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Dewan Mushtaq Textile Mills Limited
Annual Report 2000
Mission Statement
The Mission of Dewan Mushtaq Textile Mills Limited is to be
the finest Organisation, and to conduct business responsibly
in a straightforward
Our basic aim is to benefit the customers, employees
and shareholders and to fulfill our commitments to the society.
Our hallmark is honesty, initiative and teamwork of our people
and our ability to respond effectively to change in all aspects
of life including technology, culture and environment.
We will create a work environment, which motivates, recognises
and rewards achievements at all levels of the Organization
because
IN ALLAH WE TRUST & IN PEOPLE WE BELIEVE
We will always conduct ourselves with integrity
and strive to be the best.
CONTENTS
Company Information
Notice of the Meeting
Statement Under Section 160
Directors' Report
Auditor's Report to the Members
Balance Sheet
Profit & Loss Account
Cash Flow Statement
Statement of Changes in Equity
Notes to the Accounts
Pattern of Share Holding
COMPANY INFORMATION
BOARD OF DIRECTORS DEWAN ZIA-UR-REHMAN FAROOQUI
Chairman
DEWAN GHULAM MUSTAFA KHALID
Vice Chairman
DEWAN MOHAMMAD AYUB KHALID
Managing Director/Chief Executive
DEWAN MOHAMMAD YOUSUF FAROOQUI
Deputy Managing Director
DEWAN ABDUL REHMAN FAROOQUI
DEWAN ASIM MUSHFIQ FAROOQUI
MR. SHAMIM AHMED (NIT)
AUDITORS MESSRS. FARUQ ALI & CO.
Chartered Accountants
Habib Square,
M.A. Jinnah Road,
Karachi, Pakistan
TAX ADVISORS SHARIF & COMPANY
Advocates
BANKERS MUSLIM COMMERCIAL BANK LIMITED
HABIB BANK LIMITED
REGISTERED OFFICE DEWAN CENTRE
3-A, Lalazar,
Beach Hotel Road,
Karachi- 74000,
Pakistan.
MILLS A/30, S.I.T.E,
Hyderabad
Sindh, Pakistan.
NOTICE OF THIRTY NINTH ANNUAL GENERAL MEETING
Notice is hereby given that 39th Annual General Meeting of Dewan Mushtaq Textile Mills Limited will be
held on March 31, 2001 at 03.00 p.m. at Dewan Centre, 3-A, Lalazar, Beach Hotel Road, Karachi to trans-
act the following business:
ORDINARY BUSINESS:
1. Recitation from HOLY QURAN.
2. To read and confirm the minutes of 38th Annual General Meeting held on March 25, 2000.
3. To receive, consider and adopt the Annual Audited Accounts for the year ended September, 30, 2000
together with the Directors' and Auditor's reports thereon.
4. To elect Seven Directors of the Company for a period of three years. The number of Directors to be
elected is fixed by the Board of Directors in accordance with the provisions of Section 178(1) of the
Companies Ordinance, 1984. The following retiring Directors are eligible for re-election.
1. Dewan Zia-ur-Rehman Farooqui 5. Dewan Mohammad Ayub Khalid
2. Dewan GhuIam Mustafa Khalid 6. Dewan Asim Mushfiq Farooqui
3. Dewan Mohammad Yousuf Farooqui 7. Mr. Shamim Ahmed (NIT)
4. Dewan Abdul Rehman Farooqui
5. To approve the declaration of final cash dividend @ 72.5%.
6. To appoint auditors of the Company for the year ending September 30, 2001 and to fix their
remuneration.
SPECIAL BUSINESS
7. To consider and approve short term loans and advances out of surplus funds available with the
Company to Dewan Sugar Mills Limited in compliance with the provisions of Section 208 of the
Companies Ordinance, 1984.
8. To transact any other business with the permission of the Chairman.
By and on behalf of Board of Directors
Date: 10 March, 2001 (DEWAN MOHAMMAD AYUB KHALID)
Place: Karachi Managing Director/Chief Executive
NOTES:
1. The Share Transfer Books of the Company will remain closed from March 30, 2001 to April 08,
2001 (both days inclusive).
2. A member entitled to attend, speak and vote at the meeting is entitled to appoint a proxy to attend,
speak and vote for him/her. (A proxy must be member of the Company).
3. An instrument of proxy and a power of attorney or other authority (if any) under which it is signed
or a notarised certified copy of such power of attorney, in order to be valid must be deposited at
the registered office of the Company not less than 48 hours before the time of the meeting.
4. Members are requested to notify any change in their addresses immediately.
"Statement under Section 160 of the Companies Ordinance, 1984 attached with the Annual
Report circulated to the members of the Company"
STATEMENT UNDER SECTION 160
OF THE COMPANIES ORDINANCE, 1984
This statement is annexed to the Notice of the 39th Annual General Meeting of Dewan Mushtaq Textile Mills
Limited (hereinafter referred to as DMTML) to be held on 31st March, 2001 and sets out material fact concern-
ing the Special Business to be transacted at the Meeting.
1. INVESTMENT IN ASSOCIATED COMPANIES.
The board of Directors considers to advance temporary short term financing to the associated
company out of surplus funds available with the Company. Details of such financing are given below:
(i) Name of borrower Company and associated - Dewan Sugar Mills Limited
undertaking together with the amount of loan Rupees Filly Million only
and advance.
(ii) Rate of interest to be charged on each loan - 1% above the rate on which the lending
and advance together with the particulars of company has obtained its own borrowing
collateral security to be obtained from - No security is considered necessary as all
borrower. the companies are under common
management control.
(iii) Period for which these loans and advances - Twelve Months
will be made
(iv) The terms of repayment or any other terms - The loans and advances are adjustable
of loans and advances. within a period of twelve months or as
and which required by the lending Company.
(v) Purpose of loans and advances - The purpose of loans and advances is to
provide any immediate requirement of
working capital of the borrowing Companies.
(vi) Benefits likely to accrue to the Company The investing company and its shareholders
and its shareholders from loans and will be benefited in a manner that their invest-
advances. ment will fetch a return of one percent over
and above the mark-up rate at which the
investing Company has borrowed. Further. the
surplus funds will not remain idle and will be
invested in the most efficient manner whereby
the investing Company, not only getting good
return but the funds will also remain at the
disposal of the investing Company as such
loans and advances are repayable on demand.
None of the Directors or their spouse has any vested or non-vested interest whether directly, or indirectly in the
proposed business.
In this regard following resolution is proposed to be passed. with or without modification as a "SPECIAL
RESOLUTION."
"Resolved that the Board of Directors of the Company be and is hereby authorised to make temporary
short term loans/advances to Dewan Sugar Mills Limited up to maximum limit of Rs. 50 million at the
mark up rate of 1% above the rate on which the Company has obtained the borrowing.
These temporary loans / advances shall be adjusted as and when required by the Company and shall not
exceed 12 months period."
DIRECTORS' REPORT
Your Directors take pleasure in presenting to you the Thirty Ninth Annual Report of the Company together with
the audited accounts for the financial year ended on September 30, 2000.
Alhamdollilah, your Company was able to achieve good results due to procurement of cotton at economical
rates and strict control on expenditure, wherever possible.
By the Grace of Almighty Allah, your company has earned a Net Profit of Rs.38.528 million as compared with
Net profit of Rs. 1.945 million of last year. The highlights of the accounts are as follows:
2000 1999
(Rupees)
Sales 761,151,722 267,655,385
Cost of Sales 669,816,962 232,962,382
Gross profit 91,334,760 34,693,003
Taxation 9,500,000 3,900,000
Net profit after tax 38,528,451 1,944,931
We humbly and gratefully bow our heads before Almighty Allah, the Most Gracious and Merciful, who has
rewarded and blessed your Company with His innumerable bounties in the difficult times.
IF YE GIVE THANKS, I WILL GIVE YOU MORE (HOLY QURAN)
Your Directors are pleased to propose appropriation of profit in the following manner:
Profit for the year 1999-2000 Rs. 38,528,451
Un-appropriated profit brought forward Rs. 35,449,946
------------------
Profit available for appropriation Rs. 73,978,397
==========
Appropriation
Cash Dividend 72.5% Rs.15,458,900
Un-appropriated profit carried forward Rs.58,519,497
------------------
Total Rs.73,978,397
==========
The Board of Directors has taken the decision for appropriation of the profit keeping in view the expectations of
the shareholders from Dewan Mushtaq Group, future profitability and present scenario of Textile Industry.
The Board has also decided to apprise its valued shareholders about the status and future situation of
textile industry through this report.
SALIENT FEATURES OF THE ACCOUNTS
1. Total gross sales of your company amounted to Rs. 767.374 million as compared with
Rs.269.682 million last year. The increase in sales is attributed to quantity and price.
2. Earning Per Share (EPS) of your Company works out to Rs. 18.06 per share as compared with
last year's EPS. which was Rs. 0.91 per share.
3. Your Company has Successfully implemented its Balancing Modernizing and Expansion Program in
order to remain abreast with rapid change in textile technology and will continue to maintain its pace
with the future technological developments in the industry.
4. The Board would like to apprise the shareholders that our plants were based on old
technology and with the passage of time, they have became less efficient than the new
technology plant. However, since tile plant and machinery are almost frilly depreciated,
therefore, your company had been able to maintain profitability and paid dividend every year
regularly.
5. Alhamdolillah, your company has been able to meet all its financial obligations on time and
from its own resources.
SYNOPSIS OF THE YEAR UNDER REVIEW
The last season witnessed cotton prices plummeting to very low levels. However, since then the market has
stabilized and the price of cotton is again on an upward trend. The stability in the price of cotton was the result
of the Cotton Policy of the Government under which a minimum benchmark price of cotton was fixed. The
Policy also provided for export of cotton to maintain balance in the market thereby ensuring its availability to
the industry at world prices. However, the price of man made fibre has exhibited a rising trend. mainly due to
increase in the cost of its raw materials and general price hike in the international market.
Inexpensive and abundant availability of raw materials for the spinning sector has provided a great boost to
Textile Industry of the country and has enabled it to come out of deep crisis spanning over last several years.
Due to low prices of cotton, sizable numbers of idle spindles and closed spinning units have come into
production. The yarn market showed much strength as almost all the major items are in good demand both in
local and export markets. Rising trend in exports of yarns, fabrics and other textile goods clearly manifest that
Pakistan Textile Industry is able to recapture and increase its share in the world markets.
The introduction of cotton grading and standardization at the ginning stage is a welcome step. It will contribute
to betterment of quality, establish a fair linkage between price and quality and will provide a check and balance
on cotton prices. Availability of man made fibers, such as locally produced polyester and acrylic, will further
support in revival of spinning industry besides providing spinners with the flexibility to timely evaluate the yarn
market and switch over accordingly.
FUTURE OUTLOOK
Due to a good cotton crop in the preceding year and low prices, the industry was able to make handsome
profits, which were reinvested to add substantial number of new spindles and upgrading of existing machinery.
This augurs well for the industry, as it would improve its efficiency as well as its competitiveness.
The succeeding year will be difficult for Textile Industry overall as its profitability will be eroded by increasing
prices of cotton, which will also affect the profits of your mill. Pakistan is experiencing one of the worst droughts
in its short history. The lack of rainfall has reduced water to dangerously low levels in the dams, which is deplet-
ing water reservoirs and drying up rivers in the up country. This condition has been further aggravated by less
than average snowfall on mountains in the northern areas during short winters. Water shortage is affecting the
sowing season of cotton. If this situation continues unabated then the cotton crop will be gravely affected. There
is a strong likelihood that the prices of cotton may go up due to a modest crop owing to water shortage. The infla-
tionary impact of cost of inputs will also increase the conversion costs. Besides, recent trends in the market limit
transfer of incremental costs to the buyers and hence, your Company will have to implement stringent cost con-
trols to remain competitive in the market.
During the year, your Company was accorded permission to use natural gas for power generation as industrial
consumer. In order to use the facility, it was decided to induct gas generators for own generation of power. The
Directors are pleased to inform that the generators have now been installed and the supply of electricity through
these would Inshallah commence from April 2001. These generators are financed through leasing facility for a
period of five years. Due to the conversion of power from WAPDA to self-generation, the utility charges of the
mill will be reduced by about 25% in the initial year and by about 40% in the ensuing years. The management
sincerely feels that the induction of these generators will go a long way in increasing the profitability of your
Company.
The Directors have decided to restructure the Company ill order to make it more efficient and financially com-
petitive. A detailed plan is being chalked out to achieve this end.
VOTE OF THANKS
The Board puts on record its gratitude to its valuable shareholders, federal and provincial government func-
tionaries, banks, development financial institutions and customers whose co-operation, constant support and
patronage have enabled your Company to achieve the desired results.
The Board also expresses its thanks for the valuable teamwork, loyalty and laudable efforts rendered by the exec-
utives, staff members and workers of your Company, during the year under review and wishes to place on record
its appreciation for the same.
AUDITORS
The auditors of your company, M/s. Faruq Ali & Company, Chartered Accountants. retire and offer their servic-
es for re-appointment for the ensuing year.
CONCLUSION
In conclusion, we bow, beg and pray to Almighty Allah, Rehman-o-Rahim, in the name of our beloved prophet,
Muhammad, peace be upon him, for continued showering of His Blessings, Guidance, Strength, Health and
Prosperity to us, our Company, Country and Nation; and also pray to Almighty Allah to bestow pease, harmo-
ny, brotherhood and unity in true Islamic spirit to whole of Muslim Ummah, Ammen, Summa-Ameen
LO-MY LORD IS INDEED HEARER OF PRAYER (HOLY QURAN)
For and on behalf of Board of Directors
DEWAN M. AYUB KHALID
Karachi: 02 March,2001 Managing Director Chief Executive
AUDITOR'S REPORT TO THE MEMBERS
We have audited the annexed balance sheet of Dewan Mushtaq Textile Mills Limited, as at 30 September
2000 and the related Profit and Loss Account, Cash Flow Statement and Statement of Changes in Equity
together with the notes forming part thereof, for the year then ended and we state that we have obtained all
the information and explanations which, to the best of our knowledge and belief, were necessary for the
purposes of our audit.
It is the responsibility of tile company's management to establish and maintain a system of internal control,
and prepare and present the above said statements in conformity with the approved accounting standards
and the requirements of the Companies Ordinance, 1984. Our responsibility is to express an opinion on
these statement based on our audit.
We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These
standards require that we plan and perform the audit to obtain reasonable assurance about whether the
above said statement are free of any material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the above said statements. An audit also includes
assessing the accounting policies and significant estimates made by management, as well as, evaluating tile
overall presentation of tile above said statements. We believe that our audit provides a reasonable basis for
our opinion and, after due verification, we report that;                                                                .
(a) in our opinion, proper books of accounts have been kept by the company as required by
the Companies Ordinance, 1984
(b) in our opinion;
(i) the Balance Sheet and Profit and Loss Account together with the notes thereon
have been drawn up in conformity with the Companies Ordinance. 1984, and are
in agreement with the books of account and are further in accordance with
accounting policies consistently applied.
(ii) the expenditure incurred during the year was for the purpose of the Company's
business; and
(iii) the business conducted, investment made and the expenditure incurred during the
year were in accordance with the objects of the company;
(c) in our opinion and to the best of our information and according to the explanations given
to us, the Balance Sheet, Profit and Loss Account, Cash Flow Statement and Statement of
Changes in Equity together with the notes forming part thereof conform with approved
accounting standards as applicable in Pakistan, and give the information required by the
Companies Ordinance, 1984, in tile manner so required and respectively give a true and
fair view of the state of the company's affairs as at September 30, 2000 and of the Profit,
its Cash Flows and Changes in Equity for the year then ended; and
(d) in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance, 1980
(XVIII of 1980), was deducted by the company and deposited in the Central Zakat fund
established under Section 7 of that Ordinance.
Karachi. Faruq Ali & Co.
Date: 02 March 2001 Chartered Accountants
BALANCE SHEET AS ON 30 SEPTEMBER 2000
Notes 2000 1999
CAPITAL & LIABILITIES (Rupees)
SHAREHOLDER'S EQUITY
Share Capital
Authorized
10,000,000 Ordinary Shares of Rs. 10/= each 100,000,000 100,000,000
========== ==========
Issued, Subscribed & Paid up Share Capital 3 21,322,620 19,384,200
Reserves and Surplus 4 103,519,497 82,388,366
124,842,117 101,772,566
DEFERRED LIABILITY FOR
Assets Subject to Finance Lease 5 94,678,060 132,145,345
Provision for Gratuity 18,594,216 14,436,288
CURRENT LIABILITIES
Current Portion of Lease Liabilities 37,467,285 25,453,349
Short Term Running Finances 6 308,128,275 292,445,650
Creditors, Accrued Expenses & Other Liabilities 7 385,245,337 213,753,364
Provision for Taxation 32,950,641 23,450,641
Dividend Payable 8 15,669,143 4,998.26
------------------ ------------------
779,460,681 560,101,260
------------------ ------------------
1,017,575,074 808,455,459
========== ==========
PROPERTY & ASSETS
Operating Fixed Assets (at cost less
accumulated depreciation) 9 186,766,717 187,807,110
CAPITAL WORK IN PROGRESS 10 59,611,754 20,307,037
LONG TERM INVESTMENT 11 40,003,000 40,003,000
LONG TERM DEPOSITS 12 55,736 55,736
CURRENT ASSETS
Stores and Spares 13 13,169,107 10,693,663
Stock in Trade 14 381,070,765 393,509,791
Trade Debts - unsecured. Considered good 15 248,644,721 89,437,480
Advances. Deposits, Prepayments & Other Receivables 16 84,300,820 62,248,989
Cash and Bank Balances 17 3,952,454 4,392,653
------------------ ------------------
731,137,867 560,282,576
------------------ ------------------
1,017,575,074 808,455,459
========== ==========
The annexed notes forth an integral part of these accounts.
DEWAN ABDUL REHMAN FAROOQUI DEWAN M. AYUB KHALID
Director Managing Director / Chief Executive
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 SEPTEMBER 2000
Notes 2000 1999