| Faisal Spinning Mills Limited |
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| Annual
Report 2000 |
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| BOARD
OF DIRECTORS |
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| CHIEF
EXECUTIVE & DIRECTOR |
Mr. Mohammad Sharif |
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| DIRECTORS |
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Mr. Mohammad Salim |
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Mr. Mohammad Shaheen |
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Mr. Mohammad Shakeel |
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Mr. Khurram Salim |
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Mr. Bilal Sharif |
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Dr. Amjad Waheed (Nominee
- N.I.T.) |
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| COMPANY
SECRETARY |
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Mr. Asif Mahmood |
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ACA, FCIS, FITM, FICS |
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| FINANCE
MANAGER |
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Mr. Anwar Hussain |
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F. CA. |
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| BANKERS |
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Muslim Commercial Bank
Limited |
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United Bank Limited |
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Citi Bank NA |
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Standard Chartered Bank |
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Bank Al-Habib Limited |
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The Hongkong and Shanghai
Banking Corporation |
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Bank Al Falah |
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Emirates Bank
International |
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ABN Amro Bank |
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National Bank of Pakistan |
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| AUDITORS |
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M/s. Mushtaq &
Company |
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Chartered Accountants |
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407, Commerce Centre |
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Hasrat Mohani Road |
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Karachi. |
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| REGISTERED
OFFICE |
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Umer Chambers |
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10/2, Bilmoria Street |
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Off. I. I. Chundrigar
Road |
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Karachi. |
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Tel: (021) 2635916 - 17
Fax: (021) 263-7826 |
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E-mail:
khioff@umergroup.com |
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Web site:
http://www.umergroup.com |
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| MILLS AT |
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| WEAVING
UNIT: |
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SPINNING UNIT: |
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| 18-KM,
Shakupura Faisalabad Road, |
A-150, S.I.T.E. Nooriabad |
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| Ferozwattawn,
Distt. Shaikupura. |
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Ph: (02202) 660002, 145 |
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Fax: (02202) 660246 |
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| NOTICE
OF ANNUAL GENERAL MEETING |
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| NOTICE
is hereby given that 16th Annual General Meeting of the members of Faisal
Spinning Mills |
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| Limited
will be held on March 29, 2001 at 05:00 p.m., at the registered office of the
company |
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| i.e.
Umer Chambers, 10/2 Bilmoria Street, Off. I. I. Chundrigar Road, Karachi to
transact the following |
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| business: |
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| 1.
To confirm the minutes of the last Annual General Meeting held on March 27,
2000. |
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| 2.
To receive, consider and adopt the audited accounts of the company for the
year ended |
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| September
30, 2000 together with the Auditors' and Directors' Report thereon. |
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| 3.
To approve the dividend as recommended by the Board of Directors, for the
year ended September |
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| 30, 2000. |
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| 4.
To appoint auditors for the year 2000-2001 and fix their remuneration. The
present auditors |
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| M/s
Mushtaq & Co. Chartered Accountants, being eligible, offer themselves for
re-appointment. |
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| 5.
To elect seven directors as fixed by the Board for a term of three years in
accordance with |
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| Section
178 of the Companies Ordinance, 1984. The names of retiring directors are M/s |
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| Mohammad
Salim, Mohammad Sharif, Mohammad Shaheen, Mohammad Shakeel, Khurram |
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| Salim,
Bilal Sharif and Dr. Amjad Waheed (Nominee of NIT). |
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| 6.
To transact any other business with the permission of the chairman. |
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| SPECIAL
BUSINESS |
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| 7.
To approve the dis-investment of share of associated undertaking i.e. Blessed
Textiles |
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| Limited
according to section 208 of the Companies Ordinance, 1984. |
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(BY ORDER OF THE BOARD) |
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|
ASIF MAHMOOD |
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|
ACA |
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| KARACHI:
March 02, 2001 |
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COMPANY SECRETARY |
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| NOTES: |
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| 1.
The share transfer books of the company will remain closed from March 21,
2001 to |
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| April
01, 2001 (both days inclusive). |
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| 2.
A member eligible to attend and vote at this meeting may appoint another
member as |
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| his/her
proxy to attend and vote instead of him/her. Proxies in order to be effective
must |
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| be
received by the company at the registered office not less than 48 hours
before the |
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| time
for holding the meeting. |
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| 3.
In case of proxy for any individual beneficially owner of CDC, entitled to
attend and vote |
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| at
this meeting, it is necessary to deposit the attested copies of beneficial
owner's |
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| National
Identity card, account and participant's ID numbers. The proxy shall produce |
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| his
original identity card at the time of the meetin9. Representative of
corporate members |
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| should
bring the legal documents for such purpose. |
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| 4.
Any person seeking to contest in election to the office of the Director
should file with |
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| company
not later than fourteen (14) days before the date of the meeting, a notice of
his |
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| intention
to offer himself for election as director. |
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| 5.
Shareholders are requested to immediately notify the changes in address, if
any. |
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| STATEMENT
UNDER SECTION 160(1)(B) OF THE COMPANIES ORDINANCE, 1984 |
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| The
company is under the process of expansion. To improve the liquidity position,
the company |
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| intends
to sell / dis invest the shares of Blessed Textiles Limited shown under the
heading of |
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| long
term investment at Rs. 11,891,600 in the Balance Sheet as on September 30,
2000. |
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| Blessed
Textiles limited is an associated undertaking. The percentage of equity held
is |
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| 18.5%
The shares were acquired @ Rs. 10/= each. The market value of the shares as
on the |
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| date
of Balance sheet was Rs. 44,890,790 (i.e. Rs. 37.75 per share.) |
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| None
of the directors or their spouses had any interest in the above transaction.
Keeping in |
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| view
the above the following Special Resolution is proposed to be passed if deem
fit, with or |
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| without
modifications. |
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| "RESOLVED
THAT the chief executive of the company be and is hereby
authorised to sell / dis |
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| invest
1,189,160 shares of associated under taking i.e. Blessed Textiles
Limited." |
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| DIRECTORS'
REPORT TO THE MEMBERS |
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| I,
on behalf of the Board of directors, welcome the members at the 16th Annual
General Meeting |
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| and
pleased to present the audited accounts with the auditors report thereon for
the year ended |
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| September
30, 2000 for your consideration and approval. |
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| FINANCIAL
RESULTS |
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| During
the year under review, by the grace of Allah, your company has performed well
in its |
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| operations.
Masha AIlah your company has earned a net profit after tax at Rs.
127,857,967/-- |
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| against
Rs. 56,131,137/= in the corresponding year. The allocation of profit for the
year before |
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| tax
is summarized as under: |
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Sept 30, |
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2000 |
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|
Rupees |
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| Profit
for the year before taxation |
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138,522,036 |
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| Provision
for taxation |
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(10,664,069) |
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------------------ |
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| Profit
after taxation |
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127,857,967 |
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| Unappropriated
profit brought forward |
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38,810 |
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------------------ |
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| Profit
available for appropriation |
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127,896,777 |
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| Appropriations: |
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| Proposed
cash dividend @ 53% |
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53,000,000 |
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| Transfer
to general reserve |
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74,840,000 |
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------------------ |
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127,840,000 |
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------------------ |
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| Unappropriated
profit carried forward |
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56,777 |
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========== |
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| The
gross sales of the company have increased by Rs. 102.984 million as compared
to last |
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| year's
gross sales with a growth of 16.27%. The export sales of the company have
also increased |
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| by
Rs. 50.859 million over the export sales of last year. The company still
intends to increase |
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| the
export sales. The Selling & Distribution expenses have increased by Rs.
6.214 million. On |
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| the
other hand the financial charges have decreased by Rs. 14.755 million as
compared to the |
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| last
year which is due to export refinance loan. |
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| YEAR
UNDER REVIEW |
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| The
year under review was the tremendous year for the textile industry. All
remained in the |
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| favour
of textile sector. As a matter of fact the price of raw material is a major
factor in the |
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| profitability
of the company, the prices of cotton were favorable throughout the cotton
season. |
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| The
State Bank of Pakistan has allowed export refinance loan to the export of all
count of cotton |
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| yarn
at a lower mark-up rate. The facility of refinance loan has subsequently been
withdrawn in |
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| June 2000. |
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| FUTURE
OUTLOOK |
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| The
estimates regarding size of the crop in the beginning of the season was over
11 million |
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| bales
but due to panic buying at the early stage of the season the prices gone up
and out of the |
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| range.
The prices in the international market are not so good, therefore the
profitability of the |
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| company
for the current year will be effected. The imposition of section 12(9A) of
the Income |
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| Tax
Ordinance 1979 regarding minimum payment of dividend is also not in favour of
industrial |
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| development.
The economic conditions are also not gloomy. There might be a water crises in |
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| the
country which could change the total scenario. It may not only effect cotton
crop but also |
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| effect
the overall economic condition of the country. |
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| EXPANSION
PLAN |
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| The
management is fully aware of the necessity of Balancing and Modernization,
therefore the |
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| management
has chalk out an effective plan for Modernization and Expansion. During the
year |
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| under
review we have added draw frames to the existing plant and machinery. |
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| WEAVING
UNIT |
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| We
are pleased to inform you that by the grace of Almighty Allah the
installation process of |
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| weaving
unit has completed. The trial production of weaving unit is expected in the
month of |
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| March.
Insha AIlah, commercial production of weaving unit will start by April 200'i. |
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| PROFIT
DISTRIBUTION |
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| The
directors of the company are pleased to recommend a payment of 53% cash
dividend for the |
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| year
under review. |
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| BREAK
UP VALUE AND EARNING PER SHARE |
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| The
break up value of your share as on September 30, 2000 was Rs. 38.79 as
compared to |
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| Rs.
31.30 of last year. The earning per share of the year under review was Rs.
12.79 as compared |
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| to
Rs. 5.61 of the last year. |
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| ELECTION
OF DIRECTOR |
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| The
three years term of the present Board is going to expire. The existing Board
will retire in the |
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| forthcoming
Annual General Meeting schedule to be held on March 29, 2001. The Board has |
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| fixed
the number of directors at seven. |
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| AUDITORS |
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| The
present auditors M/s Mushtaq & Company, Chartered Accountants retiring at
the Annual |
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| General
Meeting and being eligible, have offered themselves for reappointment. |
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| PATTERN
OF SHAREHOLDING |
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| Statement
showing pattern of holding of shares as at September 30, 2000 is annexed to
this |
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| report. |
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| THANKS
AND GRATITUDE |
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| Your
directors would like to place their appreciation of the hard work and
dedication shown by |
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| the
executives, officers, staff members and workers of the company in the
performance of their |
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| duties.
The directors do hope that it will be continued in future. |
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For and on behalf of the Board |
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|
Mohammad Sharif |
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| Karachi:
March 02, 2001 |
|
Chief Executive/Director |
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| YEAR
WISE STATISTICAL SUMMARY |
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| ASSETS
EMPLOYED |
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|
RS. IN
THOUSANDS |
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|
2000 |
1999 |
1998 |
1997 |
|
|
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| FIXED ASSETS |
|
235,380 |
135,172 |
122,668 |
126,981 |
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| INVESTMENTS
AND LONG |
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| TERM
LOANS & DEPOSITS |
14,977 |
13,146 |
41,405 |
42,537 |
|
| CURRENT
ASSETS |
437,823 |
362,211 |
327,024 |
175,021 |
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|
------------------ |
------------------ |
------------------ |
------------------ |
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| TOTAL
ASSETS EMPLOYED |
688,180 |
510,529 |
491,095 |
342,559 |
|
|
========== |
========== |
========== |
========== |
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| FINANCED BY |
|
| SHAREHOLDER'S
EQUITY |
387,857 |
312,999 |
279,368 |
269,286 |
|
| LONG
TERM LIABILITIES |
51,249 |
14,480 |
5,852 |
7,958 |
|
| DEFERRED
LIABILITIES |
6,532 |
5,220 |
4,610 |
4,163 |
|
| CURRENT
LIABILITIES |
242,542 |
177,830 |
201,265 |
61,132 |
|
|
------------------ |
------------------ |
------------------ |
------------------ |
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| TOTAL
FUND INVESTED |
688,180 |
510,529 |
491,095 |
342,539 |
|
|
========== |
========== |
========== |
========== |
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|
| PROFIT
& LOSS |
|
| TURNOVER
(NET) |
714,288 |
622,673 |
576,988 |
570,117 |
|
| GROSS PROFIT |
|
196,534 |
121,084 |
85,297 |
84,893 |
|
| OPERATING
PROFIT |
160,730 |
95,303 |
60,118 |
56,451 |
|
| FINANCIAL
CHARGES |
25,761 |
40,516 |
30,790 |
20,957 |
|
| PROFIT
BEFORE TAXATION |
138,522 |
61,481 |
33,937 |
35,719 |
|
| PROFIT
AFTER TAXATION |
127,858 |
56,131 |
30,082 |
27,630 |
|
| CASH
DIVIDEND |
53,000 |
22,500 |
20,000 |
20,000 |
|
| TRANSFER
TO RESERVES |
74,840 |
33,600 |
10,151 |
8,900 |
|
| PROFIT C/F |
|
57 |
39 |
8 |
77 |
|
|
========== |
========== |
========== |
========== |
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| RATIO
ANALYSTS ON ACCOUNTS |
|
|
| PROFITABILITY |
|
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|
2000 |
1999 |
1998 |
|
|
% |
% |
% |
|
|
| GROSS PROFIT |
|
|
27.51 |
19.45 |
14.78 |
|
| OPERATING
PROFIT |
|
22.50 |
15.31 |
10.42 |
|
| PROFIT
BEFORE TAX |
|
19.39 |
9.87 |
5.88 |
|
| NET
PROFIT AFTER TAX |
|
17.90 |
9.01 |
5.21 |
|
| NET
PROFIT TO SHARE HOLDERS' EQUITY |
29.00 |
17.93 |
10.77 |
|
| NET
PROFIT TO TOTAL ASSETS |
18.58 |
10.99 |
6.13 |
|
| INCREASE
IN NET SALES |
|
14.71 |
7.92 |
1.21 |
|
| MATERIAL
TO NET SALES |
|
46.60 |
65.69 |
65.03 |
|
| LABOUR
NET SALE |
|
6.75 |
4.08 |
5.72 |
|
| ADMINISTRATIVE
EXPENSES TO NET SALES |
1.98 |
1.66 |
1.33 |
|
| SELLING
EXPENSES TO NET SALES |
3.03 |
2.48 |
3.03 |
|
| FINANCIAL
CHARGES TO NET SALES |
3.61 |
6.51 |
5.34 |
|
| INCOME
TAX TO GROSS SALES |
0.96 |
0.83 |
0.81 |
|
|
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| SHORT
TERM SOLVENCY & OVERALL VALUATION |
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|
|
2000 |
1999 |
1998 |
|
|
| WORKING
CAPITAL RATIO |
|
2.04:1 |
2.12:1 |
1.64:1 |
|
| BREAKUP
VALUE PER SHARE |
|
Rs. 38.79 |
31.30 |
27.94 |
|
| DIVIDEND
PER SHARE |
|
Rs. 5.30 |
2.25 |
2.00 |
|
| EARNING
PER SHARE |
|
Rs. 12.79 |
5.61 |
3.01 |
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| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of Faisal Spinning Mills Limited as at
September 30, |
|
| 2000
and the related profit and loss account, cash flow statement and statement of
changes in equity |
|
| together
with the notes formin9 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. |
|
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| It
is the responsibility of the 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 statements 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 statements 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
the overall presentation of the 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, investments 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 standard
as applicable |
|
| in
Pakistan, and give the information required by the Companies Ordinance, 1984,
in the 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. |
|
|
|
|
MUSHTAQ & COMPANY |
|
| KARACHI:
March 02, 2001. |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT SEPTEMBER 30, 2000 |
|
|
|
NOTE |
2000 |
1999 |
|
|
|
RUPEES |
RUPEES |
|
|
| CAPITAL
AND LIABILITIES |
|
|
|
| CAPITAL
AND RESERVES |
|
|
| Authorized
Share Capital |
|
3 |
120,000,000 |
120,000,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and |
|
|
|
|
| paid - up capital |
|
4 |
100,000,000 |
1,000,000.00 |
|
| Reserves |
|
5 |
287,800,000 |
212,960,000 |
|
| Un-appropriated
profit |
|
|
56,777 |
38,810 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
387,856,777 |
312,998,810 |
|
| LONG
TERM LIABILITIES |
|
|
|
| Long term loan |
|
6 |
40,000,000 |
-- |
|
| Obligation
under finance lease |
|
7 |
11,249,428 |
14,479,907 |
|
|
|
|
------------------ |
------------------ |
|
|
|
51,249,428 |
14,479,907 |
|
|
|
|
|
| DEFERRED
LIABILITIES |
|
|
|
| Gratuity |
|
8 |
6,532,658 |
5,219,666 |
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Bank
finance under mark-up arrangements |
9 |
81,000,000 |
105,000,000 |
|
| Current
maturity of long term liabilities |
|
27,972,858 |
6,756,688 |
|
| Creditors,
accruals and other liabilities |
10 |
68,261,600 |
38,302,985 |
|
| Provision
for taxation |
|
|
12,307,422 |
5,271,157 |
|
| Proposed
dividend |
|
|
53,000,000 |
22,500,000 |
|
|
|
|
------------------ |
------------------ |
|
|
|
242,541,880 |
177,830,830 |
|
| CONTINGENT
LIABILITIES AND |
|
| CAPITAL
COMMITMENTS |
|
11 |
-- |
-- |
|
|
------------------ |
------------------ |
|
|
|
688,180,743 |
510,529,213 |
|
|
|
========== |
========== |
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
| PROPERTY
AND ASSETS |
|
|
|
|
|
| TANGIBLE
ASSETS |
|
|
|
| Operating
fixed assets |
|
12 |
153,270,031 |
131,412,762 |
|
| Capital
work-in-progress |
|
13 |
82,109,941 |
3,759,291 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
235,379,972 |
135,172,053 |
|
|
|
| LONG
TERM INVESTMENT |
|
14 |
11,891,600 |
11,891,600 |
|
| LONG
TERM LOANS |
|
15 |
1,513,836 |
244,550 |
|
| LONG
TERM DEPOSITS |
|
|
1,571,615 |
1,009,815 |
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores,
spares & loose tools |
|
16 |
5,012,874 |
6,591,576 |
|
| Stocks in trade |
|
17 |
35,034,459 |
105,504,980 |
|
| Trade debtors |
|
18 |
222,294,742 |
118,971,091 |
|
| Loans
and advances |
|
19 |
34,055,054 |
49,115,116 |
|
| Deposits,
prepayments and |
|
|
|
| other
receivables |
|
20 |
4,806,403 |
3,491,899 |
|
| Cash
and bank balances |
|
21 |
136,620,188 |
78,536,533 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
437,823,720 |
362,211,195 |
|
|
|
|
------------------ |
------------------ |
|
|
688,180,743 |
510,529,213 |
|
|
|
========== |
========== |
|
|
|
MOHAMMAD SHARIF |
|
|
MOHAMMAD SALIM |
|
|
Chief Executive |
|
|
Director |
|
|
| KARACHI:
March 02, 2001. |
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE |
|
| YEAR
ENDED SEPTEMBER 30, 2000 |
|
|
|
NOTE |
2000 |
1999 |
|
|
|
RUPEES |
RUPEES |
|
|
|
|
| Sales (Net) |
|
|
22 |
714,287,603 |
622,673,454 |
|
| Cost of Sales |
|
|
23 |
517,753,991 |
501,588,652 |
|
|
|
|
------------------ |
------------------ |
|
| Gross profit |
|
|
