| International Industries Limited |
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| Annual
Report 2000 |
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| Contents |
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| Company
Information |
|
| Milestones |
|
|
| Notice
of Meeting |
|
| Chairman's
Review |
|
| Ten
Years at a Glance |
|
| Report
of the Directors |
|
| Auditors'
Report |
|
| Balance Sheet |
|
|
| Profit
& Loss Account |
|
| Statement
of Changes in Financial Position |
|
| Statement
of Changes in Equity |
|
| Notes
to the Accounts |
|
| Pattern
of Shareholdings |
|
|
|
| Company
Information |
|
|
| Chairman |
|
J.R. Rahim |
|
| Directors |
|
K.M.M. Shah |
|
|
Mustapha A. Chinoy |
|
|
Kamal A. Chinoy |
|
|
Zaka U. Khan |
|
|
M. Ateequllah |
|
|
Istaqbal Mehdi |
Nominee Director of NIT |
|
|
Kemal Shoaib |
|
Nominee Director of NIT |
|
|
M. Afzalullah Siddiqui |
Nominee Director of NIT |
|
|
A. W. Zuberi |
|
Nominee Director of NIT |
|
| Managing
Director & |
|
| Chief
Executive |
Towfiq H. Chinoy |
|
|
| Secretary |
|
Mohamed H. Walli |
|
| Auditors |
|
Ford, Rhodes, Robson,
Morrow |
|
| Bankers |
|
Standard Chartered Bank |
|
|
|
ANZ Grindlays Bank
Limited |
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|
American Express Bank
Ltd. |
|
|
Hongkong & Shanghai
Banking Corporation |
|
|
Muslim Commercial Bank
Ltd. |
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|
Bank A1-Habib Ltd. |
|
|
Soneri Bank Ltd. |
|
|
Societe Generale |
|
|
Oman International Bank
S.A.O.G. |
|
|
Credit Agricole Indosuez |
|
|
Habib Bank Ltd. |
|
|
| Legal
Advisors |
J.H. Rahimtoola &
Company |
|
|
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| Registered |
|
Hakimsons Building, 19
West Wharf Road |
|
| Office |
|
P.O. Box 4775,
Karachi-74000 |
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Telephone Nos. 2313508-14
Fax: 2314260 |
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|
E-mail:
inquiries@iil.com.pk |
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|
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| Branch |
|
Salam Chambers, Link
Mcleod Road |
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| Office |
|
Lahore-54000 |
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|
|
Telephone Nos: 7229752-55
Fax: 7220384 |
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|
|
E-mail: lahore@iil.com.pk |
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|
|
| Factory |
|
LX 15-16, Landhi
Industrial Area |
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|
Karachi-75160 |
|
|
Telephone Nos: 5080453-55
Fax: 5082403 |
|
|
E-mail:
factory@iil.com.pk |
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|
|
| Milestones |
|
|
| The
Company through the Years |
|
|
| Development
and Growth |
|
|
| 1948 |
Established as Sultan
Chinoy and Company |
|
|
|
| 1949 |
Incorporated as
International Industries Limited |
|
|
Sponsored Pak Chemicals
Limited, Pakistan. |
|
|
|
| 1953 |
Sponsored Pakistan Cables
Limited, Karachi as a Joint |
|
|
Venture with BICC, UK |
|
|
|
| 1965 |
Ventured into
manufacturing of high quality Electric |
|
|
Resistance Welded Steel
Pipe |
|
|
|
| 1983 |
Launched Galvanized Pipe,
"IIL GI PIPE" is born |
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| 1984 |
Converted to a Public
Limited Company |
|
| 1990 |
Set tip the country's
first Cold Rolling Mill in the |
|
|
private sector |
|
|
|
| 1992 |
Became a
"BILLION" rupee company |
|
|
|
| 1995 |
Entered the international
market with export of |
|
|
Galvanized Pipes |
|
|
|
| 1997 |
Certification tinder ISO
9001: 1994 |
|
|
|
| 1998 |
Commemorated 50 years and
awarded international |
|
|
credit rating by Duff
& Phelps |
|
|
| 1999 |
Achieved a turnover of
Rs. 2.0 billion |
|
|
| 2000 |
Certification to ISO/DIS
9001: 2000, ISO 14001: 1996, Winner of |
|
|
Export Merit Trophy of
FPCCI for Export of Non-Traditional Goods. |
|
|
|
| Notice
of Meeting |
|
|
| Notice
is hereby given to the Members that the 52nd Annual General |
|
| Meeting
of the Company will be held on Thursday November 2, 2000 at |
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| 11.00
a.m. at the "Raffia Choudri Memorial Center", Sidco Avenue Center, |
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| 264-R.A.
Lines, Karachi to transact the following business: |
|
|
| Ordinary
Business |
|
| 1.
To receive, consider and adopt the Audited Accounts of the Company |
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| for
the year ended June 30, 2000 and the Reports of the Directors and |
|
| Auditors
thereon. |
|
|
| 2.
To approve the issue of Bonus Shares in the ratio of 1 share for every |
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| 10
shares held. |
|
|
| 3.
To consider and approve payment of 22.5% Final Cash Dividend making |
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| a
total of 37.5% for the financial year ended June 30, 2000 as |
|
| recommended
by the Board of Directors. |
|
|
| 4.
To appoint Auditors for the year 2000-2001 and fix their remuneration. |
|
|
| 5.
To transact with' the permission of the Chair any other business which |
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| may
be transacted at an Annual General Meeting. |
|
|
| Special
Business |
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| 6.
To consider and approve the increase in authorised capital of the |
|
| Company
by Rs.100 million to Rs.250 million. |
|
|
| A
Statement under Section 160 of the Companies Ordinance 1984, pertaining |
|
| to
the Special Business, is being sent to the Members with this Notice. |
|
|
|
By Order of the Board |
|
|
|
Mohamed H. Walli |
|
| Karachi:
October 10, 2000 |
|
Company Secretary |
|
|
| Notes: |
|
|
| 1.
The Share Transfer Books of the Company shall remain closed from October 19,
2000 to |
|
| November
2, 2000 (both days inclusive). Transfers received in order at the Registered
Office of |
|
| the
Company by close of business on October 18, 2000 will be treated in time to
determine the |
|
| entitlement
of 10%, Bonus and 22.5% dividend recommended by the Board of Directors. |
|
|
| 2.
A Member entitled to attend, speak and vote at the General Meeting is
entitled to appoint |
|
| another
member as his/her proxy to attend, speak and vote on his/her behalf. |
|
|
| 3.
Instrument appointing proxy and the power of attorney or other authority
under which it is signed |
|
| or
a notarially certified copy of the power or authority must be deposited at
the registered office of |
|
| the
Company at least 48 hours before the time of the meeting. Form of proxy is
enclosed. |
|
|
| 4.
Members are requested to submit declaration for zakat on the required format
and to advise |
|
| change
in address, if any. |
|
|
| Item 2 |
|
| "RESOLVED
THAT |
|
|
| i)
a stun of Rs. 12,885,880/= out (if the Company's Revenue Reserve be
capitalised and the |
|
| Company
do issue 1,288,588 fully paid ordinary shares of Rs. l 0/= each as bonus
shares to |
|
| shareholders
whose names stand in the Register of Members on October 19, 2000 in
proportion of |
|
| 10%
of their holding or I share for every 10 shares held by them, |
|
|
| ii)
that all fractions of bonus shares be consolidated and sold in the stock
market and the proceeds be |
|
| distributed
among the members in proportion to their entitlement, |
|
|
| iii)
that the bonus shares upon issue shall rank pari passu in all respects with
the existing shares of the |
|
| Company and |
|
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| iv)
that Directors do give effect to and implement the above resolution." |
|
|
| Statement
U/S 160 of the Companies Ordinance 1984 |
|
|
| This
Statement sets out the material facts concerning "Special Business"
to be transacted at the |
|
| Fifty
Second Annual General Meeting of the Company to be held on November 2, 2000. |
|
|
| The
approval of the Members of the Company will be sought for: |
|
|
| Including
the recommended increase in existing paid-up capital (Rs. 128,858,840/=) it
will be |
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| increased
as Rs.141,744,720/= as against the authorised capital of Rs.150 million. |
|
|
| Therefore
in view of the above position and the size and nature of business of the
Company, it |
|
| has
become imperative to enhance the Authorised Capital from Rs. 150 million to
Rs.250 |
|
| million
to meet any future requirements of the Company to further increase its
capital. |
|
|
| The
Directors would be personally interested to the extent of their respective
shareholding in |
|
| the
Company in any future issue of Capital as a result of this proposed increase
in Authorised |
|
| Capital. |
|
|
| The
members are accordingly requested to pass with or without modification, the
following |
|
| resolution
as an ORDINARY RESOLUTION: |
|
|
| "RESOLVED
THAT Authorised Capital of the Company of Rs. ] 50,000,000/= (Rupees One |
|
| Hundred
Fifty Million) divided into 1,500,000 shares of Rs.10/= each be increased to |
|
| Rs.250,000,000/=
(Rupees Two Hundred Fifty Million) divided into 2,500,000 shares of Rs.10/= |
|
| each
and entries accordingly be made in Clause 5 of the Memorandum of
Association." |
|
|
| It
is with pleasure that I present to you on behalf of the Board of Directors
the 52nd |
|
| Annual
Report for the year ended June 30, 2000. |
|
|
| BOARD
OF DIRECTORS |
|
|
| NIT
nominee Directors Messrs Adnan Meraj, Sibghatullah and Samir Ahmed resigned |
|
| from
the Board and were replaced by Mr. Istaqbal Mehdi, Mr. Kemal Shoaib and Mr.
A.W. |
|
| Zuberi
also nominated by the National Investment Trust. |
|
|
| The
Board thanks the outgoing Directors for their contribution to the proceedings
and |
|
| welcomes
the new Directors and looks forward to receiving the benefit of their wisdom
and |
|
| experience. |
|
|
| OPERATIONS |
|
|
| By
the grace of Allah, during the year under review all plants operated
satisfactorily with |
|
| production
of total saleable product being 27% higher than the previous year.
Refurbishing |
|
| of
the tube mills, begun in the last financial year was completed. Output of
these tube mills |
|
| increased
by 25% over the previous year. Major repair work of the pickling and
annealing |
|
| plants
are being undertaken. On completion output and quality of the Cold Rolling
Mill |
|
| should
improve significantly. |
|
|
| SALES |
|
|
| During
the previous Financial Year the company began to supply its quality product
at low |
|
| margins.
Continued successful implementation of this strategy resulted in an 8%
increase |
|
| in
domestic sales volume. Export sales volume grew three and half times given a |
|
| correction
in prices and entrance into new markets in Africa, Europe and South America. |
|
|
| FINANCIAL
RESULTS |
|
|
| The
total turnover of the Company at Rs.2.6 billion was 18% higher than the
previous |
|
| year.
Gross margins improved to 18.1% (Financial Year 1999: 16.2%) resulting in
gross |
|
| profit
of Rs.403 million. An amount of Rs.7.2 million charged by the Custom
Authorities |
|
| in
1996 as pre shipment inspection fee was refunded after a considerable effort
and is |
|
| reflected
as other income. Administrative and Selling expenses are abnormally high on |
|
| account
of compliance to IAS 19 becoming mandatory, depreciation, repair of office |
|
| premises
and legal fees. |
|
|
| In
Financial Year 1999 there was a change in credit terms on purchase of raw
materials. |
|
| For
the most part of the year we had to buy virtually all raw materials on cash
versus 90 |
|
| days
credit available previously. There has been a consequent increase in
borrowings and |
|
| related
financial expenses. |
|
|
| Provision
for tax includes: (i) Rs.10 million on account of deferred tax in order to
comply |
|
| with
the requirements of revised IAS 12 and Rs.9 million on account of tax on
disallowed |
|
| expenses.
Your Company intends to contest this amount at the appropriate levels. |
|
|
| Profit
after tax increased by 84% over the prior financial year ended to Rs.83
million. |
|
|
| FUTURE
PROSPECTS |
|
|
| Lower
margins are inevitable given that: (i) costs are rising rapidly and with the
recent |
|
| hike
in the price of oil the situation will be further aggravated, (ii) the
continuously |
|
| depreciating
rupee is making imported raw material and spare parts more expensive and |
|
| (iii)
the inflexibility of not being able to increase selling prices as a result of
competitive |
|
| pressures. |
|
|
| The
domestic market is not likely to grow significantly as a result of which your
Company's |
|
| reliance
on exports will increase. The new tube mill should Inshallah be commissioned
by |
|
| end
October. This will provide added capacity and an extended range of products
both of |
|
| which
will assist in enhancing exports. However, your Company like all other
exporters in |
|
| the
country will need support of the Government. |
|
|
| Installation
of environmental management systems is fast becoming mandatory. In your |
|
| Company
these are already in place with ISO 14001 certification being obtained in
July |
|
| of this year. |
|
|
| As
honest taxpayers, we would like to see the Government succeed in its
endeavours to |
|
| expand
the tax net and document the economy. |
|
|
| DIVIDENDS |
|
|
| In
view of the higher profits, the Board is pleased to recommend a final cash
dividend of |
|
| 22.5%,
making a total cash dividend of 37.5% for the year. In addition, the Board is |
|
| recommending
issue of 10% bonus shares. |
|
|
| STAFF
& ACKNOWLEDGEMENTS |
|
|
| The
Company's relationship with all its employees remained cordial. Relations
with the |
|
| Employees'
Union remain amicable; negotiations were concluded in the spirit of |
|
| understanding. |
|
|
| In
Finality, I take this opportunity on behalf of the Board to acknowledge and
appreciate |
|
| the
hard work of our employees - the Company is proud of and values its zealous
and |
|
| dedicated
employees, the continued support of our bankers and the loyalty of our |
|
| customers.
We assure you of our continued determination to provide quality products at |
|
| competitive
prices. |
|
|
|
J.R. RAHIM |
|
|
|
| Ten
Years at a Glance |
|
|
2000 |
1999 |
1998 |
1997 |
1996 |
1995 |
1994 |
1993 |
1992 |
1991 |
|
|
|
(Rs. 000's) |
|
| Assets
Employed |
|
|
| Fixed
Assets (Owned &Leased) |
364,095 |
300,379 |
302,659 |
309,390 |
234,304 |
245,894 |
257,842 |
268,421 |
260,205 |
281,343 |
| Capital
Work in Progress |
|
165,667 |
2,926 |
2,045 |
2,567 |
8,618 |
1,929 |
7,373 |
3,388 |
9,410 |
3,573 |
| Long
term deposits |
|
2,304 |
2,300 |
2,073 |
1,940 |
3,003 |
3,586 |
3,320 |
4,252 |
4,480 |
4,459 |
| Net
Current Assets / (Liabilities) |
117,595 |
17,866 |
14,475 |
41,716 |
66,145 |
22,583 |
33,900 |
16,660 |
(7,613) |
(35,582) |
|
----------- |
----------- |
----------- |
----------- |
----------- |
----------- |
----------- |
----------- |
----------- |
----------- |
| Total
Assets Employed |
|
649,661 |
323,471 |
321,252 |
355,613 |
312,070 |
273,992 |
302,435 |
292,721 |
266,482 |
253,793 |
|
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
| Financed by |
|
|
| Shareholders'
Equity (includes |
|
|
| revaluation
of land) |
|
348,590 |
303,471 |
303,752 |
281,547 |
216,270 |
208,432 |
197,778 |
151,999 |
133,070 |
120,388 |
| Long
term & deferred liabilities |
301,071 |
20,000 |
17,500 |
74,066 |
95,800 |
65,560 |
104,657 |
140,722 |
133,412 |
133,405 |
|
649,661 |
323,471 |
321,252 |
355,613 |
312,070 |
273,992 |
302,435 |
292,721 |
266,482 |
253,793 |
| Sales
& Profits |
|
|
| Sales |
|
2,222,004 |
1,906,957 |
1,773,157 |
1,613,998 |
1,702,917 |
1,286,339 |
1,328,018 |
1,098,387 |
919,449 |
821,935 |
| Gross Profit |
|
402,554 |
309,674 |
275,646 |
274,278 |
253,799 |
168,943 |
155,709 |
150,341 |
121,274 |
77,316 |
| Profit
before interest & taxation |
247,193 |
170,579 |
160,468 |
180,496 |
174,707 |
115,770 |
110,374 |
109,950 |
89,374 |
44,905 |
| Profit/(Loss)
before taxation |
|
158,188 |
115,644 |
94.38 |
105,386 |
90,498 |
29,983 |
18,397 |
18,929 |
9,167 |
(21,897) |
| Profit
/ (Loss) After taxation |
|
82,814 |
44,820 |
64,084 |
78,886 |
36,831 |
29,983 |
18,397 |
18,929 |
12,682 |
(26,096) |
| Dividend |
|
61,208 |
45,101 |
41,879 |
48,322 |
28,993 |
19,329 |
12,886 |
-- |
-- |
-- |
| Retained
Earnings / (Loss) |
|
21,606 |
(281) |
22,205 |
30,564 |
7,838 |
10,654 |
5,511 |
18,929 |
12,682 |
(26,096) |
|
|
| Financial
Ratios |
|
|
| Gross
Profit as a percentage of sales |
18.10 |
16.20 |
15.50 |
17.00 |
14.90 |
13.l |
11.70 |
13.70 |
13.20 |
9.40 |
| Net
profit / (loss) before tax as |
|
|
| a
percentage of sales (excluding |
|
| contract
income) |
|
7.10 |
6.10 |
5.30 |
6.50 |
5.30 |
2.30 |
1.40 |
1.70 |
1.00 |
(2.6) |
| Current ratio |
|
1.19 |
1.02 |
1.02 |
1.06 |
1.12 |
1.04 |
1.08 |
1.03 |
0.98 |
0.89 |
| Long
term debt: equity |
|
46:54 |
06:94 |
05:95 |
21:79 |
3 l:69 |
24:76 |
35:65 |
48:52 |
50:50 |
53:47 |
| Earning
/ (Loss) per share |
|
6.43 |
3.48 |
4.97 |
6.12 |
2.86 |
2.33 |
1.43 |
2.35 |
1.69 |
(3.48) |
| Dividend (%) |
|
37.50 |
35.00 |
32.50 |
37.50 |
22.50 |
15 |
10 |
-- |
-- |
-- |
| Bonus
Shares (%) |
|
10 |
-- |
-- |
-- |
-- |
-- |
-- |
10 |
7.50 |
-- |
| Right
Shares % (at premium) |
|
-- |
-- |
-- |
-- |
-- |
-- |
-- |
50 |
-- |
32 |
|
|
| Report
of the Directors |
|
|
| The
Directors have pleasure in submitting their Report and Audited Accounts for
the |
|
| year
ended 30th June, 2000. |
|
|
|
(Rs. 000's) |
|
| The
profit for the year amounts to |
|
82,814 |
|
| Amount
of unappropriated profit brought |
|
| forward
from previous year |
|
31 |
|
|
---------- |
|
|
82,845 |
|
|
| The
Directors recommend: |
|
|
| Interim
dividend already paid at the rate of |
|
| Rs.
1.50 per share (15%) |
|
19,329 |
|
|
| Final
dividend at the rate of Rs.2.25 |
|
| per
share (22.5%) |
|
28,993 |
|
|
| Bonus
shares in the ratio of 1 share for |
|
| every
10 shares held (10%) |
|
12,886 |
|
|
| Transfer
to general reserve |
|
21,000 |
|
|
----------- |
|
|
82,208 |
|
| Leaving
an unappropriated profit |
|
----------- |
|
| carried
forward to next year. |
|
637 |
|
|
========== |
|
| The
Chairman's review on pages 6 & 7 covers significant activities of your |
|
| Company
during the year. |
|
|
| The
pattern of shareholding is provided on page 34. |
|
|
| The
present auditors, M/s. Ford, Rhodes, Robson, Morrow retire and offer
themselves for |
|
| re-appointment. |
|
|
|
On behalf of the Board |
|
|
|
Towfiq H. Chinoy |
|
| Karachi:
September 18, 2000 |
|
Managing Director &
Chief Executive |
|
|
|
| Auditors'
Report to the Member |
|
|
|
|
|
|
|
| We
have audited the annexed balance sheet of International Industries Limited as
at June |
|
| 30,
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 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 except for the change as stated in note |
|
| 2.3
with which we concur; |
|
|
| (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 standards 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 |
|
| June
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. |
|
|
|
Ford, Rhodes, Robson,
Morrow |
|
| Karachi:
September 18, 2000 |
|
Chartered Accountants |
|
|
|
| Balance
Sheet as at 30th June, 2000 |
|
|
Note |
2000 |
1999 |
|
|
|
(Rs. 000's) |
(Rs. 000's) |
|
|
| TANGIBLE
FIXED ASSETS |
|
3 |
529,762 |
303,305 |
|
| LONG-TERM
DEPOSITS |
|
|
2,304 |
2,300 |
|
| CURRENT
ASSETS |
|
|
|
| Stores
and spares |
|
4 |
60,829 |
61,788 |
|
| Stock-
in-trade e |
|
5 |
370,970 |
349,540 |
|
| Trade debtors |
|
6 |
255,020 |
272,463 |
|
| Contract
debtors |
|
7 |
3,579 |
3,770 |
|
| Advances,
deposits, prepayments and |
|
|
|
| other
receivables |
|
8 |
55,201 |
120,371 |
|
| Cash
and bank balances |
|
9 |
1,090 |
143 |
|
|
---------- |
---------- |
|
|
746,689 |
808,075 |
|
|
---------- |
---------- |
|
|
1,278,755 |
1,113,680 |
|
|
========== |
========== |
|
| SHARE
CAPITAL AND RESERVES |
|
|
|
| Authorized
capital |
|
| 15,000,000
(1999:15,000,000) ordinary |
|
| shares
of Rs. 10/- each |
|
150,000 |
150,000 |
|
|
========== |
========== |
|
| Issued,
subscribed and paid tip capital |
|
10 |
