| Latif Cotton Mills Limited |
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|
| Annual
Report 2000 |
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| COMPANY
INFORMATION |
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| BOARD
OF DIRECTORS |
|
YASIN HAJI KASSAM -
CHAIRMAN |
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|
AMANULLAH HAJI LATIF |
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|
SIRAJ HAJI KASSAM |
|
|
MOHAMMED ASIF A. GHAFFAR |
|
|
SUHAIL HAJI YOUNUS |
|
|
MUSTAFA ABDUL RAZZAK |
|
|
JUNAID HAJI LATIF - CHIEF
EXECUTIVE |
|
|
| CHIEF
ACCOUNTANT |
|
| AND
COMPANY SECRETARY |
ZAHEER AHMED |
|
|
| AUDITORS |
|
HYDER BHIMJI &
COMPANY |
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|
CHARTERED ACCOUNTANTS |
|
|
| REGISTERED
OFFICE |
|
37-F-A, BLOCK-6, |
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|
P.E.C.H. SOCIETY, |
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|
KARACHI. |
|
|
| MILLS |
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C - 101, SITE, NOORIABAD, |
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|
DISTT. DADU. |
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|
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| NOTICE
OF ANNUAL GENERAL MEETING |
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| NOTICE
is hereby given that the Sixteenth General Meeting of the Members of LATIF
COTTON MILLS |
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| LIMITED,
will be held on Tuesday, the March 20, 2001 at 10:00 a.m. at Sattar Chambers,
29-West |
|
| Wharf
Road, Karachi to transact the following business: |
|
|
| 1.
To receive and adopt the Audited Accounts of the Company for the year ended
September 30, |
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| 2000
together with Auditors' and Directors' Reports thereon. |
|
|
| 2.
To elect seven directors in accordance with the provision of the Companies
Ordinance, 1984, for |
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| a
period of three years. The number of Directors fixed by the board pursuant to
section 178 (1) |
|
| of
the Companies Ordinance 1984, is seven. The retiring Directors, namely Messrs
YASIN |
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| HAJI
KASSAM, AMANULLAH HAJI LATIF, SIRAJ HAJI KASSAM, MUHAMMED ASIF A. |
|
| GHAFFAR,
SUHAIL HAJI YOUNUS, MUSTAFA ABDUL RAZZAK and JUNAID HAJI LATIF, |
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| being
eligible, have notified their intention to offer themselves for re-election
as Directors. |
|
|
| 3.
To approve cash dividend @ 10% as recommended by the Directors. |
|
|
| 4.
To appoint Auditors for the year ending September 30, 2001 and fix their
remuneration. |
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| The
retiring Auditors M/s. Hyder Bhimji & Co., Chartered Accountants, being
eligible, have |
|
| offered
themselves for Re-appointment. |
|
|
| 5.
To transact any' other ordinary business with the permission of the Chair. |
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| Karachi:
February 16, 2001 |
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By Order of the Board |
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|
ZAHEER AHMED |
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|
Company Secretary |
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| NOTES: |
|
|
| 1.
The Share Transfer Book of the Company will remain closed from March 16, 2001
to March |
|
| 22,
2001 (Both days inclusive) |
|
|
| 2.
A Member of the Company entitled to attend and vote may appoint another
person as his/her |
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| proxy
to attend and vote instead of him/her. |
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|
| DIRECTORS'
REPORT |
|
|
| Your
directors feel immense pleasure in submitting the sixteenth annual report
alongwith the audited |
|
| accounts
and auditors' report thereon for the year ended September 30, 2000. |
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| PRODUCTION
AND SALES |
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| During
the year the Mills produced 7.227 million kgs of different count of yarn as
compared to 6.827 |
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| million
kgs in the previous year. However, net sales revenue has decreased from
Rs.823.241 to |
|
| Rs.
756.759 because of decrease in prices of raw cotton as well as the finished
product. |
|
|
| FINANCIAL
RESULTS |
|
| The
year under review was best year in the history of the company. The gross
profit for the year under |
|
| report
is Rs.194.482 million as compared to Rs.124.827 million in the preceding
year, showing a |
|
| significant
increase in the percentage of gross profit from 15;16% to 25.70% mainly due
to the bumper |
|
| corp
of cotton in the country which results in availability of cotton at lower
rates. |
|
|
| Further
the company earned profit before tax amounting to Rs.97.817 million
(1999:Rs.22.065 million) |
|
| after
providing for all operational costs including financial charges of Rs.64;872
million. |
|
|
| The
Company's financial results for the year under report are as follows:- |
|
|
| Profit
before Tax |
|
Rs. 97,816,792 |
|
|
| Tax |
|
Rs. (31,200,000) |
|
|
------------ |
|
| Profit
after Tax |
|
Rs. 66,616,792 |
|
|
| Proposed
Dividend |
|
Rs. (595,500) |
|
|
------------ |
|
|
Rs. 66,021,292 |
|
| Accumulated
(Loss) brought forward |
Rs. (181,396,124) |
|
|
------------ |
|
| Accumulated
(Loss) |
|
Rs. (115,374,832) |
|
|
========== |
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| The
Directors are fully aware that payment of dividend without wiping out all
accumulated losses of the |
|
| company
is a not wise or prudent decision but under the prevailing circumstances, the
company has |
|
| chosen
to share the current profit with the minority shareholders. |
|
|
| Therefore
the Board of Directors have recommended cash dividend @ 10% for the year
ended |
|
| September
30, 2000 to the minority share-holder as the Directors and their family
members have |
|
| decided
to waive their right to this proposed dividend. |
|
|
| FUTURE
OUTLOOK |
|
| Although
the current results of the company were very favourable but the new cotton
season has again |
|
| started
with the usual confusion regarding size and price. The cost of other
production items are also on |
|
| an
upward trend due to severe inflation prevailing in the country. On the other
hand, the performance of |
|
| our
company is on the improving track, we hope that prices of yarn will
substantially increase to offset |
|
| the
increased cotton prices and other production cost. We are striving for
betterment and are confident |
|
| that
in the near future, we will able to wipe out all accumulated losses. |
|
|
| MANAGEMENT
VIEW ON AUDITORS' REPORT |
|
| The
auditors have pointed out in their report that the requirement of IAS-19 has
not been complied with. |
|
| In
view of the facts fully explained in note number 6.1 of the financial
statement and since the compliance |
|
| of
IAS require certain time hence the same will be reflected in the next year's
financial statement. |
|
|
| EARNING
PER SHARE |
|
| The
earning per share is Rs.5.34 for the year (1999:Rs.0.71 ) |
|
|
| PATTERN
OF SHARE HOLDING |
|
| The
pattern of share holding as at September 30, 2000 is annexed for your
perusal. |
|
|
| BOARD
OF DIRECTORS |
|
| In
accordance with the provisions of section 178 of the Companies Ordinance
1984, election of the |
|
| Directors
will be held at the forthcoming Annual General Meeting. The number of
Directors fixed by the |
|
| Board
is seven and all the existing Directors retire and being eligible, offer
themselves for re-election. |
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|
| AUDITORS |
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| The
present auditors M/s. Hyder Bhimji & Co., Chartered Accountants, retire
and being eligible, offer |
|
| themselves
for re-appointment. |
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|
| ACKNOWLEDGEMENT |
|
| The
Directors place on record their appreciation for the devoted services
.rendered by the workers and |
|
| staff
of the Company during the year and hope the same will continue in future as
well. |
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|
|
On behalf of Board of Directors, |
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| Karachi:
February 16, 2001 |
|
JUNAID HAJI LATIF |
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|
(Chief Executive) |
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|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed Balance Sheet of LATIF COTTON 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 forming part thereof, for the year then ended and we
state that we have |
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| obtained
all the information and explanations which, to the best of our knowledge and
belief, were |
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| necessary
for the purpose 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 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 a |
|
| 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 |
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| 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
consis- |
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| tently
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 stan- |
|
| dards
as applicable in Pakistan except the deviation of IAS as more fully explained
in Note 6.1, |
|
| and,
give the information required by the Companies Ordinance, 1984 in the manner
so re- |
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| quired
and respectively, with the exception of the matter reported earlier, 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, no Zakat was deductible at source under the Zakat and
Ushr Ordinance, 1980 |
|
| (XVIII
of 1980). |
|
|
| Karachi.
February 16, 2001 |
|
HYDER BHIMJI & CO. |
|
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT SEPTEMBER 30, 2000 |
|
|
|
|
2000 |
1999 |
|
|
Notes |
Rupees |
Rupees |
|
| SHARE
CAPITAL |
|
| Authorized: |
|
| 15,000,000
ordinary shares of Rs.10 each |
|
150,000,000 |
150,000,000 |
|
|
========== |
========== |
|
| Issued,
Subscribed and Paid-up: |
|
| 12,471,600
ordinary shares of Rs. 10 each |
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| fully
paid issued for cash |
|
124,716,000 |
124,716,000 |
|
|
| Accumulated
(loss) |
|
(115,374,832) |
(181,396,124 |
|
|
9,341,168 |
(56,680,124) |
|
| SURPLUS
ON REVALUATION OF FIXED ASSETS |
3 |
225,402,120 |
225,402,120 |
|
| LONG
TERM FINANCE |
|
4 |
235,263,071 |
207,328,538 |
|
| LONG
TERM LOANS |
|
5 |
-- |
-- |
|
| DEFERRED
LIABILITIES |
|
6 |
21,975,410 |
15,105,520 |
|
| CURRENT
LIABILITIES |
|
|
|
|
| Short
term running finance utilized |
|
|
|
|
| under
mark-up arrangements |
|
7 |
103,589,311 |
223,108,499 |
|
| Current
portion of long term liabilities |
|
|
29,416,044 |
63,180,894 |
|
| Creditors,
accrued and other liabilities |
|
8 |
58,755,911 |
100,933,589 |
|
| Provision
for taxation |
|
|
19,161,731 |
(4,256,452 |
|
| Proposed
dividend |
|
|
595,500 |
-- |
|
|
|
------------ |
------------ |
|
|
|
211,518,497 |
382,966,530 |
|
|
|
|
|
| CONTINGENCIES
AND COMMITMENTS |
9 |
-- |
-- |
|
|
|
|
------------ |
------------ |
|
| Total: |
|
703,500,266 |
774,122,584 |
|
|
========== |
========== |
|
| OPERATING
ASSETS |
|
| Fixed assets |
|
10 |
450,245,306 |
461,075,005 |
|
| LONG
TERM LOANS AND DEPOSITS |
|
11 |
2,255,400 |
1,973,700 |
|
|
| CURRENT
ASSETS |
|
| Stores
and spares |
|
12 |
12,850,478 |
12,904,463 |
|
| Stock-in-trade |
|
13 |
107,289,546 |
118,202,683 |
|
| Trade debts |
|
14 |
112,701,482 |
166,328,236 |
|
| Advances,
deposits, prepayments |
|
|
|
| and
other receivables |
|
15 |
16,724,753 |
12,889,630 |
|
|
|
|
| Cash
and bank balances |
|
16 |
1,433,301 |
748,867 |
|
|
|
------------ |
------------ |
|
|
250,999,560 |
311,073,879 |
|
|
------------ |
------------ |
|
|
Total : |
703,500,266 |
774,122,584 |
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Junaid Haji Latif |
|
Chief Executive |
|
| KARACHI:
February 16, 2001 |
Amanullah Haji Latif |
|
Director |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 2000 |
|
|
|
Notes |
2000 |
1999 |
|
|
|
Rupees |
Rupees |
|
| Sales |
|
17 |
756,759,426 |
823,241,465 |
|
| Cost of sales |
|
18 |
(562,277,915) |
(698,414,784) |
|
|
------------ |
------------ |
|
| GROSS
PROFIT |
|
194,481,511 |
124,826,681 |
|
| OPERATING
EXPENSES |
|
| Administrative |
|
19 |
(14,844,501) |
(8,569,185) |
|
| Selling |
|
20 |
(11,106,833) |
(9,630,351) |
|
|
------------ |
------------ |
|
|
(25,951,334) |
(18,199,536 |
|
|
------------ |
------------ |
|
| OPERATING
PROFIT |
|
168,530,177 |
106,627,145 |
|
| Other
income |
|
21 |
895,851 |
335,653 |
|
|
|
------------ |
------------ |
|
|
169,426,028 |
106,962,798 |
|
|
| Financial
charges |
|
22 |
(64,871,557) |
'(83,558,515) |
|
| Other
charges |
|
23 |
(6,737,679) |
(1,338,916) |
|
|
------------ |
------------ |
|
|
(71,609,236) |
84,897,431 |
|
|
------------ |
------------ |
|
| Profit
before taxation |
|
97,816,792 |
22,065,367 |
|
| Provision
for taxation |
|
24 |
(31,200,000) |
(13,271,110) |
|
|
|
------------ |
------------ |
|
| Profit
after taxation |
|
|
66,616,792 |
8,794,257 |
|
| Proposed
dividend |
|
25 |
(595,500) |
-- |
|
|
------------ |
------------ |
|
|
66,021,292 |
8,794,257 |
|
| Accumulated
(loss) brought forward |
|
(181,396,124) |
(190,190,381 ) |
|
|
------------ |
------------ |
|
| Accumulated
(loss) carried forward |
|
(115,374,832) |
(181,396,124) |
|
|
========== |
========== |
|
| Basic
earning per share |
|
26 |
5:34 |
0.71 |
|
| The
annexed notes form an integral part of these accounts. |
========== |
========== |
|
|
|
Junaid Haji Latif |
|
Chief Executive |
|
| KARACHI:
February 16, 2001 |
Amanullah Haji Latif |
|
Director |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 2000 |
|
|
|
|
Notes |
2000 |
1999 |
|
|
|
Rupees |
Rupees |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| CASH
GENERATED FROM OPERATION |
27 |
233,304,703 |
106,308,008 |
|
| Payments
for · Financial charges |
|
(80,373,090) |
(72,135,643) |
|
| Income tax |
|
(2,781,817) |
(680,080) |
|
| Long
term loans and advances |
|
(281,700) |
309,750 |
|
|
------------ |
------------ |
|
| Net
cash from operating activities |
|
149,868,096 |
33,802,035 |
|
| CASH
FLOW TOWARDS INVESTING ACTIVITIES |
|
|
|
|
(28,636,532) |
(9,356,221) |
|
| Sale
proceed of fixed assets |
|
4,748,000 |
400,000 |
|
|
------------ |
------------ |
|
| Net
cash used in investing activities |
|
(23,888,532) |
(8,956,221) |
|
| CASH
FLOW TOWARDS FINANCING ACTIVITIES |
|
| Long
term borrowings |
|
57,580,248 |
21,114,373 |
|
| Repayment
of long term liabilities |
|
(63,410,565) |
(37,112,761) |
|
| Markup
received |
|
54,375 |
63,000 |
|
|
------------ |
------------ |
|
| Net
cash towards financing activities |
|
(5,775,942) |
(15,935,388) |
|
|
------------ |
------------ |
|
| Net
Increase in cash and cash equivalent |
|
120,203,622 |
8,910,426 |
|
| Cash
and cash equivalents at beginning |
|
(222,359,632) |
(231,270,058) |
|
|
------------ |
------------ |
|
| Cash
and cash equivalents at end |
|
28 |
(102,156,010) |
(222,359,632) |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Junaid Haji Latif |
|
Chief Executive |
|
| KARACHI:
February 16, 2001 |
Amanullah Haji Latif |
|
Director |
|
|
|
| STATEMENT
OF CHANGES IN EQUITY |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 2000 |
|
|
|
Share |
Accumulated |
|
|
|
Capital |
( Loss ) |
Total |
|
|
Rupees |
Rupees |
Rupees |
|
| Balance
as at September 30, 1998 |
124,716,000 |
(190,190,381) |
(65,474,381) |
|
|
| Net
profit for the year |
|
-- |
8,794,257 |
8,794,257 |
|
|
------------ |
------------ |
------------ |
|
| Balance
as at September 30, 1999 |
124,716,000 |
(181,396,124) |
(56,680,124 |
|
|
| Net
profit for the year |
|
-- |
66,616,792 |
66,616,792 |
|
| Proposed
dividend |
|
-- |
(595,500) |
(595,500) |
|
|
------------ |
------------ |
------------ |
|
|
-- |
66,021,292 |
66,021,292 |
|
|
------------ |
------------ |
------------ |
|
| Balance
as at September 30, 2000 |
124,716,000 |
(115,374,832) |
9,341,168 |
|
|
========== |
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Junaid Haji Latif |
|
Chief Executive |
|
| KARACHI:
February 16, 2001 |
Amanullah Haji Latif |
|
Director |
|
|
|
| NOTES
TO THE ACCOUNTS FOR THE YEAR |
|
| ENDED
SEPTEMBER 30, 2000. |
|
|
| 1.
COMPANY AND ITS BUSINESS |
|
| The
Company was incorporated in 1985 as a Private Limited Company. and was
converted into a |
|
| public
limited company in 1992. The shares of the Company are quoted at the Karachi
Stock |
|
| Exchange.
The principal activity of the Company is the manufacture and sale of yarn. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
| 2.1
ACCOUNTING CONVENTION |
|
| These
accounts have been prepared under the historical cost convention.
Modification is |
|
| specifically
stated. |
|
|
| 2.2
GRATUITY |
|
| The
Company maintains an unfunded gratuity scheme for all its employees eligible
to the |
|
| benefit
and provision is made annually to cover the obligation. |
|
|
| 2.3
FOREIGN CURRENCY TRANSACTIONS |
|
| Liabilities
in Foreign Currencies are translated into Pak rupee at the rate of exchange
prevailing |
|
| at
the Balance sheet date except where exchange risk cover has been obtained for
repayment |
|
| of
liabilities, in which case, the contracted rate is applied. Other exchange
gains and / or |
|
| losses
are included in income currently. |
|
|
| 2.4
FIXED ASSETS |
|
| Operating
fixed assets are stated at cost less accumulated depreciation, except
Building on |
|
| Leasehold
Land and Plant and Machinery which also includes revaluation. Land and
Capital |
|
| Work-in-Progress
are stated at cost. Depreciation is charged on reducing balance method |
|
| at
the rates specified in the fixed assets note whereby the Cost of fixed assets
including |
|
| revalued
amounts will be written off over their estimated useful life. |
|
|
| A
full year's depreciation on addition made during the year is charged whereas
no depreciation |
|
| is
charged on assets disposed off during the year. |
|
|
| Maintenance
and normal repairs are charged to Profit and Loss account as and when
incurred |
|
| Major
renewals and improvements are Capitalized. Profit or loss on disposal of
fixed assets |
|
| is
taken into Profit and loss account. |
|
|
| 2.5
TAXATION |
|
| The
provision for Current taxation is calculated in accordance with the
provisions of the |
|
| Income
Tax Ordinance 1979. |
|
|
| The
Company account for deferred taxation on all major timing differences by
using liability |
|
| method. |
|
|
| 2.6
STORES AND SPARES |
|
| These
are valued at moving average cost except those in transit which are valued at
actuals. |
|
|
| 2.7
STOCK-IN-TRADE |
|
| These
are valued as follows |
|
|
| -
Packing material |
at .moving average |
|
| -
Raw material |
at average cost |
|
| -
Work in process |
at raw material cost only |
|
| -
Finished goods |
at lower of average
manufacturing |
|
|
cost and net realisable
value. |
|
|
| 2.8
TRADE DEBTS |
|
| Debts
considered irrecoverable are written off and provision is made of debts
considered |
|
| doubtful,
if any. |
|
|
| 2.9
REVENUE RECOGNITION |
|
| Sales
are recorded on despatch of goods to buyers. |
|
|
| 3.
SURPLUS ON REVALUATION OF FIXED ASSETS |
|
2000 |
1999 |
|
|
Rupees |
Rupees |
|
|
| Balance
as per last balance sheet (for detail refer note 10.1) |
225,402,120 |
225,402,120 |
|
|
|
|
| 4.
LONG TERM FINANCE |
|
| LMM
finance-H.B.L. |
|
(4.1) |
1,607,135 |
2,678,565 |
|
| Demand
finance-H.B.L. |
|
(4.2) |
263,071,980 |
218,325,572 |
|
|
----------- |
----------- |
|
|
264,679,115 |
221,004,137 |
|
| Less:
Current portion shown under current liabilities |
|
29,416,044* |
13,675,599* |
|
|
----------- |
----------- |
|
|
235,263,071 |
207,328,538 |
|
|
========== |
========== |
|
| It
includes Rs.535,715 (1999: Rs.3,944,476) being the overdue instalment and
which has been |
|
| paid
subsequent to the balance sheet date. |
|
|
| 4.1
SECURITY |
|
| The
financing is secured against equitable mortgage of company's fixed assets and |
|
| personal
guarantees of all the directors. |
|
|
| MARK UP |
|
| It
carries mark-up at the rate of 8% per annum. |
|
|
| REPAYMENTS |
|
| The
financing is repayable in 14 equal half yearly instalments commencing from
March 31, |
|
| 1995. |
|
|
|
1999 |
2000 |
|
|
Rupees |
Rupees |
|
| 4.2
Existing demand finance |
|
-- |
10,617,499 |
|
| New
demand finance |
|
263,071,980 |
206,257,118 |
|
| Overdue
financial charges |
|
-- |
1,450,955 |
