| Souvenir Tobacco Company Limited |
|
|
|
|
|
|
| Annual
Report 2000 |
|
|
|
| CONTENTS |
|
|
|
|
| Board
of Directors |
|
| Notice
of Annual General Meeting |
|
| Director's
Report |
|
| Auditor's
Report to the Members |
|
| Balance
Sheet |
|
| Profit
and Loss Account |
|
| Cash
Flow Statement |
|
| Notes
to the Cash Flow Statement |
|
| Statement
of Changes in Equity |
|
| Auditors
Notes on Accounts |
|
| Pattern
of Share Holdings |
|
|
|
| BOARD
OF DIRECTORS |
|
|
| Chairman |
|
| SADRUDDIN
LAKHANI |
|
|
| Managing
Director |
|
| SHAD
ALI KHAN |
|
|
| Directors |
|
| DILAWAR
KHAN |
|
| AZAM
KHAN |
|
| MUHAMMAD
RAZA SHAH |
|
| MAHMOOD
SHAIKH |
|
| AMEER
MUHAMMAD KHAN |
|
|
| Secretary |
|
| S. A. SALIM |
|
|
| Auditors |
|
| GANGAT
& CO. |
|
| Chartered
Accountants |
|
|
| Registered
Office |
|
| F-102/1,
Khayaban-e-Roomi, |
|
| Block-7,
Clifton, |
|
| Karachi
- 75600 |
|
|
|
| NOTICE
OF MEETING |
|
|
| NOTICE
is hereby given that Thirty Ninth Annual General Meeting of the Company will
be |
|
| held
on Monday the 30th Dec, 2000 at 11:00 A.M. at NAUBAHAR HALL, near Passport
Office, |
|
| Shahrah-e-
Iraq, Saddar, Karachi to transact the following business. |
|
|
| 1.
To confirm the Minutes of the last Annual General Meeting of the Company |
|
| held
on 08-05-2000. |
|
|
| 2.
To receive, consider and approve the Audited Accounts for the year ended 30th |
|
| June,
2000 and Director's report thereon. |
|
|
| 3.
To appoint Auditors for the ensuing year and fix their remuneration. |
|
|
| 4.
To transact any other ordinary business of the Company with Permission of the |
|
| Chairman. |
|
|
|
BY ORDER OF THE BOARD |
|
|
|
(S. A. SALIM) |
|
| Karachi:
Dec, 4-2000. |
|
Company Secretary |
|
|
| N.B. |
|
| 1.
The Share Transfer Books of the Company will be closed from 21-12-2000 to
30-12-2000 |
|
| (both
days inclusive). Transfers received in order at the Registered Office of the
Company by |
|
| 2.00
RM. on 20-12-2000 will be treated in time. |
|
|
| 2.
A member entitled to attend and vote at this meeting may appoint any person,
as his/her |
|
| proxy
to attend and vote instead of him/her. Proxis in order to be effective, must
be received |
|
| by
the Company not less than 96 hours before the Meeting. Such proxy should be a
member |
|
| of
the Company. |
|
|
|
|
| DIRECTORS
REPORT |
|
|
| The
Directors of your company are pleased to present their Annual report together
with the |
|
| Audited
Accounts for the year ended 30th June, 2000. |
|
|
| The
Financial result during the year under review has shown significant
improvement as |
|
| compared
to previous year mainly on account of higher sales volume and lower incidence |
|
| of Central Excise Duty on our brands |
due to adjustment in the
lower slab of CED |
|
| structure
announced in 1999-2000 budget. |
|
|
| Both
production and turnover showed considerable growth as compared to last year, |
|
| resulting
in higher profitability and higher Government Revenues. |
|
|
| The
market is witnessing a fierce and cut throat price war between the
multinational |
|
| companies
who are enjoying a virtual monopoly in the higher and middle segment |
|
| brands.
They have reduced prices of their well established brands by almost 100% and |
|
| are
backing it with extensive and expensive promotion schemes. The smaller
companies |
|
| do
not have the resources and capacity to counter this ruthless competition and
are |
|
| loosing
their market share. This certainly calls for corrective measures by the |
|
| Government
for survival of the smaller units. |
|
|
| As
a consequence of the above, sales of your company has shown a declining trend
in the |
|
| first
half of the current year and we anticipate a difficult and challenging year. |
|
|
| We
are pleased to inform you that all our issues and disputes with the banks
have been |
|
| settled
amicably and we wish to express our sincere gratitude to all the concerned
banks |
|
| for
the co-operation and support extended to us. |
|
|
| In
view of accumulated losses, no dividend is recommended. |
|
|
| The
Directors wish to place on record their appreciation for the co-operation and
loyal services |
|
| rendered
by the employees of the company. |
|
|
| The
Auditors M/s. Gangat & Co. Chartered Accountants retire and offer
themselves for re- |
|
| appointment. |
|
|
| Statement
of pattern of shareholders is enclosed. |
|
|
|
On behalf of the Board of
Directors |
|
|
|
SADRUDDIN LAKHANI |
|
| Karachi
· Dec - 04-2000 |
|
Chairman |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed Balance sheet of Souvenir Tobacco Company 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 |
|
| 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 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 |
|
| statement
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 account 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 Accounts together with 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, 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/loss |
|
| 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). |
|
|
|
GANGAT & CO. |
|
| Karachi
· Dec - 04-2000 |
|
Chartered Accountants |
|
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 2000 |
|
|
| CAPITAL
AND LIABILITIES |
|
Note |
JUNE 30, |
JUNE 30, |
|
|
2000 |
1999 |
|
|
Rupees |
Rupees |
|
| SHARE
CAPITAL AND RESERVES |
|
| Authorised |
|
| 5,000,000
(1999: 5,000,000) Ordinary shares of |
|
| Rs. 10/- each |
|
50,000,000 |
50,000,000 |
|
|
========== |
========== |
|
| Issued,
subscribed and paid up capital |
|
20,1 1 5,260 |
20,11 5,260 |
|
| Accumulated
loss |
|
(35,913,643) |
(53,479,800) |
|
|
----------- |
----------- |
|
|
(15,798,383) |
(33,364,540) |
|
| SURPLUS
ON REVALUATION OF FIXED ASSETS |
|
1 5,003,937 |
1 5,003,937 |
|
| LONG
TERM LOANS |
|
4 |
34,725,998 |
46,041,998 |
|
| DEFERRED
LIABILITIES |
|
|
|
|
| Provision
for gratuity |
|
|
2,695,303 |
2,101,434 |
|
| CURRENT
LIABILITIES |
|
|
|
|
| Short
term borrowings/finances |
|
5 |
25,620,847 |
42,701,313 |
|
| Sponsors'
loan from Directors and family members |
6 |
429,000 |
1,179,000 |
|
| Current
portion of long term liabilities |
|
7 |
7,047,388 |
16,049,980 |
|
| Creditors,
accrued & other liabilities |
|
8 |
68,030,433 |
46,219,080 |
|
| Taxation |
|
702,107 |
514,767 |
|
|
----------- |
----------- |
|
|
101,829,775 |
106,664,140 |
|
| CONTINGENCIES AND
COMMITMENTS |
9 |
-- |
-- |
|
|
----------- |
----------- |
|
|
138,456,630 |
136,446,969 |
|
|
========== |
========== |
|
| PROPERTY
AND ASSETS |
|
|
|
| TANGIBLE
FIXED ASSETS |
|
| Operating
assets |
|
10 |
26,086,927 |
28,321,750 |
|
| LONG
TERM INVESTMENTS |
|
|
-- |
52,300 |
|
| DEFERRED
COSTS |
|
|
-- |
1,517,464 |
|
| CURRENT
ASSETS |
|
|
|
|
| Stores
and spares |
|
11 |
3,212,618 |
3,178,939 |
|
| Stock-in-trade |
|
12 |
99,585,898 |
95,178,543 |
|
| Trade
Debtors |
|
13 |
2,224,757 |
539,914 |
|
| Loans,
advances, deposits, |
|
|
|
|
| prepayments
& other receivables |
|
14 |
4,538,548 |
6,284,507 |
|
|
|
|
|
| Cash
and bank balances |
|
15 |
2,807,882 |
1,373,552 |
|
|
----------- |
----------- |
|
|
112,369,703 |
106,555,455 |
|
|
|
|
|
----------- |
----------- |
|
|
138,456,630 |
136,446,969 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
| Karachi
· Dec-04,2000. |
|
|
|
MAHMOOD SHAIKH |
|
SHAD ali KHAN |
|
GANGAT & CO. |
|
|
Director Finance |
|
Managing Director |
|
Chartered Accountant |
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
|
|
Year Ended |
Year Ended. |
|
|
|
JUNE 30, |
JUNE 30, |
|
|
|
2000 |
1999 |
|
|
Note |
Rupees |
Rupees |
|
| Turnover |
|
289,072,789 |
157,525,080 |
|
| Cost of sales |
|
16 |
242,782,772 |
140,260,678 |
|
|
|
------------ |
------------ |
|
| Gross Profit |
|
|
46,290,017 |
17,264,402 |
|
| Marketing
and distribution expenses |
|
17 |
10,451,031 |
2,822,001 |
|
| Administrative
expenses |
|
18 |
3,432,222 |
3,189,848 |
|
| Depreciation |
|
2,279,823 |
2,560,170 |
|
|
------------ |
------------ |
|
|
16,163,076 |
8,572,019 |
|
|
------------ |
------------ |
|
| Operating
profit |
|
30,126,941 |
8,692,383 |
|
| Non-operating
income |
|
19 |
8,618 |
1,754,550 |
|
|
|
------------ |
------------ |
|
|
|
30,135,559 |
10,446,933 |
|
| Financial
expenses |
|
20 |
6,842,556 |
7,321,676 |
|
|
|
------------ |
------------ |
|
|
|
23,293,003 |
3,125,257 |
|
| Worker's
profit participation fund |
|
21 |
1,194,110 |
187,948 |
|
|
|
------------ |
------------ |
|
| Profit
before taxation |
|
|
22,098,893 |
2,937,309 |
|
| Prior
year Adjustments |
|
22 |
(3,830,629) |
(30,307,736) |
|
|
|
------------ |
------------ |
|
| Taxation |
|
18,268,264 |
(27,370,427) |
|
| -
Current year |
|
702,107 |
514,767 |
|
| - Prior year |
|
-- |
220,887 |
|
|
------------ |
------------ |
|
|
702,107 |
735,654 |
|
|
------------ |
------------ |
|
| Profit
/ (Loss) after taxation |
|
17,566,157 |
(28,106,081) |
|
| Appropriation
· |
|
| Proposed
Dividend |
|
-- |
-- |
|
|
------------ |
------------ |
|
| Profit
/ (Loss) after appropriation |
|
17,566,157 |
(28,106,081) |
|
| Accumulated
loss brought forward |
|
(53,479,800) |
(25,837,071) |
|
| Dividend
written back |
|
24 |
-- |
463,352 |
|
|
|
------------ |
------------ |
|
| Accumulated
loss carried forward |
|
|
(35,913,643) |
(53,479,800) |
|
|
|
========== |
========== |
|
| Earning
/ (Loss) per share |
|
25 |
8.73 |
(13.97) |
|
|
|
========== |
========== |
|
| The
notes referred to above from an integral part of the profit and loss account |
|
|
|
MAHMOOD SHAIKH |
|
SHAD Ali KHAN |
|
GANGAT & CO. |
|
|
Director Finance |
|
Managing Director |
|
Chartered Accountant |
|
|
|
| Karachi:
Dec-4,2000 |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
|
|
Year Ended |
Year Ended |
|
|
|
JUNE 30, |
JUNE 30, |
|
|
|
2000 |
1999 |
|
|
Note |
Rupees |
Rupees |
|
| CASH
FLOW FROM OPERATING ACTIVITIES: |
|
| Cash
generated / (used for) from operations |
A |
45,359,049 |
(11,684,965) |
|
| Gratuity paid |
|
|
(171,498) |
(71,099) |
|
| Taxes paid |
|
|
(451,588) |
(694,010) |
|
| Financial
charges paid |
|
|
(7,352,821) |
(8,375,276) |
|
|
|
------------ |
------------ |
|
| Net
cash inflow / (outflow) from operating activities |
|
37,383,142 |
(20,825,350) |
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES: |
|
| Fixed
capital expenditure |
|
(45,000) |
-- |
|
| Sales
proceeds of investment |
|
60,918 |
-- |
|
| Net
(increase)/decrease deferred costs |
|
1,517,464 |
(278,890) |
|
|
------------ |
------------ |
|
| Net
cash (inflow)/outflow from investing activities |
|
1,533,382 |
(278,890) |
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES: |
|
| Associated
undertaking |
|
(900,000) |
-- |
|
| Repayment
of redeemable capital |
|
-- |
(200,000) |
|
| Proceeds
from Long term loans |
|
(20,318,592) |
27,547,353 |
|
| Dividend
paid |
|
(83,136) |
(240,529) |
|
|
------------ |
------------ |
|
| Net
cash (outflow) inflow from financing activities |
|
(21,301,728) |
27,106,824 |
|
|
------------ |
------------ |
|
| Net
increase in cash and cash equivalents |
|
17,614,796 |
6,002,584 |
|
| Cash
and cash equivalent at beginning of the year |
B |
(38,127,761) |
(44,130,345) |
|
|
|
------------ |
------------ |
|
| Cash
and cash equivalent at end of the year |
B |
(20.512,965) |
(38,127,761) |
|
|
========== |
========== |
|
|
|
|
|
MAHMOOD SHAIKH |
|
SHAD ALI KHAN |
|
GANGAT & CO. |
|
|
Director Finance |
|
Managing Director |
|
Chartered Accountant |
|
|
|
|
| NOTES
TO THE CASH FLOW STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
|
JUNE 30, |
JUNE 30, |
|
|
2000 |
1999 |
|
|
Rupees |
Rupees |
|
| A.
CASH GENERATED FROM OPERATIONS |
|
| Profit
before taxation |
|
22,098,893 |
2,937,309 |
|
| Adjustment
for non-cash charges and other items: |
|
|
|
| Depreciation |
|
2,279,823 |
2,560,170 |
|
| Profit
on long term investments |
|
(8,618) |
-- |
|
| Prior
year Adjustments |
|
(3,830,629) |
(30,307,736) |
|
| Gratuity |
|
765,367 |
354,343 |
|
| Financial
charges |
|
6,842,556 |
7,321,676 |
|
|
----------- |
----------- |
|
| Profit
before working capital changes |
|
28,147,392 |
(17,134,238) |
|
|
| Effects
on cash flow due to working capital changes: |
|
| (Increase)/decrease
in Current Assets |
|
| Stores
and spares |
|
(33,679) |
1,419,941 |
|
| Stock-in-trade |
|
(4,407,355 |
(8,925,283) |
|
| Trade
debtors |
|
(1,684,843 |
4,087,705 |
|
| Loan,
advances, deposits, prepayments and |
|
|
|
| other
receivables |
|
1,682,780 |
(308,477) |
|
|
----------- |
----------- |
|
|
(4,443,097) |
(3,726,114) |
|
| Increase/(decrease)
in Current Liabilities |
|
| Sponsors
loan from directors and family members |
|
(750,000) |
(50,000) |
|
| Creditors,
accrued and other liabilities |
|
22,404,754 |
9,225,387 |
|
|
----------- |
----------- |
|
|
21,654,754 |
9,175,387 |
|
|
----------- |
----------- |
|
|
45,359,049 |
(11,684,965 |
|
|
========== |
========== |
|
| B.
CASH AND CASH EQUIVALENTS COMPRISE: |
|
| Cash
and bank balances |
|
2,807,882 |
1,373,552 |
|
| Short-term
secured bank borrowings/finances |
|
(23,320,847) |
(39,501,313) |
|
|
----------- |
----------- |
|
|
(20,512,965) |
(38,127,761) |
|
|
========== |
========== |
|
|
|
|
| Statement
Of Changes in Equity |
|
| For
the Year ended June 30, 2000 |
|
|
|
Share |
Unappropriated |
Total |
|
|
Capital |
Profit |
Rupees |
|
| Balance
as at June 30, 1998 |
|
20,115,260 |
(53,943,152) |
(33,827,892) |
|
| Appropriation: |
|
| Dividend
written back |
|
-- |
463,352 |
463,352 |
|
|
----------- |
----------- |
----------- |
|
| Balance
as at June 30, 1999 |
|
20,115,260 |
(53,479,800) |
(33,364,540) |
|
|
| Profit
for the year ended June 30, 2000 |
-- |
17,566,157 |
17,566,157 |
|
|
----------- |
----------- |
----------- |
|
|
20,115,260 |
(35,913,643) |
(15,798,383) |
|
|
| Appropriation: |
|
| Proposed
dividend |
|
-- |
-- |
-- |
|
|
----------- |
----------- |
----------- |
|
| Balance
as at June 30, 2000 |
20,115,260 |
(35,913,643) |
(15,798,383) |
|
|
========== |
========== |
========== |
|
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
| 1.
COMPANY AND ITS OPERATIONS |
|
| The
company is incorporated in Pakistan and is listed on the Karachi Stock
Exchange. It is |
|
| engaged
in the manufacture and sale of cigarettes. |
|
|
| 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
| 2.1
Accounting Convention |
|
| These
accounts have been prepared on the basis of historical cost convention which
permits the re- |
|
| statements
of fixed assets at revalued amounts. |
|
|
| 2.2
Staff Retirement Benefits |
|
| The
Company operates: |
|
| a)
a provident fund scheme effective from July 01, 1963 |
|
| b)
an unfunded gratuity scheme for its employees. |
|
|
| 2.3
TANGIBLE FIXED ASSETS |
|
| Fixed
assets except land and building are recorded at historical cost less
Accumulated depreciation. |
|
| Land
and building are recorded at revalued cost. |
|
|
| Freehold
land is not amortized. Depreciation is charged to income on the basis of
historical written |
|
| down
value as increased by foreign currency translation loss or the revalued
amounts at the |
|
| following
rates: |
|
|
| Building
on freehold land |
10% |
|
| Plant
and machinery |
10% |
|
| Furniture
and fixtures |
10% |
|
| Equipment |
|
15% |
|
| Vehicles |
|
20% |
|
|
| Full
year's depreciation is charged on additions, while no depreciation charged on deletions |
|
| during
the year. |
|
| Normal
repairs and maintenance are charged to income currently. |
|
|
| Gains
and losses, if any, on disposal of fixed assets are included in income. |
|
|
| 2.4
TAXATION |
|
| Current |
|
| Provision
for current taxation is based on taxable income on current rates of taxation
after taking |
|
| into
account tax rebates and tax credits available or based on 0 5% of turnover
less related excise |
|
| duty,
whichever is higher. |
|
|
| Deferred |
|
| The
Company accounts for deferred taxation on all material timing differences
using |
|
| the
liability method excluding the tax effects of those timing differences which
are considered |
|
| not
likely to reverse in the foreseeable future (see note 23). |
|
|
| 2.5
INVESTMENTS |
|
| These
are valued at cost. |
|
|
| 2.6
STORES AND SPARES |
|
| Stores
and spares are stated at cost on the basis of first in first out. |
|
|
| 2.7 STOCK-IN-TRADE |
|
| Raw
materials and work in process are stated at average cost. Finished goods are
valued at the |
|
| lower
of average cost and net realisable value. |
|
|
| 2.8
REVENUE RECOGNITION |
|
| Sales
are recorded on despatch of goods. |
|
|
JUNE 30, |
JUNE 30, |
|
|
2000 |
1999 |
|
|
Rupees |
Rupees |
|
| 3.
ISSUED, SUBSCRIBED AND PAID UP CAPITAL |
|
| 1,203,704
( 1999: 1,203,704) ordinary shares |
|
| of
Rs. 10 each fully paid in cash |
|
12,037,040 |
12,037,040 |
|
|
