| Dewan Khalid Textile Mills Limited |
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| Annual
Report 2000 |
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Mission Statement |
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The Mission of Dewan Khalid Textile Mills Limited is to be the |
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finest Organisation, and to conduct business responsibly |
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in a straight forward way. |
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Our basic aim is to benefit the customers, employees |
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and shareholders and to fulfill our commitments to the
society. |
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Our hallmark is honesty, initiative and teamwork of our people |
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and our ability to respond effectively to change in all
aspects |
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of life including technology, culture and environment. |
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We will create a work environment, which motivates, recognises |
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and rewards achievements at all levels of the Organisation |
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because |
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In Allah We Trust & In People We Believe |
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We will always conduct ourselves with integrity |
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and strive to be the best. |
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| CONTENTS |
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| Company
Information |
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| Notice
of the Meeting |
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| Statement
Under Section 160 |
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| Directors'
Report |
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| Auditors'
Report to the Members |
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| Balance Sheet |
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| Profit
& Loss Account |
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| Cash
Flow Statement |
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| Statement
of Changes in Equity |
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| Notes
to the Accounts |
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| Pattern
of Share Holding |
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| COMPANY
INFORMATION |
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| BOARD
OF DIRECTORS |
DEWAN ZIA-UR-REHMAN
FAROOQUI |
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Chairman |
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DEWAN GHULAM MUSTAFA
KHAL1D |
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Vice Chairman |
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DEWAN ABDUL REHMAN
FAROOQUI |
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Managing Director/Chief
Executive |
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DEWAN MOHAMMAD AYUB
KHALID |
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Deputy Managing Director |
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DEWAN MOHAMMAD YOUSUF
FAROOQUI |
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DEWAN ASIM MUSHFIQ
FAROOQUI |
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MR. MOHAMMAD SHAFI (NIT) |
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| AUDITORS |
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MESSRS. FARUQ ALl &
CO. |
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Chartered Accountants |
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Habib Square, |
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M.A. Jinnah Road, |
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Karachi, Pakistan. |
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| TAX
ADVISORS |
SHARIF & COMPANY |
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Advocates |
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| BANKERS |
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MUSLIM COMMERCIAL BANK
LIMITED |
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HABIB BANK LIMITED |
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ABN AMRO BANK |
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| REGISTERED
OFFICE |
DEWAN CENTRE |
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3-A, Lalazar, |
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Beach Hotel Road, |
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Karachi - 74000, |
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Pakistan. |
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| MILLS |
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G/11, S.I.T.E., |
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Kotri, |
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Sindh, Pakistan. |
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| NOTICE
OF TWENTY THIRD ANNUAL GENERAL MEETING |
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| Notice
is hereby given that 23rd Annual General Meeting of Dewan Khalid Textile
Mills Limited will |
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| be
held on March 31,2001 at 04.00 p.m. at Dewan Centre, 3-A, Lalazar, Beach
Hotel Road, Karachi |
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| to
transact the following business: |
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| ORDINARY
BUSINESS: |
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| 1.
Recitation from HOLY QURAN. |
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| 2.
To read and confirm the minutes of 22nd Annual General Meeting held on March
25, 2000. |
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| 3.
To receive, consider and adopt the Annual Audited Accounts for the year ended
September, 30, |
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| 2000
together with the Directors' and Auditors' reports thereon. |
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| 4.
To approve the declaration of Final Cash Dividend @ 40%. |
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| 5.
To appoint auditors of the Company for the year ending September 30, 2001 and
to fix their |
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| remuneration. |
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| SPECIAL
BUSINESS |
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| 6.
To consider and approve short term loans and advances out of surplus funds
available with the |
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| Company
to Dewan Sugar Mills Limited in compliance with the provisions of Section 208
of |
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| the
Companies Ordinance, 1984. |
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| 7.
To transact any other business with the permission of the Chairman. |
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By and on behalf of Board of Directors |
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| Date:
10 March, 2001 |
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(DEWAN ABDUL REHMAN FAROOQUI) |
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| Place: Karachi. |
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Managing Director/Chief Executive |
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| NOTES: |
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| 1.
The Shares Transfer Books of the Company will remain closed from March 30,
2001 to April |
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| 08,
2001 (both days inclusive). |
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| 2.
A member entitled to attend, speak and vote at the meeting is entitled to
appoint a proxy to |
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| attend,
speak and vote for him/her. (A proxy must be member of the Company). |
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| 3.
An instrument of proxy and a power of attorney or other authority (if any)
under which it is |
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| signed
or a notarised certified copy of such power of attorney, in order to be valid
must be |
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| deposited
at the registered office of the company not less than 48 hours before the
time of the |
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| meeting. |
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| 4.
Members are requested to notify any change in their addresses immediately. |
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| "Statement
under Section 160 of the Companies Ordinance, 1984 attached with the |
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| Annual
Report circulated to the members of the Company ". |
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| STATEMENT
UNDER SECTION 160 |
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| OF
THE COMPANIES ORDINANCE, 1984 |
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| This
statement is annexed to the Notice of the 23rd Annual General Meeting of
Dewan Khalid Textile Mills |
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| Limited
(hereinafter referred to as DKTML.) to be held on 31st March, 2001 and sets
out material facts con- |
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| cerning
the Special Business to be transacted at the Meeting. |
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| 1.
Investments in Associated Companies |
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| The
board of Directors considers to advance temporary short term financing to the
associated |
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| company
out of surplus funds available with the company. Details of such financing
are given below: |
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| (i)
Name of borrower Company and associated |
- Dewan Sugar Mills Limited |
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| undertaking
together with the amount of loans |
Rupees Fifty Million only |
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| and advance. |
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| (ii)
Rate of interest to be charged on each loan |
- 1% above the rate on
which the lending |
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| and
advance together with the particulars of |
company has obtained its
own borrowing |
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| collateral
security to be obtained from |
- No security is
considered necessary as all |
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| borrower. |
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the companies are trader
common |
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management control. |
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| (iii)
Period for which these loans and advances |
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Twelve Months |
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| will be made |
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| (iv)
The terms of repayment or any other terms |
- The loans and advances are
adjustable |
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| of
loans and advances. |
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within a period of twelve
months or as |
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and when required by the
lending company. |
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| (v)
Purpose of loans and advances |
- The purpose of loans and
advances is to |
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provide any immediate
requirement of |
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working capital of the
borrowing companies. |
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| (vi)
Benefits likely to accrue to the Company |
- The investing company
and its shareholders |
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its shareholders from loans and |
will be benefited in a
manner that their invest- |
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| advances. |
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ment will fetch a return
of one percent over |
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and above the mark-up
rate at which the |
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investing Company has
borrowed. Further. the |
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surplus funds will not
remain idle and will be |
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invested in the most
efficient manner whereby |
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the investing Company,
not only getting good |
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return but the funds will
also remain at the |
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disposal of the investing
Company as such |
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loans and advances are
repayable on demand. |
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| None
of the Directors or their spouse has any vested or non-vested interest
whether directly, or indirectly in the |
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| proposed
business. |
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| In
this regard following resolution is proposed to be passed, with or without
modification as a "SPECIAL |
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| RESOLUTION". |
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| "Resolved
that the Board of Directors of the Company be and is hereby authorised to
make temporary |
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| short
term loans/advances to Dewan Sugar Mills Limited up to maximum limit of Rs.
50 Million at the |
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| mark
up rate of 1% above the rate on which the Company has obtained the borrowing. |
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| These
temporary loans / advances shall be adjusted as and when required by the
Company and shall not |
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| exceed
12 months period. |
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| DIRECTORS'
REPORT |
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| Your
Directors take pleasure in presenting to you the Twenty Third Annual Report
of the Company together with |
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| the
audited accounts for the financial year ended on September 30, 2000. |
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| Alhamdolillah,
your Company was able to achieve good results due to procurement of cotton at
economical |
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| rates
and strict control on expenditure, wherever possible. |
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| By
the Grace of Almighty Allah, your company has earned a Net Profit of Rs.31.88
million as compared with |
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| Net
profit of Rs. 8.993 million of last year. The highlights of the accounts are
as follows: |
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2000 |
1999 |
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(Rupees) |
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| Sales |
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560,640,337 |
438,177,566 |
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| Cost of Sales |
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481,274,853 |
376,970,775 |
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| Gross profit |
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79,365,484 |
61,206,791 |
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| Taxation |
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8,600,000 |
5,905,000 |
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| Net
profit after tax |
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31,880,945 |
8,993,048 |
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| We
humbly and gratefully bow our heads before Almighty Allah, the Most Gracious
and Merciful, who has |
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| rewarded
and blessed your Company with His innumerable bounties in difficult times. |
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| IF
YE GIVE THANKS, I WILL GIVE YOU MORE (HOLY QURAN) |
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| Your
Directors are pleased to propose appropriation of profit in the following
manner: |
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(Rupees) |
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| Profit
for the year 1999-2000 |
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31,880,945 |
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| Un-appropriated
profit brought forward |
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66,685,485 |
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| Profit
available for appropriation |
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98,566,430 |
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| Appropriation |
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| Cash
Dividend 40% |
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14,113,440 |
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| Un-appropriated
profit carried forward |
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84,452,990 |
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| Total |
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98,566,430 |
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| The
Board of Directors has taken the decision for appropriation of the profit,
keeping in view the expectations |
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| of
the shareholders from Dewan Mushtaq Group, future profitability and present
scenario of Textile Industry. |
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| The
Board has also decided to apprise its valued shareholders about the status
and future situation of Textile |
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| Industry
through this report. |
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| SALIENT
FEATURES OF THE ACCOUNTS |
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| 1.
Total gross sales of your Company increased to Rs. 564.77 million as compared
with Rs. 441.42 |
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| million
last year. The increase in sales was achieved due to sale of higher volume at
better prices. |
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| 2.
Earning Per Share (EPS) of your Company works out to Rs.9.03 per share as
compared with last year's |
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| EPS,
which was Rs. 2.55 per share. |
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| 3.
The Board would like to apprise the shareholders that our plants are based on
old technology and with |
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| the
passage of time, they have become less efficient than the new technology
plants. However, since the |
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| plant
and machinery are almost fully depreciated, therefore, your Company has been
able to maintain |
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| profitability
and paid dividend every year regularly. |
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| 4.
Alhamdolillah, your Company has been able to meet all its financial
obligations from its own resources |
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| on time. |
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| SYNOPSIS
OF THE YEAR UNDER REVIEW |
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| The
last season witnessed cotton prices plummeting to very low levels. However,
since then the market has |
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| stabilized
and the price of cotton is again on an upward trend. The stability in the
price of cotton was the result |
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| of
the Cotton Policy of the Government under which a minimum benchmark price of
cotton was fixed. The |
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| Policy
also provided for export of cotton to maintain balance in the market thereby
ensuring its availability to |
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| the
industry at world prices. However, the price of man made fibre has exhibited
a rising trend, mainly due to |
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| increase
in the cost of its raw materials and general price hike in the international
market. |
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| Inexpensive
and abundant availability of raw materials for the spinning sector has
provided a great boost to |
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| Textile
Industry of the country and has enabled it to come out of deep crisis
spanning over last several years. |
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| Due
to low prices of cotton, sizable numbers of idle spindles and closed spinning
units have come into produc- |
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| tion.
The yarn market showed much strength as almost all the major items are in
good demand both in local and |
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| export
markets. Rising trend in exports of yarns, fabrics and other textile goods
clearly manifest that Pakistan |
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| Textile
Industry is able to recapture and increase its share in the world markets. |
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| The
introduction of cotton grading and standardization at the ginning stage is a
welcome step. It will contribute |
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| to
betterment of quality, establish a fair linkage between price and quality and
will provide a check and balance |
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| on
cotton prices. Availability of man made fibers, such as locally produced
polyester and acrylic, will further |
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| support
in revival of spinning industry besides providing spinners with the
flexibility to timely evaluate the yarn |
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| market
and switch over accordingly. |
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| FUTURE
OUTLOOK |
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| Due
to a good cotton crop in the preceding year and low prices, the industry was
able to make handsome |
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| profits,
which were reinvested to add substantial number of new spindles and upgrading
of existing machinery. |
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| This
augurs well for the industry, as it would improve its efficiency as well as
its competitiveness. |
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| The
succeeding year will be difficult for Textile Industry overall as its
profitability will be eroded by increasing |
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| prices
of cotton, which will also affect the profits of your mill. Pakistan is
experiencing one of the worst droughts |
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| in
its short history. The lack of rainfall has reduced water to dangerously low
levels in the dams, which is |
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| depleting
water reservoirs and drying up rivers in the up country. This condition has
been further aggravated by |
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| less
than average snowfall on mountains in the northern areas during short
winters. Water shortage is affecting |
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| the
sowing season of cotton. If this situation continues unabated then the cotton
crop will be gravely affected. |
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| There
is a strong likelihood that the prices of cotton may go up due to a modest
crop owing to water shortage. |
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| The
inflationary impact of cost of inputs will also increase the conversion
costs. Besides, recent trends in the |
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| market
limit transfer of incremental costs to the buyers and hence, your Company
will have to implement strin- |
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| gent
cost controls to remain competitive in the market. |
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| During
the year, your Company was accorded permission to use natural gas for power
generation as industrial |
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| consumer.
In order to use the facility, it was decided to induct gas generators for own
generation of power. The |
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| Directors
are pleased to inform that the generators have now been installed and the
supply of electricity through |
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| these
would Inshallah commence from April 2001. These generators are financed
through leasing facility for a |
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| period
of five years. Due to the conversion of power from WAPDA to self-generation,
the utility charges of the |
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| mill
will be reduced by about 25% in the initial year and by about 40% in the
ensuing years. The management |
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| sincerely
feels that the induction of these generators will go a long way in increasing
the profitability of your |
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| Company. |
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| The
Directors have decided to restructure the Company in order to make it more
efficient and financially com- |
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| petitive.
A detailed plan is being chalked out to achieve this end. |
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| VOTE
OF THANKS |
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| The
Board puts on record its gratitude to its valuable shareholders. federal and
provincial government func- |
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| tionaries,
banks, development financial institutions and customers whose co-operation,
constant support and |
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| patronage
have enabled your Company to achieve the desired results. |
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| The
Board also expresses its thanks for the valuable teamwork, loyalty and
laudable efforts rendered by the exec- |
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| utives,
staff members and workers of your Company, during the year under review and
wishes to place on record |
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| its
appreciation for the same. |
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| AUDITORS |
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| The
auditors of your company, M/s. Faruq Ali & Company, Chartered
Accountants, retire and offer their servic- |
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| es
for re-appointment for the ensuing year. |
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| CONCLUSION |
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| In
conclusion, we bow, beg and pray to Almighty Allah, Rehman-o-Rahim, in the
name of our beloved prophet, |
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| Muhammad,
peace be upon him, for continued showering of His Blessings, Guidance,
Strength, Health and |
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| Prosperity
to us, our Company, Country and Nation; and also pray to Almighty Allah to
bestow peace, harmo- |
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| ny,
brotherhood and unity in true Islamic spirit to whole of Muslim Ummah, Ammen,
Summa-Ameen. |
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| LO-MY
LORD IS INDEED HEARER OF PRAYER (HOLY QURAN) |
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For and on behalf of Board of Directors |
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DEWAN ABDUL REHMAN FAROOQUI |
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| Karachi:
March 02, 2001 |
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Managing Director/Chief Executive |
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| AUDITOR'S
REPORT TO THE MEMBERS |
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| We
have audited the annexed Balance Sheet of Dewan Khalid Textile Mills Limited,
as at September 30, |
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| 2000
and the related Profit and Loss Account, Cash Flow Statement and Statement of
Changes in Equity |
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| together
with the notes forming part thereof, for the year then ended and we state
that we have obtained all |
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| the
information and explanations which, to the best of our knowledge and belief,
were necessary for the |
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| purposes
of our audit. |
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| It
is the responsibility of tile company's management to establish and maintain
a system of internal control, |
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| and
prepare and present the above said statements in conformity with the approved
accounting standards |
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| and
the requirements of the Companies Ordinance, 1984. Our responsibility is to
express an opinion on |
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| these
statement based on our audit. |
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| We
conducted our audit in accordance with the auditing standards as applicable
in Pakistan. These |
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| standards
require that we plan and perform the audit to obtain reasonable assurance
about whether the |
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| above
said statement are free of any material misstatement. An audit includes
examining, on a test basis, |
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| evidence
supporting the amounts and disclosures in the above said statements. An audit
also includes |
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| assessing
the accounting policies and significant estimates made by management, as well
as, evaluating the |
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| overall
presentation of the above said statements. We believe that our audit provides
a reasonable basis for |
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| our
opinion and, after due verification, we report that; |
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| (a)
in our opinion, proper books of accounts have been kept by the company as
required by the |
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| Companies
Ordinance, 1984; |
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| (b)
in our opinion |
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| (i)
the balance sheet and profit and loss account together with the notes thereon
have |
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| been
drawn up in conformity with the Companies Ordinance, 1984, and are in |
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| agreement
with the books of account and are further in accordance with accounting |
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| policies
consistently applied; |
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| (ii)
the expenditure incurred during the year was for the purpose of the company's |
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| business; and |
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| (iii)
the business conducted, investment made and the expenditure incurred during
the |
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| year
were in accordance with the objects of the company; |
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| (c)
in our opinion and to the best of our information and according to the
explanations given |
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| to
us, the Balance Sheet, Profit and Loss Account, Cash Flow Statement and
Statement of |
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| Changes
in Equity together with the notes forming part thereof conform with approved |
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| accounting
standards as applicable in Pakistan, and give the information required by the |
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| Companies
Ordinance, 1984, in the manner so required and respectively give a true and
fair |
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| view
of the state of the company's affairs as at September 30, 2000 and of the
Profit, its |
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| Cash
Flows and Changes in Equity for the year then ended; and |
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| (d)
in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance,
1980 |
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| (XVIII
of 1980), was deducted by the company and deposited in the Central Zakat Fund |
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| established
under Section 7 of that Ordinance. |
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| Karachi. |
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Faruq Ali & Co. |
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| Date:
02 March, 2001 |
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Chartered Accountants |
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| BALANCE
SHEET AS ON 30 SEPTEMBER, 2000 |
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| CAPITAL
& LIABILITIES |
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Notes |
2000 |
1999 |
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|
(Rupees) |
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| SHAREHOLDER'S
EQUITY |
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| Share Capital |
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| Authorized |
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| 15,000,000
Ordinary Shares of Rs. 10/= each |
|
150,000,000 |
150,000,000 |
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|
========== |
========== |
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| Issued,
Subscribed & Paid up Shares Capital |
3 |
35,283,600 |
32,076,000 |
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| Reserves
and Surplus |
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4 |
219,452,990 |
204,893,085 |
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------------------ |
------------------ |
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254,736,590 |
236,969,085 |
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| Deferred
Liabilities for |
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| Assets
Subject to Finance Lease |
|
5 |
10,520,591 |
20,289,333 |
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| Provision
for Gratuity |
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|
16,773,483 |
14,737,577 |
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| Current
Liabilities |
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| Current
Portion of Lease Liabilities |
5 |
9,768,742 |
9,761,880 |
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| Short
Term Running Finances |
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6 |
448,861,418 |
254,113,925 |
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| Creditors,
Accrued Expenses & Other Liabilities |
7 |
121,522,400 |
202,400,244 |
|
| Provision
for Taxation |
|
|
29,047,696 |
20,447,696 |
|
| Dividend
Payable |
|
8 |
14,393,280 |
7,741,267 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
623,593,536 |
494,465,012 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
905,624,200 |
766,461,007 |
|
|
|
|
========== |
========== |
|
| PROPERTY
& ASSETS |
|
|
|
| TANGIBLE
FIXED ASSETS |
|
| Operating
Fixed Assets (at cost |
|
| less
Accumulated Depreciation) |
|
9 |
90,341,979 |
93,248,914 |
|
|
| Capital
Work in Progress |
|
10 |
47,500,195 |
-- |
|
| Long
Term Investment |
|
11 |
65,000,000 |
65,000,000 |
|
| Long
Term Deposits |
|
12 |
66,775 |
66,775 |
|
|
|
| Current Assets |
|
|
|
| Stores & Spares |
|
13 |
9,073,348 |
7,705,484 |
|
| Stock in Trade |
|
14 |
462,758,936 |
449,456,867 |
|
| Trade
Debts - Unsecured Considered good |
|
177,685,300 |
103,517,911 |
|
| Advances,
Deposits, Prepayments |
|
|
| and
Other Receivables |
|
15 |
45,792,390 |
41,254,203 |
|
| Cash
and Bank Balance |
|
16 |
7,405,277 |
6,210,853 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
702,715,251 |
608,145,318 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
905,624,200 |
766,461,007 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| The
Annexed notes form an integral part of these accounts. |
|
|
|
DEWAN GHULAM MUSTAFA KHALID |
|
DEWAN ABDUL REHMAN FAROOQUI |
|
|
Director |
|
Managing Director/Chief Executive |
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED 30 SEPTEMBER, 2000 |
|
|
|
Notes |
2000 |
1999 |
|
|
|
(Rupees) |
|
|
|
|
| Sales - Net |
|
17 |
560,643,927 |
438,304,363 |
|
| Less:
Export Duty |
|
|
3,590 |
126.80 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
560,640,337 |
438,177,566 |
|
| Cost of Sales |
|
18 |
