| Gulshan Spinning Mills 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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| Directors'
Report |
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| Auditors' Report |
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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 Account |
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| Schedule
of Fixed Assets |
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| Pattern
of Share Holding |
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| BOARD
OF DIRECTORS |
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| CHAIRMAN |
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Mr. Abdul Shakoor |
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| CHIEF
EXECUTIVE |
Mr. Naseer Ahmed |
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| DIRECTORS |
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Mr. Tanveer Ahmed |
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Mr. Mohammad Abdullah |
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Mr. N. R. Siddiqui |
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Mr. Mohammad Younus |
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Mr. Riaz Ahmed |
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| SECRETARY |
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Mr. Zamir O. Siddiqui |
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| AUDITORS |
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M/ s. Mushtaq &
Company |
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Chartered Accountants, |
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Karachi. |
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| BANKERS |
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Messrs: Habib Bank
Limited |
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| REGISTERED
OFFICE |
2nd Floor, Finlay House, |
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I.I. Chundrigar Road, |
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Karachi. |
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| MILLS |
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| UNIT I |
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Tibba Sultanpur |
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Distt. Vehari |
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| UNIT 1I |
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Jumber Khurd |
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Tehsil Chunnian |
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Distt. Kasur |
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| UNIT III |
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Warburton |
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Distt. Shaikhupura |
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| NOTICE
OF THE ANNUAL GENERAL MEETING |
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| Notice
is hereby given that the Annual General Meeting of the Shareholders of
Gulshan Spinning Mills |
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| Ltd.
will be held on 28th Mar' 2001 at 11 a.m. at top Floor of Finlay House, I. I.
Chundrigar Road, Karachi |
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| to
transact the following business:- |
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| 1.
to confirm the minutes of the preceding meeting of the share holders. |
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| 2.
to receive consider and adopt the audited accounts of the Company for the
year ended 30.9.2000 |
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| together
with the Directors and Auditors report thereon. |
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| 3.
to approve the dividend as recommended by the Directors of the Company. |
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| 4.
to appoint the Auditors of the company for the year ending 30.9.2001 and to
fix their remuneration. |
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| The
present Auditors M/s. Mushtaq & Co. Chartered Accountants being eligible
offered themselves |
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| for
reappointment. |
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| 5.
to elect seven (7) Directors in accordance with the provisions of the
Companies Ordinance 1984 |
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| for
a period of 3 years in place of retiring Directors namely: |
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| 1.
Mr. Abdul Shakoor 2. Mr. Naseer Ahmed 3. Mr. Tanveer Ahmed |
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| 4.
Mr. Mohammad Abdullah. 5. Mr. N. R. Siddiqi 6. Mr. Mohammad Yunus |
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| 7.
Mr. Riaz Ahmed |
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| All
retiring Directors are eligible to offer themselves for re-election as
Directors of the company. |
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| The
Board of Directors in their meeting have fixed the number of directors to be
elected as |
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| seven (7). |
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| 6.
Special Business: |
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| To
amend article (56) of the Article of Association of the Company and to insert
in its place the |
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| following
with or without any amendment:- |
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| (56)
The remuneration paid or to be paid to a Director for performing extra
services, including of |
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| the
Office of Chairman and the remuneration paid or to be paid to any Director
for attending the |
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| meeting
of the Directors or a Committee of Directors shall from time to time be
determined and / |
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| or
confirmed by the Directors. |
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| 7.
Any other matter with the permission of the Chairman. |
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| Karachi: |
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By order of the Board |
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| 6th March 2001 |
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|
Company Secretary |
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| Notes: |
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| Statement
under section 160(1) {B) of the Companies Ordinance 1984: |
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| The
amendment in the Article of Association of the Company is solicited to make
it in conformity |
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| with
the Article provided for the appointment of the Chief executive of the
Company. The Directors |
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| have
no special interest in it. |
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| 1.
Register of the members of the Company will remain closed from 27.3.2001 to
2.4.2001 (both days |
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| inclusive).
Dividend if approved will be paid to such members only whose names appear in
the |
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| register
of the company as at the close of 26.3.2001. |
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| 2.
Proxies in order to be effective must be received duly completed in all
respects by the company at |
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| the
registered office not less than 48 hours before the time for holding the
meeting.. |
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| 3.
Any individual beneficial owner of CDC, entitled to vote at this meeting must
bring his/her original |
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| NIC
with him/her to prove his/her identity, and in case of proxy, a copy of
share-holder's attested |
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| NIC
must be attached with the proxy form. Representatives of corporate members
should bring |
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| the
usual documents required for such purpose. |
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| 4.
Every candidate who seeks to contest the election whether he is a retiring
Director or otherwise |
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| shall
file with the Company at least {14) days before the election a notice of his
intention to offer |
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| himself
for election as a Director. |
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| 5.
Shareholders are requested to notify us immediately for any change in their
registered address |
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| currently
available with the company. |
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| Directors
Report to the Share-Holders |
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| Dear
Shareholders, |
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| Assalam
-o-Alaikum, |
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| We
have the pleasure to present before you the Annual results of your Company
for the year ended |
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| 30-09-2000. |
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| OVERVIEW: |
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| The
spinning industry faced in the last many years the shortage of cotton crop
with its soaring prices in |
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| the
domestic market. As a result of bumper cotton crop coupled with the
Government's open market |
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| price
policy for cotton trade this year it was available in the home market at the
international prices. |
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| Therefore
the results of the spinning industry as a whole are quite promising this
year. Net sale for the |
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| year
have increased from Rs. 1,325 Million to Rs. 1,373 Million. But you will note
with satisfaction that |
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| our
export sales have substantially increased from Rs.834 Million to Rs. 1,085
Million that is from 60% to |
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| 73%
as compared to previous year, which speaks of the quality of your products
& our cordial business |
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| relations
in the international market. |
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| Following
are the key number:- |
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Rupees in |
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|
Million |
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| Sales Net |
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1,373.42 |
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| Gross Profit |
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|
319.16 |
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| Profit
for the year before diminution and other charges |
|
160.58 |
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| Diminution
in value of shares and other charges |
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40.14 |
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| Profit
for the year after Tax |
|
99.84 |
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| Un-appropriated
profit brought forward. |
|
54.92 |
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| Profit
available for appropriation |
|
154.76 |
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| APPROPRIATION: |
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| Proposed
Cash Dividend @ 32.5% |
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41.11 |
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| Un-appropriated
profit carried forward. |
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113.65 |
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| In
the preceding years your Directors did not provide for diminution in the
value of investments made in |
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| shares,
in the hope that the stock market may improve as a result of Government's
efforts for economic |
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| revival.
However, as the signs of any improvement, are quite uncertain therefore, we
have as a policy |
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| now
decided to provide diminution. The policy would be adopted in future
reporting also. It is quite satis- |
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| fying
that inspite of this provision, your Directors have recommended a cash
dividend of 32.5% for the |
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| year
ending 30-09-2000 for your approval. |
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| Exchange
risk fee has been paid to avoid exchange losses as our currency is
fluctuating very rapidly. |
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| Exchange
loss is an allowable capital expenditure hence any expenditure incurred to
avoid this loss |
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| should
also be treated accordingly. Without the exchange booking the loss of
exchange fluctuation would |
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| have
been much more. Hence we have capitalized exchange risk fee in the respective
assets accounts. |
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| FUTURE
OUTLOOK: |
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| As
we have seen from the current year's performance, the success of the textile
industry primarily |
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| depend
upon the availability of raw cotton on reasonable rates. For the year
2000-2001, the prices of raw |
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| cotton
have increased substantially as compared to the year under review without any
corresponding |
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| increase
in the selling price of yarn. Facility of export refinance has been
withdrawn. The rates of mark- |
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| up
on borrowing for the purchase of cotton are also high. Under such adverse
scenario, your Directors are |
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| trying
their level best to keep the cost increase at a minimum possible level so
that the erosion in the |
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| profitability
is controlled. |
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| BALANCING
MODERNIZATION AND REPLACEMENT: |
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| Home
and foreign markets are now very quality conscious. Due to tough competition
we have to main- |
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| tain
the price structure to the lowest. To achieve it we have an investment Plan
of over Rs. 150 Million |
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| under
BMR, partially implemented during the year under review and partially during
next year. After full |
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| implementation
of this plan your company will be able to face competition in the foreign
markets for |
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| hopefully
achieving better results. |
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| BREAK-UP
VALUE AND EARNING PER SHARE: |
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| The
break-up value of your shares on 30-09-2000 was Rs. 40.48 as compared to
Rs.35.84 of last year. The |
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| earning
per share of the year under review was Rs.7.89 (Before diminution of share
value Rs. 10.56 ) as |
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| compared
to Rs. 1.36 of the last year. |
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| PATTERN
OF SHARE HOLDING: |
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| Statement
showing pattern of share holding as on 30-09-2000 is enclosed. |
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| APPOINTMENT
OF AUDITORS: |
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| The
auditors of the Company M/s. Mushtaq and Company Chartered Accountants retire
and being eli- |
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| gible
offer themselves for reappointment as the Auditors of the Company for
2000-2001. |
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| THANKS: |
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| The
Board place on record for the dedicated services rendered by the staff /
workers of the Company. |
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| Thanks
are also extended for timely assistance rendered by the financial
institutions and all others. |
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BY ORDER OF THE BOARD |
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| Karachi |
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|
NASEER AHMED |
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| 5th March, 2001 |
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|
CHIEF EXECUTIVE |
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| AUDITORS'
REPORT TO THE MEMBERS |
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| We
have audited the annexed balance sheet of Gulshan Spinning Mills Limited as
at September 30, 2000 |
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| and
the related profit and loss account, cash flow statement and statement of
changes in equity together |
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| with
the notes forming part thereof, for the year then ended and we state that we
have obtained all the |
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| 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 the company's management to establish and maintain a
system of internal |
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| control,
and prepare and present the above said statements in conformity with the
approved accounting |
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| standards
and the requirements of the Companies Ordinance, 1984. Our responsibility is
to express an |
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| opinion
on these statements based on our audit. |
|
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| We
conducted our audit in accordance with the auditing standards as applicable
in Pakistan. These stan- |
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| dards
require that we plan and perform the audit to obtain reasonable assurance
about whether the |
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| above
said statements are free of any material misstatement. An audit includes
examining on a test |
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| basis,
evidence supporting the amounts and disclosures in the above said statements.
An audit also |
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| 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 Compa- |
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| nies
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 been |
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| drawn
up in conformity with the Companies Ordinance, 1984, and are in agreement
with |
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| 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 |
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| were
in accordance with the objects of the company. |
|
|
| (c)
except for the effect, on the financial statement, of the matters as
disclosed in Note No. 13.1 re- |
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| garding
capitalization of exchange risk 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 con- |
|
| form
with approved accounting standards as applicable in Pakistan, and, give the
information |
|
| required
by the companies Ordinance, 1984, in the manner so required and respectively
give a |
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| true
and fair 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)
Without further qualifying our opinion we draw attention to note 2.12 (a) in
the financial state- |
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| ments
regarding reclassification of direct expenses. |
|
|
| (e)
in our opinion Zakat deductible at source under the Zakat and Usher
Ordinance, 1980 (XVIII of |
|
| 1980),
was deducted by the company and deposited in the Central Zakat Fund
established under |
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| section
7 of that Ordinance. |
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| KARACHI: |
|
MUSHTAQ & COMPANY |
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| 5th March, 2001 |
|
CHARTERED ACCOUNTANTS |
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| BALANCE
SHEET AS AT SEPTEMBER 30, 2000 |
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|
2000 |
1999 |
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|
Note |
Rupees |
Rupees |
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| CAPITAL
AND LIABILITIES |
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| Authorized
Capital: |
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| 15,000,000
ordinary shares of |
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| Rs. 10/- each |
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|
150,000,000 |
150,000,000 |
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|
========== |
========== |
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| ISSUED,
SUBSCRIBED AND PAID UP CAPITAL |
3 |
126,500,000 |
126,500,000 |
|
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| RESERVES |
|
|
|
| General reserve |
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|
206,000,000 |
206,000,000 |
|
| Share
premium account |
|
|
66,000,000 |
66,000,000 |
|
| Un-appropriated
profit |
|
|
113,653,790 |
54,920,222 |
|
|
------------------ |
------------------ |
|
|
|
385,653,790 |
326,920,222 |
|
|
|
|
------------------ |
------------------ |
|
|
| Total
capital and reserves |
|
512,153,790 |
453,420,222 |
|
|
| LONG
TERM LOAN |
|
4 |
-- |
62,685,314 |
|
|
| REDEEMABLE
CAPITAL |
|
5 |
50,500,000 |
-- |
|
|
| DUE
TO ASSOCIATED UNDERTAKING |
6 |
6,000,000 |
9,800,000 |
|
|
|
|
| LIABILITIES
AGAINST ASSETS SUBJECT |
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| TO
FINANCE LEASE |
|
7 |
98,912,783 |
33,677,868 |
|
| DEFERRED
LIABILITIES |
|
8 |
21,788,887 |
18,387,651 |
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Short
term bank borrowings |
|
9 |
664,039,749 |
718,761,233 |
|
| Current
maturity of long term liabilities |
10 |
56,719,984 |
49,469,506 |
|
| Creditors,
accrued and other liabilities |
11 |
84,920,113 |
104,692,482 |
|
| Proposed
Dividend |
|
|
41,112,500 |
12,650,000 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
846,792,346 |
885,573,221 |
|
| CONTINGENCIES
AND COMMITMENTS |
12 |
|
|
------------------ |
------------------ |
|
|
|
|
1,536,147,806 |
1,463,544,276 |
|
|
|
|
========== |
========== |
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
NASEER AHMAD |
|
TANVEER AHMED |
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
| PROPERTY
AND ASSETS |
|
|
| FIXED
ASSETS - TANGIBLE |
|
| Operating
Fixed Assets (At cost |
|
|
|
| less
depreciation) |
|
13 |
716,409,779 |
615,006,897 |
|
|
|
|
|
| CAPITAL
WORK IN PROGRESS |
14 |
5,790,016 |
2,058,031 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
722,199,795 |
617,064,928 |
|
| LONG
TERM DEPOSITS |
|
|
12,672,086 |
7,325,954 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stock and stores |
|
15 |
458,651,420 |
379,450,252 |
|
| Trade debtors |
|
16 |
128,830,141 |
181,977,607 |
|
| Loans,
Advances, Deposits, Prepayments |
|
|
| and
Other Receivables |
|
17 |
82,292,923 |
116,414,684 |
|
| Sales
Tax Receivable |
|
|
6,463,042 |
29,876,160 |
|
| Short
Term Investments |
|
18 |
75,567,108 |
101,697,095 |
|
| Margin
Deposits with Banks |
|
19 |
3,862,030 |
6,298,830 |
|
| Cash
and Bank Balances |
|
20 |
45,609,261 |
23,438,766 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
801,275,925 |
839,153,394 |
|
|
|
------------------ |
------------------ |
|
|
|
1,536,147,806 |
1,463,544,276 |
|
|
|
========== |
========== |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 2000 |
|
|
|
|
2000 |
1999 |
|
|
Note |
Rupees |
Rupees |
|
|
| Sales - Net |
|
21 |
1,373,423,236 |
1,325,608,095 |
|
| Less:
Cost of Sales |
|
22 |
1,054,262,741 |
1,177,299,213 |
|
|
|
|
------------------ |
------------------ |
|
| Gross Profit |
|
|
319,160,495 |
148,308,882 |
|
|
| OPERATING
EXPENSES |
|
|
|
| Administrative |
|
23 |
25,922,621 |
21,908,877 |
|
| Selling
and Distribution . |
|
24 |
1,064,957 |
783,637 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
26,987,578 |
22,692,514 |
|
|
|
|
------------------ |
------------------ |
|
| OPERATING
PROFIT |
|
|
292,172,917 |
125,616,368 |
|
| Other Income |
|
25 |
669,757 |
916,765 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
292,842,674 |
126,533,133 |
|
| Financial
Charges |
|
26 |
132,254,697 |
100,028,916 |
|
|
|
|
------------------ |
------------------ |
|
| Net
profit for the year before other charges |
|
160,587,977 |
26,504,217 |
|
| Diminution
in value of shares |
|
|
33,804,337 |
-- |
|
| Workers
Profit Participation Fund |
|
|
6,339,182 |
132,521 |
|
|
|
|
------------------ |
------------------ |
|
| Net
Profit for the year before taxation |
|
120,444,458 |
25,179,006 |
|
|
|
|
|
|
| TAXATION |
|
|
|
| Current year |
|
27 |
(20,598,390) |
(8,987,893) |
|
| Prior year |
|
|
-- |
239,825 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(20,598,390) |
(8,748,068) |
|
|
|
|
------------------ |
------------------ |
|
| Net
profit for the year after taxation |
|
99,846,068 |
16,430,938 |
|
| Un-appropriated
Profit brought forward |
|
54,920,222 |
51,139,284 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
available for appropriation |
|
|
154,766,290 |
67,570,222 |
|
|
|
|
|
|
| Appropriation: |
|
|
|
| Proposed
Dividend @ 32.5% (1999: @ 10%} |
|
41,112,500 |
12,650,000 |
|
|
|
|
------------------ |
------------------ |
|
| Unappropriated
profit carried to balance sheet |
|
113,653,790 |
54,920,222 |
|
|
|
|
========== |
========== |
|
| Earning
per share |
|
28 |
7.89 |
1.30 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
NASEER AHMAD |
|
TANVEER AHMED |
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 2000 |
|
|
|
|
2000 |
1999 |
|
|
Note |
Rupees |
Rupees |
|
|
| A.
CASH FLOW FROM OPERATING ACTIVITIES |
|
| Net
Profit before taxation |
|
120,444,458 |
25,179,006 |
|
|
|
|
|
| Adjustments
for: |
|
|
|
| Depreciation |
|
|
58,860,321 |
55,657,898 |
|
| Provision
gratuity (net} |
|
3,401,236 |
2,749,497 |
|
| Financial
expenses |
|
132,254,697 |
100,028,916 |
|
| Provision
for W.P.P.F & Interest |
|
6,339,182 |
1,352,345 |
|
| Profit
on sale of fixed assets |
|
(69,035) |
(116,285) |
|
| Dividend
income |
|
(600,722) |
(800,481) |
|
| Provision
for diminution in the value of shares |
|
33,804,337 |
-- |
|
|
------------------ |
------------------ |
|
|
|
|
233,990,016 |
158,871,891 |
|
| Cash
flow from operation before working capital changes |
354,434,474 |
184,050,897 |
|
| Movement
in working capital |
|
------------------ |
------------------ |
|
| (Increase)
/ decrease in Current assets: |
|
|
| Stocks
and stores |
|
(79,201,168) |
(72,903,288) |
|
| Trade debtors |
|
|
53,147,466 |
39,641,488 |
|
| Advances,
deposits, prepayments and other receivables |
33,640,357 |
(13,504,826) |
|
| Margin
deposits with banks |
|
2,436,800 |
(4,705,524) |
|
|
|
------------------ |
------------------ |
|
|
|
10,023,455 |
(51,472,150) |
|
|
| Increase
/ (decrease) in Current liabilities: |
|
| Creditors,
accrued and other liabilities |
|
(31,615,837) |
(47,763,929) |
|
|
|
------------------ |
------------------ |
|
| Cash
generated from operations |
|
332,842,092 |
84,814,818 |
|
|
| Payments
/ Receipts for: |
|
| Interest paid |
|
(159,782,051) |
(120,120,794) |
|
| Interest received |
|
34,537,119 |
8,518,004 |
|
| Tax
(paid) Refund |
|
3,134,954 |
(16,912,777) |
|
| W.P.P.F. paid |
|
(1,352,345) |
(1,208,873) |
|
|
|
------------------ |
------------------ |
|
|
|
(123,462,323) |
(129,724,440) |
|
|
|
------------------ |
------------------ |
|
| Net
cash from operating activities |
|
209,379,769 |
(44,909,622) |
|
|
|
|
|
|
|
|
|
