| Sapphire Fibres Limited |
|
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| Annual
Report 2000 |
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| CONTENTS |
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|
| Board
of Directors |
|
| Notice
of Meeting |
|
| Directors Report |
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| Auditors'
Report |
|
| Balance Sheet |
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| Profit
& Loss Account |
|
| Cash
Flow Statement |
|
| Changes
in Equity |
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| Notes
to the Accounts |
|
| Pattern
of Share Holdings |
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|
|
| BOARD
OF DIRECTORS |
|
|
| CHAIRMAN |
|
Mr. Mohammad Abdullah |
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| CHIEF
EXECUTIVE |
Mr. Shahid Abdullah |
|
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|
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| DIRECTORS |
|
Mr. Nadeem Abdullah |
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|
Mr. Amer Abdullah |
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|
Mr. Yousuf Abdullah |
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|
Mr. Mohammad Younus |
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|
Mr. Mohammad Yamin |
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| SECRETARY |
|
Mr. Shaukat Mahmud |
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|
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| AUDITORS |
|
Mushtaq & Company |
|
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|
Chartered Accountants |
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|
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| MANAGEMENT |
M. Yousuf Adil Saleem
& Company |
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| CONSULTANTS |
Chartered Accountants |
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|
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| TAX
CONSULTANTS |
Mushtaq & Company |
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|
Chartered Accountants |
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| BANKERS |
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ABN Amro Bank |
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CITI Bank N.A. |
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|
Habib Bank Limited |
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|
National Bank of Pakistan |
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| REGISTERED
OFFICE |
212, Cotton Exchange
Building, |
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|
I. I. Chundrigar Road,
Karachi. |
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| MILLS |
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* Kharianwala, |
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|
Tehsil and District
Sheikhupura. |
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* Feroze Wattoan, |
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Tehsil and District
Sheikhupura. |
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* Raiwind, Lahore. |
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| NOTICE
OF ANNUAL GENERAL MEETING |
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| NOTICE
IS HEREBY GIVEN THAT 21st Annual General Meeting of SAPPHIRE FIBRES LIMITED
will be |
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| held
on Monday the 26th day of March, 2001 at 8:00 a.m. at 212, Cotton Exchange
Building, I.I. Chundrigar |
|
| Road,
Karachi to transact the following business: |
|
|
| 1.
To confirm the minutes of the Extra Ordinary General Meeting held on 26th
August, 2000. |
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|
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| 2.
To receive, consider and adopt the Audited Accounts together with Directors'
and Auditors' Reports for |
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| the
year ended September 30, 2000. |
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|
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|
|
| 3.
To approve a cash dividend as recommended by the Board of Directors. |
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|
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| 4.
To appoint auditors for the year ending 30th September, 2001 and to fix their
remuneration. The retiring |
|
| auditors,
M/s Mushtaq & Company Chartered Accountants, being eligible, offered
themselves |
|
| for
re-appointment. |
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|
|
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| 5.
To transact any other business with the permission of the Chair. |
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|
By order of the Board |
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| Karachi. |
|
(SHAUKAT MAHMUD) |
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| Dated:
02 March, 2001 |
|
SECRETARY |
|
|
|
| NOTE: |
|
|
| 1.
The share transfer books of the Company shall remain closed for entitlement
of Dividend from |
|
| 19th
March, 2001 to 26th March, 2001 (both days inclusive). Transfers received in
order, by |
|
| the
Company upto 17th March, 2001, will be considered in time for the payment of
dividend. |
|
|
|
|
| 2.
A member entitled to attend and vote at this meeting may appoint another
member as his/ |
|
| her
proxy to attend and vote on his/her behalf. Proxies in order, to be valid
must be deposited |
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| at
the Registered Office of the Company not less than 48 hours before the time
of the |
|
| meeting. |
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|
|
|
|
| 3.
CDC shareholders desiring to attend the meeting are requested to bring their
original National |
|
| Identity
Cards, Account/Sub Account and particular of participants I.D. members and
account |
|
| numbers
in CDS, for identification purpose, and in case of proxy, to enclose an
attested copy |
|
| of
his/her National Identity Card. |
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|
|
|
|
|
| 4.
Shareholders are requested to notify the Company of any change in their
addresses. |
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|
|
| DIRECTORS
REPORT TO THE SHAREHOLDERS |
|
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| The
Directors have pleasure in presenting their report along With audited
accounts of the Company for the year |
|
| ended
30th September 2000 for your consideration and approval. |
|
|
| OPERATING
REVIEW: |
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| By
the Grace of Almighty Allah, this year the results of the Company were
excellent. The Company earned net |
|
| profit
of Rs.500.855 million after provision for taxation. |
|
|
| The
Directors recommend payment of cash dividend of 145% i.e. Rs.14.50 (Rupees
Fourteen and paisa Fifty |
|
| only)
for each ordinary share of Rs. 10/- to be paid to the shareholders. |
|
|
| The
Directors has also decided to issue right shares to the existing shareholders
in the ratio of 25 shares for |
|
| every
100 shares held, at Rs.35/- per share including premium of Rs.25/- per share. |
|
|
| APPROPRIATION
OF PROFITS: |
|
|
|
Rs. In '000' |
|
|
|
| Net
Profit after Tax |
|
500,855 |
|
| Un-appropriated
Profit brought forward |
|
259,586 |
|
|
|
|
------------------ |
|
| Profit
available for appropriation |
|
760,441 |
|
|
|
|
|
|
| Appropriations: |
|
|
| Proposed
dividend @145% (1999 62%) |
|
203,000 |
|
|
|
|
------------------ |
|
| Un-appropriated
Profit carried forward |
|
557,441 |
|
|
|
|
========== |
|
|
| CAPITAL
EXPENDITURE |
|
| The
Company has made Capital Expenditure during the year in Plant & Machinery
and Building for about |
|
| Rs.318
millions in order to maintain and improve the quality standards and to
upgrade the mills with latest |
|
| technology.
The Management of the Company is well aware that the Spinning Industry has
become highly |
|
| competitive
and has continued to follow its policy of acquiring latest technology by
up-gradation of its plant and |
|
| machinery
through balancing, modernization and replacement of its spinning facilities. |
|
|
| BMR
AND EXPANSION PLAN |
|
| The
Company has planned for an Expansion & BMR for the current year amounting
to Rs.340 million. The plan |
|
| comprises
of expansion in spinning capacity by addition of 5040 spindles with most
modern state of art, back |
|
| process
and finishing machinery and addition of machinery in knitted unit, dyeing
plant and Balancing, |
|
| Modernizing
and Replacement of machinery. The said expansion plan is being financed
through Issue of Right |
|
| Shares,
Medium term bank loan and internal generation of funds. |
|
|
| FUTURE
OUTLOOK |
|
| The
management is making continuous efforts to diversify its business activities
and improve the quality of |
|
| products.
In order to compete in a highly commoditized industry, efforts are being made
to explore new markets |
|
| for
knitted dyed products. |
|
|
| In
this regard the management plans to grow in two directions, first, horizontal
integration, "Balancing" through |
|
| installation
of new spindles to enhance the utilization of the existing plant and secondly
through Modernization |
|
| of
old equipment to produce better quality products. |
|
|
| The
raw cotton price during the current season was very high in local as well as
international market at the start |
|
| of
the season and have now declined. Furthermore, there are also signs of
general slowdown in the international |
|
| market.
Considering the increase in the prices of cotton and general slowdown, it
appears that the profitability |
|
| of
the Company for the next year may substantially decline. |
|
|
| AUDITORS: |
|
| The
present Auditors M/S Mushtaq & Company, Chartered Accountants, retires
and being eligible, offer themselves |
|
| for
reappointment for the next year. |
|
|
| ACKNOWLEDGEMENTS: |
|
| The
Management would like to place on record its appreciation for the support of
the Board of Directors, |
|
| Shareholders,
Bankers, Suppliers and the dedication and hard work of the Staff and Workers. |
|
|
|
|
| Karachi. |
|
SHAHID ABDULLAH |
|
| Dated:
02 March, 2001 |
|
CHIEF EXECUTIVE |
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of Sapphire Fibres
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 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 September 30, 2000 and of the profit, its cash flows and
changes in |
|
| equity
for the year then ended; and |
|
|
| (d)
Without qualifying our opinion we draw attention to note 2.10 in the
financial statements |
|
| regarding
reclassification of direct expenses. |
|
|
| (e)
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. |
|
|
| Place: Karachi |
|
|
MUSHTAQ & CO. |
|
| Date:
2nd March, 2001 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT SEPTEMBER 30, 2000 |
|
|
|
|
Note |
2000 |
1999 |
|
|
|
|
Rupees |
Rupees |
|
|
| SHARE
CAPITAL AND RESERVES |
|
| Authorised
Capital |
|
|
|
| 35,000,000
Ordinary Shares of Rs. 10/- each |
|
350,000,000 |
150,000,000 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| Issued,
subscribed and paid-up capital |
3 |
140,000,000 |
140,000,000 |
|
|
|
|
|
| RESERVES |
|
|
|
| General reserve |
|
|
|
550,000,000 |
550,000,000 |
|
| Share premium |
|
|
4 |
58,240,000 |
58,240,000 |
|
| Unappropriated
profit |
|
|
557,440,617 |
259,585,726 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
1,165,680,617 |
867,825,726 |
|
|
|
|
|
------------------ |
------------------ |
|
| Share
holders' equity |
|
1,305,680,617 |
1,007,825,726 |
|
|
|
| LONG
TERM LIABILITIES |
|
| Redeemable
capital |
|
5 |
66,666,668 |
-- |
|
| Loans
from banks and financial institutions |
6 |
58,278,099 |
88,654,827 |
|
| Custom
duty payable |
|
7 |
-- |
727,597 |
|
|
|
------------------ |
------------------ |
|
|
|
124,944,767 |
89,382,424 |
|
|
|
| DEFERRED
LIABILITIES |
|
| Gratuity payable |
|
8 |
43,666,654 |
32,261,256 |
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Short
term bank borrowings |
|
9 |
443,172,169 |
586,907,112 |
|
| Loan
from associated undertakings and others |
10 |
37,534,173 |
-- |
|
| Current
maturity of long term liabilities |
11 |
64,437,657 |
34,634,597 |
|
| Creditor,
accrued and other liabilities |
12 |
155,275,280 |
121,007,249 |
|
| Proposed
dividend |
|
|
203,000,000 |
86,800,000 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
903,419,279 |
829,348,958 |
|
| Contingent
liabilities and commitments |
13 |
-- |
-- |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
2,377,711,317 |
1,958,818,364 |
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
| Karachi. |
|
| Dated:
2nd March, 2001 |
|
|
| TANGIBLE
FIXED ASSETS |
|
| Operating
assets |
|
14 |
851,850,679 |
737,990,279 |
|
| Capital
work in progress |
|
15 |
156,192,502 |
6,097,116 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
1,008,043,181 |
744,087,395 |
|
| LONG
TERM INVESTMENTS |
|
16 |
191,739,472 |
149,503,593 |
|
|
|
|
|
| LONG
TERM DEPOSITS |
|
17 |
1,252,378 |
1,209,078 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores,
spares and loose tools |
|
18 |
85,844,870 |
76,005,744 |
|
| Stock in trade |
|
19 |
245,055,487 |
262,418,005 |
|
| Trade debtors |
|
20 |
671,117,460 |
558,785,496 |
|
| Loans
and advances |
|
21 |
12,032,602 |
10,665,662 |
|
| Deposit,
prepayments and other receivables |
22 |
50,193,557 |
52,312,173 |
|
| Short
term investments |
|
23 |
7,740,196 |
6,374,630 |
|
| Cash
and bank balances |
|
24 |
104,692,114 |
97,456,588 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
1,176,676,386 |
1,064,018,298 |
|
|
------------------ |
------------------ |
|
|
|
2,377,711,317 |
1,958,818,364 |
|
|
========== |
========== |
|
|
|
SHAHID ABDULLAH |
|
MOHAMMAD ABDULLAH |
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 2000 |
|
|
|
|
Note |
2000 |
1999 |
|
|
|
|
Rupees |
Rupees |
|
|
| Sales (net) |
|
25 |
2,499,630,168 |
2,261,038,495 |
|
| Cost of sales |
|
26 |
1,851,913,350 |
1,870,220,825 |
|
|
|
|
------------------ |
------------------ |
|
| Gross Profit |
|
|
647,716,818 |
390,817,670 |
|
|
|
| OPERATING
EXPENSES |
|
| Administrative |
|
27 |
45,979,985 |
31,277,800 |
|
| Selling
and distribution |
|
28 |
8,427,623 |
6,630,420 |
|
|
|
|
------------------ |
------------------ |
|
|
54,407,608 |
37,908,220 |
|
|
------------------ |
------------------ |
|
| Operating
profit |
|
|
593,309,210 |
352,909,450 |
|
| Add:
Other income |
|
29 |
22,054,801 |
25,928,341 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
615,364,011 |
378,837,791 |
|
|
|
|
------------------ |
------------------ |
|
| Financial
Expenses |
|
30 |
110,241,552 |
128,673,987 |
|
| Workers
profit participation fund |
|
27,446,763 |
12,667,548 |
|
|
------------------ |
------------------ |
|
|
137,688,315 |
141,341,535 |
|
|
------------------ |
------------------ |
|
|
477,675,696 |
237,496,256 |
|
| Diminution
in value of investments written back |
|
43,701,445 |
2,974,048 |
|
|
------------------ |
------------------ |
|
| Net
Profit before taxation |
|
521,377,141 |
240,470,304 |
|
|
|
|
|
| TAXATION |
|
31 |
|
| Current year |
|
24,750,105 |
26,746,262 |
|
| Prior year |
|
(4,227,855) |
293,342 |
|
|
------------------ |
------------------ |
|
|
|
20,522,250 |
27,039,604 |
|
|
|
------------------ |
------------------ |
|
| Net
Profit after taxation |
|
500,854,891 |
213,430,700 |
|
| Add:
Unappropriated profit brought forward |
|
259,585,726 |
278,455,026 |
|
|
|
------------------ |
------------------ |
|
| PROFIT
AVAILABLE FOR APPROPRIATION |
|
760,440,617 |
491,885,726 |
|
|
|
|
|
| APPROPRIATIONS |
|
| Transfer
to general reserve |
|
-- |
100,000,000 |
|
| Dividend
prior year |
|
-- |
45,500,000 |
|
| Proposed
dividend @ 145% (1999: 62 %) |
|
203,000,000 |
86,800,000 |
|
|
------------------ |
------------------ |
|
|
|
203,000,000 |
232,300,000 |
|
|
|
|
------------------ |
------------------ |
|
| UNAPPROPRIATED
PROFIT CARRIED FORWARD |
557,440,617 |
259,585,726 |
|
|
|
|
========== |
========== |
|
| EARNING
PER SHARE |
|
32 |
35.77 |
15.25 |
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these account. |
|
|
| Karachi. |
|
SHAHID ABDULLAH |
|
MUHAMMAD ABDULLAH |
|
| Dated:
2nd March, 2001 |
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED SEPTEMBER 30,2000 |
|
|
|
|
|
2000 |
1999 |
|
| CASH
FLOW FROM OPERATIONS |
|
Rupees |
Rupees |
|
|
| Cash
generated from operations |
|
A |
602,316,774 |
270,075,232 |
|
|
| Financial
charges paid |
|
(107,780,315) |
(149,335,494) |
|
| Income tax paid |
|
|
(26,480,533) |
(23,796,727) |
|
| Gratuity paid |
|
|
(2,447,304) |
(1,485,629) |
|
|
|
------------------ |
------------------ |
|
|
|
(136,708,152) |
(174,617,850) |
|
|
|
------------------ |
------------------ |
|
| Net
cash inflow / (outflow) from operating activities |
465,608,622 |
95,457,382 |
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
|
| Fixed
capital expenditure |
|
(350,895,178) |
(132,676,421) |
|
| Sale
proceed of short term investments |
|
426,000 |
4,765,138 |
|
| (Increase)
/ decrease in long term deposits |
|
(43,300) |
(351,000) |
|
| Sale
proceeds of fixed assets |
|
411,932 |
2,306,000 |
|
| Decrease
/ (increase) in advance for purchase of land and shares |
800,000 |
5,200,000 |
|
| Dividend,
interest and other income |
|
18,162,903 |
21,770,105 |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash (outflow) from investing activities |
|
(331,137,643) |
(98,986,178) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
134,470,979 |
(3,528,796) |
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Long
term loans received |
|
|
100,000,000 |
-- |
|
| Repayment
of long term loans |
|
|
(33,907,000) |
(29,424,000) |
|
| Repayment
of custom duty |
|
|
(727,597) |
(727,597) |
|
| Dividend paid |
|
|
(86,400,086) |
(73,458,061) |
|
| Loan
from associated undertaking and others |
|
37,534,173 |
-- |
|
|
------------------ |
------------------ |
|
| Net
cash inflow / (outflow) from financing activities |
16,499,490 |
(103,609,658) |
|
|
|
|
------------------ |
------------------ |
|
| Net
increase / (decrease) in cash and cash equivalent |
150,970,469 |
(107,138,454) |
|
| Cash
and cash equivalents at the beginning of the year |
(489,450,524) |
(382,312,070) |
|
|
|
|
------------------ |
------------------ |
|
| Cash
and cash equivalents at the end of the year |
B |
(338,480,055) |
(489,450,524) |
|
|
========== |
========== |
|
|
| A.
CASH GENERATED FROM OPERATIONS |
|
| Profit
before taxation |
|
521,377,141 |
240,470,304 |
|
|
| Adjustments
for non-cash charges and other items |
|
|
| Depreciation |
|
|
|
86,754,381 |
76,222,681 |
|
| Provision
for gratuity |
|
|
13,852,702 |
7,566,654 |
|
| diminution
in value of investments written back |
|
(43,701,445) |
(2,974,048) |
|
| (Gain)
/loss on sale of fixed assets |
|
|
(226,921) |
(154,800) |
|
| (Gain)
/ loss on disposal of investments |
|
(326,000) |
(1,764,832) |
|
| Dividend,
interest and other income |
|
(18,162,903) |
(21,770,105) |
|
| Financial
charges |
|
|
110,241,552 |
128,673,987 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
148,431,366 |
185,799,537 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
before working capital changes |
|
669,808,507 |
426,269,841 |
|
|
|
|
| WORKING
CAPITAL CHANGES |
|
| (Increase)
/ decrease in current assets |
|
| Store,
spares and loose tools |
|
(9,839,129) |
312,764 |
|
| Stock in trade |
|
|
17,362,518 |
(158,050,917) |
|
| Trade debtors |
|
|
(112,331,964) |
1,407,731 |
|
| Loans
and advances |
|
(2,166,940) |
(1,476,208) |
|
