| Abbas Engineering Industries Limited |
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| Annual
Report 2000-2001 |
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| CONTENTS |
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| COMPANY
INFORMATION |
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| NOTICE
OF ANNUAL GENERAL MEETING |
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| DIRECTORS'
REPORT |
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| AUDITORS'
REPORT |
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| BALANCE
SHEET |
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| PROFIT
AND LOSS ACCOUNT |
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| CASH
FLOW STATEMENT |
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| STATEMENT
OF CHANGES IN EQUITY |
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| NOTES
TO THE ACCOUNTS |
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| PATTERN
OF SHAREHOLDINGS |
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| COMPANY
INFORMATION |
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| BOARD
OF DIRECTORS |
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| CHAIRMAN |
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Mr. Riaz Lalljee |
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| CHIEF
EXECUTIVE |
Mrs. Nazneen Lalljee |
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|
Mr. Suleman Lakhany |
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|
Mr. Nasir Ahmed |
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|
Mr. Anjum Nasim |
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|
Dr. Nayyar Khawaja
(Nominee of Pakistan Steel Mills Corporation Ltd.) |
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|
Mr. Shahid Anwar (Nominee
of National Investment Trust) |
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| COMPANY
SECRETARY |
Mr. Nasir Ahmed |
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| GENERAL MANAGER FINANCE |
Mr. Habib Ullah |
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| AUDITORS |
|
Faruq Ali & Co. |
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|
Chartered Accountants |
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| LEGAL
ADVISOR |
Faruqui & Co. |
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|
Advocates & Legal
Consultants |
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| BANKERS |
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United Bank Limited |
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Muslim Commercial Bank
Limited |
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|
Habib Bank Limited |
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Oman International Bank |
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Faysal Bank Limited |
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| REGISTERED
OFFICE |
123-Old Clifton |
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|
Karachi. |
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| FACTORY |
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DSU-2, Bin Qasim |
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Karachi. |
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| NOTICE
OF ANNUAL GENERAL MEETING |
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| Notice
is hereby given that the 19th Annual General Meeting of the Company will be
held at |
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| 10:30
a.m. on Friday the 21st December, 2001 at Beach Luxury Hotel, M. Tamizuddin
Khan |
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| Road,
Karachi, to transact the following business: |
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| Ordinary
Business: |
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| 1.
To confirm the minutes of 18th Annual General Meeting held on December 20,
2000. |
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| 2.
To receive, consider and adopt the Audited Accounts for the year ended June
30, 2001 |
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| together
with Directors and Auditors Reports thereon. |
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| 3.
To appoint auditors for the year 2001-2002 and to fix their remuneration. The
present |
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| Auditors
M/s Faruq Ali & Co., Chartered Accountants, retire and being eligible,
offer |
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| themselves
for re-appointment. |
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| Special
Business: |
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| 4.
To consider and if deemed fit and proper, pass the following resolution as
Special Resolution: |
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| "RESOLVED
that the majority shareholders/sponsors of the Company will buy-back shares |
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| of
the Company at a price of Rs. 13.75 per share fixed by the Karachi Stock
Exchange from |
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| the
general public, NIT and other shareholders of the Company." |
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| "FURTHER
RESOLVED that the Company be de-listed from Karachi and Lahore Stock |
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| exchanges,
Mr. Nasir Ahmed, Director & Company Secretary be and is hereby authorised |
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| to
take necessary action as deemed fit in this regard." |
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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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|
NASIR AHMED |
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| Karachi:
November 28, 2001 |
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Company Secretary |
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| NOTE: |
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| 1.
The share transfer books of the Company will remain closed from December 14
to |
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| December
21, 2001 (both days inclusive). |
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| 2.
A member of the Company entitled to attend and vote at this meeting may
appoint another |
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| member
as his/her proxy to attend and vote instead of him/her. Proxies in order to
be |
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| effective
must be received by the Company not less than 48 hours before the meeting. |
|
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| CDC
Account Holders will further have the following under mentioned guidelines as
laid |
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| down
by the Securities and Exchange Commission of Pakistan: |
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| A)
For Attending Meeting: |
|
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| (i)
In the case of individuals, the account holder or sub-account holder and/or
the person |
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| whose
securities are in group account and their registration details are uploaded
as |
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| per
the Regulations, shall authenticate his identity by showing his original
National |
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| Identity
Card (NIC) or original passport at the time of attending the meeting. |
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| (ii)
In the case of corporate entity, the Board of Directors' resolution/power of
attorney |
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| with
specimen signature of the nominee shall be produced (unless it has been
provided |
|
| earlier)
at the time of meeting. |
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| B)
For Appointing Proxies: |
|
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| (i)
In the case of individuals, the account holder or sub-account holder and/or
the person |
|
| whose
securities are in group account and their registration details are uploaded
as |
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| per
the Regulations, shall submit the proxy form as per the above requirement. |
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|
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| (ii)
The proxy shall be witnessed by two persons whose names, addresses and NIC |
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| numbers
shall be mentioned on the form. |
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|
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| (iii)
Attested copies of NIC or the passport of the beneficial owners and proxy
shall be |
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| furnished
with the proxy form. |
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|
|
|
| (iv)
The proxy shall produce his original NIC or original passport at the time of
meeting. |
|
|
| (v)
In the case of corporate entity, the Board of Directors' resolution/power of
attorney |
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| with
specimen signature of the nominee shall be produced (unless it has been
provided |
|
| earlier)
along with proxy form to the Company. |
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|
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| 3.
Statement under Section 160 of Companies Ordinance 1984 |
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| The
approval of Shareholders of the Company is being sought for de-listing from
Stock |
|
| Exchanges.
The reasons for de-listing are explained in Directors' Report. The Karachi |
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| Stock
Exchange vide its letter No. KSE/C-533-4080 dated August 31, 2001 has fixed a |
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| price
of Rs. 13.75 (Rupees thirteen and paisas seventy five) per share for buying
back of |
|
| the
shares by Sponsors. |
|
|
| 4.
Shareholders are requested to notify any change in address immediately on the
following |
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| address: |
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|
Abbas Engineering Industries Limited |
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|
123-O1d Clifton, Karachi. |
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| DIRECTORS'
REPORT |
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| The
directors have pleasure in presenting their Annual Report together with the
Audited Accounts and |
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| the
Auditors' Report thereon for the year ended June 30, 2001 and welcoming you
all to the 19th |
|
| Annual
General Meeting of the Company. |
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|
| OPERATING
AND FINANCIAL RESULTS |
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| The
Gross Sales of main products of your Company - Wire Rods and Baling Hoops
increased |
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| substantially
by 15% collectively over last year and amounting to Rs. 401.965 million
against |
|
| Rs.350.285
million in the preceding year. The Gross Sales of Wire Rods Rs. 295.184
million and |
|
| Baling
Hoops Rs. 106.781 million registered an increase of 14% and 16% respectively
over 1999- |
|
| 2000. |
|
|
| The
total production of the Company also increased to 17,104 Metric Ton during
the year under |
|
| review
as compared to 16,738 Metric Ton in the year 1999-2000. The supply position
of billets during |
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| the
year under review by Pakistan Steel Mills Corporation Limited was irregularly
and unsatisfactorily. |
|
|
| The
Gross Profit decreased to 5.66% in the year under review as compared to 6.40%
in the last year |
|
| and
the main reason for this fall was no rebate allowed by the Pakistan Steel
Mills Corporation Limited |
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| on
billets during the year 2000-2001. |
|
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| The
actual production during the year was as under: |
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|
30th , June |
30th June |
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|
2001 |
2000 |
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|
(Metric
Tons) |
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| Wire Rods |
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|
13,031 |
12,924 |
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| Baling Hoops |
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|
4,073 |
3,814 |
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|
------------------ |
------------------ |
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| Total |
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|
17,104 |
16,738 |
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|
========== |
========== |
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| During
the year under review the plant capacity utilization for the year was 44% of
maximum designed |
|
| capacity. |
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|
| ADVANCE
TO ASSOCIATED UNDERTAKING |
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| During
the year the position of advances given for purchase of raw-materials to M/s.
Abbas Steel |
|
| Industries
(Private) Limited, an associated company has reduced to Rs. 47.264 million
against |
|
| Rs.
78.115 million in last year. However the Company is charging mark-up at bank
rate on daily |
|
| product
basis as per agreement. |
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|
| BUY-BACK
OF SHARES |
|
| The
Board of Directors of the Karachi Stock exchange (Guarantee) Limited vide
their letter No. |
|
| KSE/C-533-4080
of August 31,2001 has approved the de-listing of the Company from the |
|
| Exchange
and fixed a price of Rs. 13.75 (Rupees thirteen and paisas seventy five) for
the buy- |
|
| back
of shares by the sponsors of the Company from the shareholders of the
Company. The |
|
| procedure
for buy-back will be notified after the approval of the special resolution,
to be proposed |
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| in
the Annual General Meeting of the Company. |
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| OUTLOOK
FOR 2001-2002 |
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| The
performance of your Company in the coming year will naturally depend upon the
steel market |
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| stability,
economic and political conditions of the country as well as positive growth
in the global |
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| economy
and regular supply of billets by Pakistan Steel Mills Corporation Limited. On
the other hand |
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| there
is no signs of any improvements in the local steel market position so far. |
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|
| BOARD
OF DIRECTORS |
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| During
the year Mr. Hammad Mehmood, nominee director of NIT and Mr. S.U. Beg &
Mr. M. Haroon, |
|
| nominee
directors of PASMIC resigned from the Board. Mr. Shahid Anwar, nominee
director of NIT and |
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| Dr.
Nayyar Khawaja, nominee director of PASMIC were appointed to fill up the
vacancy created thereby |
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| for
the remainder of their terms of office. |
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| The
Board places on record the valuable services rendered by the outgoing nominee
directors and welcomes |
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| the
new nominee directors. |
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|
| AUDITORS |
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| The
present auditors' M/s Faruq Ali & Co., Chartered Accountants, retire and
being eligible offer |
|
| themselves
for re-appointment for the year 2001-2002. |
|
|
| PATTERN
OF SHAREHOLDING |
|
| A
statement showing pattern of shareholding as at June 30, 2001 is attached. |
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|
| EARNING
PER SHARE |
|
| Earning
per share is given in Accounts |
|
|
| ACKNOWLEDGEMENT |
|
| The
Directors are pleased to place on record their deep appreciation of work and
dedicated services |
|
| being
rendered by both the management staff and the employees. We are confident
that their |
|
| continued
dedications will more bring the better results in the coming year. |
|
|
| STATEMENT
UNDER SECTION 241(2) OF THE COMPANIES ORDINANCE 1984 |
|
| The
Chief Executive of the Company is presently out of country, therefore this
Report has been signed |
|
| by
two Directors of the Company duly authorised by the Board of Directors. |
|
|
|
|
By Order of
the Board |
|
|
|
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| Karachi:
November 28, 2001 |
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|
Director |
Director |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of ABBAS ENGINEERING
INDUSTRIES LIMITED as at |
|
| 30th
June 2001 and the related profit & 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 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)
An amount of Rs. 204.285 million is outstanding against M/s Abbas Steel
Industries (Pvt.) Limited, |
|
| an
associated company which remained being advanced during the period 1997 to
2001. |
|
|
|
|
| (b)
In our opinion, proper books of account have been kept by the company as
required by the |
|
| Companies
Ordinance, 1984; |
|
|
|
|
| (c)
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; |
|
|
| (d)
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, 2001 and of the profit its cash flows
and changes |
|
| in
equity for the year then ended; and |
|
|
|
|
|
|
| (e)
no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980; |
|
|
|
|
| (f)
Without qualifying our opinion, we draw attention to the fact that, although
company Earned |
|
| a
profit of Rs. of 1.631 million during the year ended June 30, 2001 but as of
that date, the |
|
| company's
accumulated losses exceeded its capital by Rs. 11.468 million and Its current |
|
| liabilities
exceeded its current assets by Rs. 40.712 million. |
|
|
|
|
|
|
FARUQ ALI & CO. |
|
| Karachi:
November 27, 2001 |
|
Chartered Accountants |
|
|
|
|
|
|
|
| Balance
Sheet as at 30 June, 2001 |
|
|
|
Note |
2001 |
2000 |
|
|
(Rupees in
'000) |
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
|
| AUTHORISED |
|
| 5,000,000
ordinary shares of |
|
| Rs. 10/- each |
|
|
50,000 |
50,000 |
|
|
========== |
========== |
|
|
| ISSUED,
SUBSCRIBED AND PAID-UP |
|
| 4,200,000
(2000: 4,200,000) ordinary shares of |
|
| Rs. 10/- each |
|
4 |
42,000 |
42,000 |
|
|
| ACCUMULATED
LOSSES |
|
|
(53,468) |
(55,099) |
|
|
------------------ |
------------------ |
|
|
|
(11,468) |
(13,099) |
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Finances
under mark-up arrangements |
5 |
169,938 |
169,938 |
|
| Creditors,
accrued expenses and |
|
|
|
| other liabilities |
|
6 |
174,818 |
138,232 |
|
| Provision
for taxation |
|
|
3,526 |
3,186 |
|
|
|
|
------------------ |
------------------ |
|
|
|
348,282 |
311,356 |
|
| CONTINGENCIES |
|
7 |
|
|
|
|
------------------ |
------------------ |
|
|
|
336,814 |
298,257 |
|
|
|
|
========== |
========== |
|
|
|
|
| FIXED
ASSETS - at cost less |
|
|
|
| accumulated
depreciation |
|
8 |
27,723 |
30,194 |
|
|
|
|
|
| LONG-TERM
DEPOSITS |
|
|
1,521 |
1,382 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores,
spares and loose tools |
|
9 |
1,925 |
3,841 |
|
| Stock-in-trade |
|
10 |
9,755 |
11,582 |
|
| Trade
debts-unsecured considered good |
11 |
2,121 |
2,605 |
|
| Advances,
deposits, prepayments |
|
|
|
| and
other receivables |
|
12 |
233,747 |
160,032 |
|
| Advance
to associated undertaking |
13 |
47,264 |
78,115 |
|
| Cash
and bank balances |
|
14 |
12,758 |
10,506 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
307,570 |
266,681 |
|
|
|
|
------------------ |
------------------ |
|
|
336,814 |
298,257 |
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts |
|
|
| Statement
under section 241 (2) of the Companies Ordinance, 1984 |
|
| The
Chief Executive of the company is presently out of the country, therefore
these accounts have been |
|
| signed
by two Directors of the company duly authorised by the Board of Directors. |
|
|
|
Director |
|
Director |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| For
the year ended 30 June, 2001 |
|
|
|
|
Note |
2001 |
2000 |
|
|
|
(Rupees in
'000) |
|
|
|
|
| Sales - Net |
|
18 |
359,299 |
313,217 |
|
| Cost
of goods sold |
|
19 |
338,955 |
293,157 |
|
|
|
|
------------------ |
------------------ |
|
| Gross Profit |
|
|
20,344 |
20,060 |
|
| Other Income |
|
20 |
32,227 |
28,804 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
52,571 |
48,864 |
|
|
|
|
------------------ |
------------------ |
|
| Administrative
expenses |
|
21 |
8,993 |
7,793 |
|
| Selling expenses |
|
22 |
4,632 |
3,017 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
13,625 |
10,810 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
38,946 |
38,054 |
|
|
|
|
------------------ |
------------------ |
|
| Financial
charges |
|
23 |
36,296 |
36,496 |
|
| Workers'
profit participation fund |
|
|
133 |
78 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
36,429 |
36,574 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
for the year |
|
|
2,517 |
1,480 |
|
| Add:
Prior year's Adjustment |
|
24 |
2,021 |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
4,538 |
1,480 |
|
| Provision
for Taxation |
|
| - Current year |
|
|
1,960 |
1,556 |
|
| - Prior year |
|
|
947 |
(1,369) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
2,907 |
187 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
for the year |
|
|
1,631 |
1,293 |
|
| Accumulated
Losses brought forward |
|
(55,099) |
(56,392) |
|
|
|
|
------------------ |
------------------ |
|
| Accumulated
Losses carried forward |
|
(53,468) |
(55,099) |
|
|
|
|
========== |
========== |
|
| Earning
per share |
|
29 |
0.39 |
0.31 |
|
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts |
|
|
| Statement
under section 241 (2) of the Companies Ordinance, 1984 |
|
| The
Chief Executive of the company is presently out of the country, therefore
these accounts have been |
|
| signed
by two Directors of the company duly authorised by the Board of Directors. |
|
|
|
Director |
|
Director |
|
|
|
| CASH
FLOW STATEMENT |
|
| For
the year ended 30 June, 2001 |
|
|
|
Note |
2001 |
2000 |
|
|
|
(Rupees in
'000) |
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| Cash
generated from operations |
|
27 |
(28,103) |
1,265 |
|
| Income tax paid |
|
|
(138) |
(1,875) |
|
| Advances
to associated undertaking |
|
30,851 |
10,111 |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash (outflow) / inflow from operating activities |
|
2,610 |
9,501 |
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
| Purchase
of fixed assets |
|
(219) |
(2) |
|
| Security
deposit K.E.S.C |
|
(139) |
-- |
|
|
|
------------------ |
------------------ |
|
| Net
cash inflow / (outflow) from investing activities |
|
(358) |
(2) |
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
-- |
-- |
|
|
|
------------------ |
------------------ |
|
| NET
(DECREASE) / INCREASE IN |
|
| CASH
AND CASH EQUIVALENTS |
|
2,252 |
9,499 |
|
|
|
|
|
| CASH
DEFICIT / EQUIVALENTS AT |
|
|
| BEGINNING
OF THE YEAR |
|
|
(159,432) |
(168,931) |
|
|
|
|
|
|
| CASH
DEFICIT / EQUIVALENTS AT |
|
------------------ |
------------------ |
|
| END
OF THE YEAR |
|
28 |
(157,180) |
(159,432) |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts |
|
|
|
Director |
|
Director |
|
|
|
| STATEMENT
OF CHANGES IN EQUITY |
|
| For
the year ended 30 June, 2001 |
|
|
|
Share Capital |
Share Premium |
Unappropriated |
Total |
|
|
|
profit/(loss) |
|
|
|
(Rupees in '000') |
(Rupees in '000') |
(Rupees in '000') |
(Rupees in '000') |
|
|
| Balance
as on 1st July 1999 |
42,000 |
-- |
(56,392) |
(14,392) |
|
| Net
profit for the year |
-- |
-- |
1,293 |
1,293 |
|
|
|
------------------ |
------------------ |
------------------ |
------------------ |
|
| Balance
as on June 30, 2000 |
42,000 |
-- |
(55,099) |
(13,099) |
|
| Net
profit for the year |
-- |
-- |
1,631 |
1,631 |
|
|
|
------------------ |
------------------ |
------------------ |
------------------ |
|
| Balance
as on June 30, 2001 |
42,000 |
-- |
(53,468) |
(11,468) |
|
|
|
========== |
========== |
========== |
========== |
|
|
|
Director |
|
|
Director |
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| For
the year ended 30 June, 2001 |
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
