| Polypropylene Products Limited |
|
|
|
|
|
|
| Annual
Report 2000 |
|
|
| Contents |
|
|
| Company
Information |
|
| Directors'
Report |
|
| Auditors'
Report to the Members |
|
| Balance Sheet |
|
|
| Profit
and Loss Account |
|
| Cash
Flow Statement |
|
| Statement
of Changes in Equity |
|
| Notes
to Accounts |
|
| Pattern
of Shareholdings |
|
| Notice
of Annual General Meeting |
|
|
|
| Company
Information |
|
|
| Board of |
Mr. Razzak H. Mohammed |
Chairman |
|
| Directors |
Mr. Salim H. Mohammed |
|
|
Mr. Shabbir S. Mohammed |
|
|
Ms. Farzana Munaf |
|
|
Mr. Iqbal Parekh |
|
|
Mr. Fatehali R. Mohammed |
|
|
Mr. A.Q. Malik |
|
|
Mr. Mohammed Zafar Iqbal |
Chief Executive |
|
|
|
| Secretary |
Mr. Akber Ali Nanji |
|
|
|
| Bankers |
Allied Bank of Pakistan
Limited |
|
|
Bank Al-Habib Limited |
|
|
Faysal Bank Limited |
|
|
Habib Bank AG Zurich |
|
|
Metropolitan Bank Limited |
|
|
| Auditors |
Ford, Rhodes, Robson,
Morrow |
|
|
Chartered Accountants |
|
|
|
| Factory |
Korangi, Karachi. |
|
|
| Registered |
7th Floor, Trade Centre, |
|
| Office |
I.I. Chundrigar Road, |
|
|
Karachi. |
|
|
|
| Twenty
Seventh Annual Report of the Directors |
|
| for
the year ended June 30, 2000 |
|
|
| The
Shareholders, |
|
|
| Your
directors are pleased to submit herewith the twenty seventh annual report on
the affairs |
|
| of
the Company together with the audited accounts and the Auditors' Report for
the year |
|
| ended
June 30, 2000. |
|
|
| Financial
Results |
|
Rupees |
|
|
|
|
|
|
| Net
Loss for the year after providing for taxation |
|
(2,389,961) |
|
| Unappropriated
profit brought forward from last year's accounts |
|
4,413,518 |
|
|
|
|
------------------ |
|
| Unappropriated
profit carried forward to the next year's accounts |
|
2,023,557 |
|
|
|
|
========== |
|
|
| The
Company incurred net loss of Rs. 2.38 million during the year ended June 30,
2000 as |
|
| compared
to previous year's net profit of Rs. 3.2 million mainly due to prices of raw
material |
|
| rising
and then declining sharply within a very short period and the selling price
of PP Bags |
|
| not
keeping pace with the increase in raw material prices. |
|
|
| The
production of Polypropylene bags increased by about 14% from 16.97 million
metres in |
|
| 1998-99
to 19.34 million metres in 1999-2000, but the value of gross sales increased
by about |
|
| 6%
from Rs. 138.3 million in 1998-99 to Rs. 146.4 million in 1999-2000. |
|
|
| Although
the prices of raw material increased by about 24% due to increase in C &
F prices |
|
| and
devaluation of Pak Rupee against US $, the selling price of PP Bags did not
keep pace |
|
| with
the increase in raw material prices. |
|
|
| Future
Prospects |
|
| The
situation in Polypropylene bag business may not improve because of excess
manufacturing |
|
| capacity
over demand and very unhealthy competition from unorganized sector of PP Bag |
|
| manufacturers
which forced us to keep our prices below cost. |
|
|
| From
August 2000, the production has been curtailed and we have also cut back on
our staff |
|
| and overheads. |
|
|
| Auditors |
|
| The
present Auditors of the Company, Ford, Rhodes, Robson, Morrow, Chartered
Accountants, |
|
| retire
and being eligible, offer themselves for re-appointment for the year
2000-2001. |
|
|
| Your
Directors would like to thank the workers and staff of the Company for
working with |
|
| enthusiasm,
loyalty and devotion to duty. |
|
|
|
|
On behalf of the Board |
|
|
|
|
|
|
|
RAZZAK H. MOHAMMED |
|
| Karachi:
October 23, 2000. |
|
Chairman |
|
|
|
|
| Auditors'
Report to the Members |
|
|
| We
have audited the annexed balance sheet of POLYPROPYLENE PRODUCTS 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; |
|
|
|
| (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 loss, its cash flows and changes in equity for the year then ended; |
|
|
| (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:
October 23, 2000. |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 2000 |
|
|
|
|
|
2000 |
1999 |
|
|
|
Note |
Rupees |
Rupees |
|
| Non
current assets |
|
|
|
| Operating
fixed assets |
|
3 |
13,112,534 |
14,033,119 |
|
| Long
term investments |
|
4 |
24,590,063 |
27,072,861 |
|
| Long
term loans and deposits |
|
5 |
684,300 |
929,950 |
|
|
|
|
|
|
|
| Current assets |
|
|
|
| Stores
and spares |
|
6 |
1,557,010 |
1,620,862 |
|
| Stock-in-trade |
|
7 |
29,304,180 |
18,983,368 |
|
| Trade debtors |
|
8 |
12,383,445 |
14,955,045 |
|
| Advance
income tax |
|
|
2,699,925 |
4,238,029 |
|
| Profit
accrued on investments |
|
|
4,166,750 |
2,296,000 |
|
| Advances,
deposits, prepayments and other receivables |
9 |
4,453,214 |
2,673,197 |
|
| Short
term investment |
|
10 |
20,000,000 |
20,000,000 |
|
| Cash
and bank balances |
|
11 |
322,217 |
231,989 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
74,886,741 |
64,998,490 |
|
|
|
|
------------------ |
------------------ |
|
| Total assets |
|
|
|
113,273,638 |
107,034,420 |
|
|
========== |
========== |
|
| Share
capital and reserves |
|
| Share capital |
|
|
| Authorised |
|
|
| 6,000,000
(1999: 6,000,000) ordinary shares of Rs. 5/- each |
30,000,000 |
30,000,000 |
|
|
|
|
|
========== |
========== |
|
|
| Issued,
subscribed and paid-up |
|
|
|
| 4,000,000
(1999: 4,000,000) ordinary shares of |
|
|
|
| Rs.
5/- each fully paid-up |
|
12 |
20,000,000 |
20,000,000 |
|
|
| Revenue
reserves |
|
13 |
42,023,557 |
44,413,518 |
|
|
|
|
|
|
------------------ |
------------------ |
|
|
| Shareholders'
equity |
|
|
62,023,557 |
64,413,518 |
|
|
| Deferred
liabilities |
|
14 |
10,012,160 |
10,860,903 |
|
|
|
|
|
|
|
|
| Current
liabilities |
|
| Creditors,
accrued and other liabilities |
15 |
11,293,344 |
4,318,201 |
|
| Short
term running finance |
|
16 |
24,535,359 |
18,204,239 |
|
| Provision
for taxation |
|
|
4,771,000 |
4,671,000 |
|
| Unclaimed
dividend |
|
|
638,218 |
566,559 |
|
| Proposed
dividend |
|
|
-- |
4,000,000 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
41,237,921 |
31,759,999 |
|
| Contingencies
and commitments |
17 |
|
|
|
|
|
------------------ |
------------------ |
|
| Total
shareholders' equity and liability |
|
113,273,638 |
107,034,420 |
|
|
========== |
========== |
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Mohammed Zafar Iqbal |
|
|
|
Salim H. Mohammed |
|
|
Chief Executive |
|
|
|
Director |
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2000 |
|
|
|
|
2000 |
1999 |
|
|
Note |
Rupees |
Rupees |
|
|
| Turnover |
|
18 |
127,170,237 |
117,112,643 |
|
| Cost of sales |
|
19 |
122,678,214 |
103,654,323 |
|
|
|
|
------------------ |
------------------ |
|
| Gross profit |
|
|
4,492,023 |
13,458,320 |
|
|
| Other income |
|
|
7,480,591 |
6,504,366 |
|
| Administrative
expenses |
|
|
(6,833,140) |
(7,075,925) |
|
| Selling
expenses |
|
|
(5,436,320) |
(5,262,640) |
|
| Workers'
profit participation fund |
|
-- |
(222,069) |
|
| Workers'
welfare fund |
|
|
-- |
(7,628) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(296,846) |
7,394,424 |
|
|
| Reversal/(Provision)
for diminution in value of investments |
2,089,706 |
(968,035) |
|
|
|
------------------ |
------------------ |
|
|
|
1,792,860 |
6,426,389 |
|
|
| Financial
charges |
|
23 |
(4,258,471) |
(3,182,745) |
|
| Loss
on sale of shares |
|
|
(167,429) |
-- |
|
|
|
|
------------------ |
------------------ |
|
| Net
(loss)/profit before taxation |
|
|
(2,633,040) |
3,243,644 |
|
| Less: Taxation |
|
|
24 |
(243,079) |
46,437 |
|
|
|
|
|
------------------ |
------------------ |
|
| Net
(loss)/profit after taxation |
|
|
(2,389,961) |
3,197,207 |
|
| Unappropriated
profit brought forward |
|
4,413,518 |
5,216,311 |
|
|
|
|
|
------------------ |
------------------ |
|
| Profit
available for appropriation |
|
2,023,557 |
8,413,518 |
|
|
|
|
|
|
|
| Appropriations |
|
| Proposed
dividend @ Nil (1999: 20%) |
|
-- |
4,000,000 |
|
|
|
|
------------------ |
------------------ |
|
| Unappropriated
profit carried forward |
|
2,023,557 |
4,413,518 |
|
|
|
|
|
========== |
========== |
|
| Basic
earnings per share |
|
25 |
(0.60) |
0.80 |
|
|
|
|
========== |
========== |
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Mohammed Zafar Iqbal |
|
Salim H. Mohammed |
|
|
Chief Executive |
|
Director |
|
|
|
|
|
|
|
| CASH
FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 2000 |
|
|
|
2000 |
1999 |
|
|
|
Rupees |
Rupees |
|
|
| Cash
flows from operating activities |
|
| Net
Profit before taxation |
|
|
(2,633,040) |
3,243,644 |
|
|
| Adjustments
for |
|
|
|
|
|
| Depreciation |
|
|
1,795,060 |
1,932,084 |
|
|
| Profit
on sale of fixed assets |
|
|
(182,986) |
(207,786) |
|
|
| Provision
for retirement gratuity |
|
|
460,241 |
956,449 |
|
|
| Gratuity paid |
|
|
(308,984) |
(148,629) |
|
|
| Loss
on sale of shares |
|
|
122,449 |
-- |
|
|
| Provision
for diminution in value of investments |
|
(2,089,706) |
968,035 |
|
|
| Income
from investments |
|
|
(5,324,957) |
(4,843,206) |
|
|
| Financial
charges |
|
|
4,241,679 |
3,165,897 |
|
|
|
|
|
------------------ |
------------------ |
|
|
| Operating
profit before working capital changes |
|
(3,920,244) |
5,066,488 |
|
|
|
|
|
|
|
| (Increase)/decrease
in current assets |
|
|
| Stores
and spares |
|
63,852 |
(195,240) |
|
|
| Stock-in-trade |
|
(10,320,812) |
(2,735,973) |
|
|
| Trade debtors |
|
(2,571,600) |
(3,383,597) |
|
|
| Profit
accrued on investments |
|
(1,870,750) |
(1,365,000) |
|
|
| Advances,
deposits, prepayments and other receivables |
(1,780,017) |
(7,512) |
|
|
|
| Increase/(decrease)
in current liabilities |
|
| Creditors,
accrued and other liabilities |
|
6,706,777 |
(2,100,985) |
|
|
|
------------------ |
------------------ |
|
|
(4,629,350) |
(9,788,307) |
|
|
------------------ |
------------------ |
|
| Cash
generated from operations |
|
(8,549,594) |
(4,721,819) |
|
| Refund
of Taxes |
|
|
1,720,541 |
2,751,753 |
|
| Taxes paid |
|
|
|
(839,358) |
(822,024) |
|
| Financial
charges paid |
|
|
(3,973,313) |
(2,724,983) |
|
|
|
|
|
------------------ |
------------------ |
|
| Net
cash outflow from operating activities (A) |
|
(11,641,724) |
(5,517,073) |
|
|
|
|
========== |
========== |
|
|
|
|
| Cash
flows from investing activities |
|
|
|
| Sale
of fixed assets |
|
196,610 |
765,000 |
|
| Acquisition
of fixed assets |
|
(888,100) |
(1,907,460) |
|
| Short
term investment |
|
-- |
2,500,000 |
|
| Income
from investments |
|
5,324,957 |
4,843,206 |
|
| Long
term loans and deposits |
|
245,650 |
(86,800) |
|
| Sale
proceeds of long term investment |
|
4,617,393 |
-- |
|
| Long
term investments |
|
(167,337) |
(4,239,490) |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash inflow from investing activities (B) |
|
9,329,173 |
1,874,456 |
|
|
========== |
========== |
|
|
|
|
| Cash
flows from financing activities |
|
| Short
term finance |
|
6,331,120 |
7,523,396 |
|
| Dividend paid |
|
|
(3,928,341) |
(3,930,915) |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash inflow from financing activities (c) |
|
2,402,779 |
3,592,481 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| Net
increase in cash and cash equivalents (A+B+C) |
90,228 |
(50,136) |
|
| Cash
and cash equivalents at the beginning of the year |
231,989 |
282,125 |
|
|
------------------ |
------------------ |
|
| Cash
and cash equivalents at the end of the year |
|
322,217 |
231,989 |
|
|
========== |
========== |
|
|
|
Mohammed Zafar Iqbal |
|
Salim H. Mohammed |
|
|
Chief Executive |
|
Director |
|
|
|
| STATEMENT
OF CHANGES IN EQUITY FOR THE YEAR ENDED JUNE 30, 2000 |
|
|
|
|
Issued |
|
|
|
subscribed and |
General |
Unappropriated |
|
|
|
|
paid-up capital |
reserves |
Profit |
Total |
|
|
|
Rupees |
Rupees |
Rupees |
Rupees |
|
|
| Balance
as at July 1, 1998 |
20,000,000 |
40,000,000 |
5,216,311 |
65,216,311 |
|
| Profit
after taxation |
-- |
-- |
3,197,207 |
3,197,207 |
|
| Dividend |
|
-- |
-- |
(4,000,000) |
(4,000,000) |
|
|
|
------------------ |
------------------ |
------------------ |
------------------ |
|
| Balance
as at June 30, 1999 |
20,000,000 |
40,000,000 |
4,413,518 |
64,413,518 |
|
| Profit
after taxation |
-- |
-- |
(2,389,961) |
(2,389,961) |
|
|
|
------------------ |
------------------ |
------------------ |
------------------ |
|
| Balance
as at June 30, 2000 |
20,000,000 |
40,000,000 |
2,023,557 |
62,023,557 |
|
|
|
========== |
========== |
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Mohammed Zafar Iqbal |
|
Salim H. Mohammed |
|
|
Chief Executive |
|
Director |
|
|
|
| Notes
to the Accounts |
|
| For
the year ended June 30, 2000 |
|
|
| 1.
The Company and its operations |
|
| Polypropylene
Products Limited, incorporated in 1973, as a public limited company, quoted |
|
| on
stock exchanges in Pakistan. The Company is engaged in the manufacture and
sale of |
|
| polypropylene
woven bags. |
|
|
| 2.
Statement of significant accounting policies |
|
|
|
| 2.1
Accounting convention |
|
|
|
| These
accounts have been prepared under the historical cost convention. |
|
|
|
|
|
| 2.2
Retirement benefits |
|
|
|
| The
Company operates an unfunded gratuity scheme covering employees who have |
|
| completed
atleast one year of service with the Company. Provision is made annually |
|
| to
cover obligations under the scheme. |
|
|
|
| 2.3 Taxation |
|
| Provision
for current taxation is based on taxable income at current rates of taxation |
|
| or
0.5% of the turnover under section 80D of the Income Tax Ordinance, 1979 |
|
| whichever
is higher. |
|
|
|
|
|
|
| The
Company accounts for deferred taxation on all significant timing differences |
|
| which
are likely to reverse in the foreseeable future, using the liability method.
As a |
|
| measure
of prudence, deferred tax debits are not accounted for. |
|
|
|
| 2.4
Fixed assets |
|
|
|
| Fixed
assets are stated at cost less accumulated depreciation except leasehold |
|
| land
which is stated at cost. |
|
|
|
|
|
|
| Depreciation
on fixed assets is calculated on written down values at the rates given |
|
| below: |
|
|
|
|
| Office premises |
|
5% per annum |
|
| Vehicles |
|
20% per annum |
|
| Computers |
|
30% per annum |
|
| All other assets |
|
10% per annum |
|
|
| Normal
repairs and maintenance cost is charged to revenue in the year in which it is |
|
| incurred,
major renewals and improvements are capitalised. |
|
|
|
|
| Profits
and losses on disposal of fixed assets are taken to profit and loss account. |
|
|
| 2.5
Investments |
|
| Short
term investments are valued at cost or market value whichever is lower, |
|
| calculated
on aggregate basis. In case of long term investments provision for |
|
| diminution
in value of investments is made on individual basis if it is considered to |
|
| be permanent. |
|
|
| 2.6
Stock-in-trade |
|
| These
are stated at the lower of cost or net realisable value. Cost is determined
on |
|
| "first-in,
first-out" basis. Stock-in-transit is valued at cost. |
|
|
| 2.7
Stores and spares |
|
| These
are stated at the lower of cost or net realisable value. Cost is determined
on |
|
| "first-in,
first-out" basis. |
|
|
| 2.8
Bad and doubtful debts |
|
| Known
bad debts are written off and provision is made for debts considered
doubtful. |
|
|
| 2.9
Foreign currency transactions |
|
| Assets
and liabilities in foreign currencies are stated in Pak rupees at the rates
of |
|
| exchange
ruling on the balance sheet date or fixed under contractual arrangements. |
|
|
| All
exchange differences are included in the profit and loss account. |
|
|
| 2.10
Borrowing costs |
|
| Borrowing
costs are recognised as expenses in the period in which they are incurred. |
|
|
| 2.11
Revenue recognition |
|
|
| (a)
Sales are recorded when goods are despatched and invoiced. |
|
|
| (b)
Income on investments is accounted for as follows: |
|
|
| (i)
dividend income is accounted for upon declaration of dividends by the |
|
| investee
companies. |
|
|
| (ii)
income on Regular Income Certificates and Defence Savings Certificates |
|
| is
accounted for as and when due according to the terms of the schemes. |
|
|
| (c)
Other income is accounted for on an accrual basis. |
|
|
| 3.
Operating fixed assets |
|
|
|
COST |
|
DEPRECIATION |
|
Written |
|
|
|
down |
|
As at |
|
|
As at |
As at |
For the |
On |
As at |
value as at |
|
July 1, |
Additions |
Disposals |
June 30, |
July 1, |
year |
disposals |
June 30, |
June 30, |
|
1999 |
|
2000 |
1999 |
|
|
2000 |
2000 |
|
|
|
|
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
|
| Leasehold land |
147,271 |
-- |
-- |
147,271 |
-- |
-- |
-- |
-- |
147,271 |
| Office premises |
1,807,653 |
-- |
-- |
1,807,653 |
638,400 |
58,463 |
-- |
696,863 |
1,110,790 |
| Building on lease-hold land |
4,495,739 |
-- |
-- |
4,495,739 |
3,817,250 |
67,849 |
-- |
3,885,099 |
610,640 |
| Pla |
