| Dewan Mushtaq Textile Mills Limited |
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| Annual
Report 2001 |
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| Mission
Statement |
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The Mission of Dewan Mushtaq Textile Mills Limited is to be
the finest |
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Organisation, and to conduct business responsibly |
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in a straightforward way. |
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Our basic aim is to benefit the customers, employees |
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and shareholders and to fulfill our commitments to the
society. |
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Our hallmark is honesty, initiative and teamwork of our people |
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and our ability to respond effectively to change in all
aspects |
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of life including technology, culture and environment. |
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We will create a work environment, which motivates, recognises |
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and rewards achievements at all levels of the Organisation |
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because |
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In Allah We Trust & In People We Believe. |
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We will always conduct ourselves with integrity |
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and strive to be the best. |
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| CONTENTS |
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| Company
Information |
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| Notice
of the Meeting |
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| Directors'
Report |
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| Auditors'
Report to the Members |
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| Balance Sheet |
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| Profit
& 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 Share Holding |
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| COMPANY
INFORMATION |
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| Board
of Directors |
Dewan Zia-ur-Rehman
Farooqui |
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Chairman |
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Dewan Ghulam Mustafa
Khalid |
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Vice Chairman / Director |
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Dewan Mohammad Ayub
Khalid |
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Chief Executive /
Managing Director |
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Dewan Mohammad Yousuf
Farooqui |
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Deputy Managing Director |
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Dewan Abdul Rehman
Farooqui |
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Dewan Asim Mushfiq
Farooqui |
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Ms. Shehnila Parekh (NIT) |
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| Auditors |
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Messrs. Faruq Ali &
Co. |
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Chartered Accountants |
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803, 8th Floor, Land Mark
Plaza, |
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I.I. Chundrigar Road, |
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Karachi. |
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| Tax Advisors |
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Sharif & Company |
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Advocates |
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| Bankers |
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Muslim Commercial Bank
Limited |
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Habib Bank Limited |
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| Registered
Office |
Dewan Centre |
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3-A, Lalazar, |
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Beach Hotel Road, |
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Karachi-74000, |
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Pakistan. |
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| Mills |
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A-30, S.I.T.E., |
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Hyderabad Sindh, |
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Pakistan. |
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| NOTICE
OF FORTIETH ANNUAL GENERAL MEETING |
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| Notice
is hereby given that 40th Annual General Meeting of Dewan Mushtaq Textile
Mills Limited will |
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| be
held on March 29, 2002 at 06.30 p.m. at Dewan Centre, 3-A, Lalazar, Beach
Hotel Road, Karachi |
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| to
transact the following business: |
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| 1.
Recitation from HOLY QURAN. |
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| 2.
To read and confirm the minutes of 39th Annual General Meeting held on March
31,2001. |
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| 3.
To receive, consider and adopt the Annual Audited Accounts for the year ended
September 30, |
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| 2001
together with the Directors' and Auditors' reports thereon. |
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| 4.
To approve the declaration of final cash dividend @ 20 %. |
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| 5.
To appoint auditors of the Company for the year ending September 30, 2002 and
to fix their |
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| remuneration. |
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| 6.
To transact any other business with the permission of the Chairman. |
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By and on behalf of Board of Directors |
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| March 07, 2002 |
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(Dewan Ghulam Mustafa Khalid) |
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| Karachi. |
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Vice Chairman / Director |
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| NOTES: |
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| 1.
A member of the Company entitled to attend and vote at this meeting may
appoint another member of his/her proxy |
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| to
attend and vote instead of him/her. Proxies, in order to be effective, must
be received by the Company not less than |
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| 48
hours before the meeting. CDC Account holders will further have the following
guidelines as laid down by the |
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| Securities
and Exchange Commission of Pakistan. |
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| a)
For Attending Meeting: |
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| i)
In case of individual, the account holder or sub-account holder and/or the
person whose securities are |
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| in
group account and their registration details are uploaded as per the
regulations, shall authenticate |
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| his/her
identity by showing his/her original National Identity Card (NIC) or original
Passport at the time |
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| of
attending the meeting. |
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| ii)
In case of corporate entity, the Board of Directors' resolution/power of
attorney with the specimen |
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| 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 case of individual, the account holder or sub-account holder and/or the
person whose securities are |
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| in
group account and their registration details are uploaded as per the
regulations, shall submit the proxy |
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| form
as per the above requirements. |
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| ii)
Two persons whose names, addresses and NIC numbers shall be mentioned on the
form shall witness |
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| the proxy. |
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| iii)
Attested copies of NIC or passport of the beneficial owners and proxy shall
be furnished with the proxy |
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| form. |
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| iv)
The proxy shall produce his/her original NIC or original passport at the time
of the meeting. |
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| v)
In case of corporate entity, the Board of Directors' resolution/power of
attorney with the specimen |
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| signature
of the nominee shall be produced (unless it has been provided earlier) along
with the proxy |
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| form
to the Company. |
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| 2.
Members are requested to immediately notify the change in their addresses, if
any. |
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| 3.
The Share Transfer Books of the Company will remain closed from March 25,
2002 to April 01, 2002 (both days |
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| inclusive). |
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| DIRECTORS'
REPORT |
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| Your
Directors take pleasure in presenting to you the Fortieth Annual Report of
the Company together |
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| with
the audited accounts for the financial year ended on September 30, 2001. |
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| Alhamdolillah,
the results for the year under review can be termed
satisfactory considering the overall |
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| situation
being faced by the local textile industry. The results have been achieved
primarily due to drastic |
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| measures
to cut down expenses and shift to gas generators for power generation. |
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| By
the Grace of Almighty Allah, your
company has earned a net profit of Rs. 9.792 million as compared |
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| with
net profit of Rs. 38.528 million for last year. The highlight of the accounts
are as follows: |
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2001 |
2000 |
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|
Rupees |
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| Sales |
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865,220,330 |
761,151,722 |
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| Cost of sales |
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761,083,764 |
669,816,962 |
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| Gross profit |
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104,136,566 |
91,334,760 |
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| Taxation |
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7,000,000 |
9,500,000 |
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| Net
profit after tax |
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9,792,051 |
38,528,451 |
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| We
humbly and gratefully bow our heads before Almighty Allah, the Most Gracious and Merciful, |
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| who
has rewarded and blessed your company with His innumerable bounties in the
difficult times. |
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| IF
YE GIVE THANKS, I WILL GIVE YOU MORE (HOLY QURAN) |
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| Your
Directors are pleased to propose appropriation of profit in the following
manner: |
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Rupees |
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| Profit
for the year 2000-2001 |
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9,792,051 |
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| Un-appropriated
profit brought forward |
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58,519,497 |
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------------------ |
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| Profit
available for appropriation |
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68,311,548 |
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========== |
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| Appropriation |
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| Cash
Dividend @ 20% |
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4,264,524 |
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| Un-appropriated
profit carried forward |
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64,047,024 |
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------------------ |
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| Total |
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68,311,548 |
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========== |
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| The
Board of Directors took the decision for appropriation of the profit keeping
in view the expectations |
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| of
the shareholders from Dewan Mushtaq Group, future profitability and present
scenario of textile |
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| industry. |
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| The
Board also decided to appraise its valued shareholders with the current
status and future of local |
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| textile
industry and other prevalent situation in detail through this report. |
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| SALIENT
FEATURES OF THE ACCOUNTS |
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| 1.
Total gross sales of your company amounted to Rs. 965.447 million as compared
with Rs. 866.378 |
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| million
last year. The increase in sales is attributed to quantity and price. |
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| 2.
Earning Per Share (EPS) of your Company works out to Rs. 4.59 per share as
compared with last |
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| year's
EPS, which was Rs. 18.06 per share. |
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| 3.
The use of gas generators have commenced from subsequent year and the cost
saving will be realised |
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| in
the next year as the power bill has reduced subsequently. |
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| 4.
Alhamdolillah, your company has been able to meet all its financial
obligations on time and from |
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| its
own resources. |
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| SYNOPSIS
OF THE YEAR UNDER REVIEW |
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| As
mentioned in our last annual report, the prices of cotton showed a downward
trend during the year |
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| 1999-2000.
As expected the prices moved upward during the year under review, which may
be related |
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| to
a lower production of cotton as a result of water shortage. Yarn prices
remained at the same level |
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| thus
leaving very little margins for the mills. |
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| The
gas generators have been put to use in the later part of the year thereby
reducing the power bill. |
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| However,
the full saving will be reflected in the ensuing year when the generators
will be used for |
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| substantial
part of the year. |
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| FUTURE
OUTLOOK |
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| The
recession-ridden cotton yarn market has been hit by fears of war and the
business transactions of |
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| almost
all the counts of cotton and blended yarn are lower by at least 40 to 50
percent. Some of the big |
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| dealers
stopped transacting their business due to aggravated situation between India
and Pakistan, which |
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| hampered
the trade deals in Asia's biggest cotton yarn market. The demand of yarn,
grey cloth, and |
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| cotton
made-ups has also substantially declined in the last couple of months, which
forced the exporters |
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| to
stop purchasing yarn from the local market. The industry is facing serious
financial difficulties due |
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| to
suspension of orders and pilling up of stocks thus pushing the yarn market
into unprecedented crisis. |
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| The
present government is striving hard to boost the Pakistan economy of which
the textile sector is |
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| the
biggest contributor. Steps like enhancement of quotas and reduction in
textile tariff by the United |
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| States
of America and duty free access recently offered by the European Union will
improve the textile |
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| sector.
These efforts are paying off and lately, the export activity has picked up.
It is felt that the rest |
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| of
the year would be better. |
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| VOTE
OF THANKS |
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| The
board puts on record its gratitude to its valuable shareholders, federal and
provincial government |
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| functionaries,
banks, development financial institutions and customers whose co-operation,
constant |
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| support
and patronage have enabled your company to achieve the desired results. The
board also |
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| expresses
its thanks for the valuable teamwork, loyalty and laudable efforts rendered
by the executives, |
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| staff
members and workers of your company, during the year under review and wishes
to place on record |
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| its
appreciation for the same. |
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| AUDITORS |
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| The
auditors of your company, M/s. Faruq Ali & Company, Chartered
Accountants, retire and offer |
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| their
services for re-appointment for the ensuing year. |
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| CONCLUSION |
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| In
conclusion, we bow, beg and pray to Almighty Allah,
Rehman-o-Rahim, in the name of our beloved |
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| prophet,
Mohammad, peace be upon him, for continued showering of His Blessings,
Guidance, Strength, |
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| Health
and Prosperity to us, our Company, Country and Nation; and also pray to
Almighty Allah to |
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| bestow
peace, harmony, brotherhood and unity in true Islamic spirit to whole of
Muslim Ummah, |
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| Ammen,
Summa-Ameen. |
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| LO-MY
LORD IS INDEED HEARER OF PRAYER (HOLY QURAN) |
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For and on behalf of Board of Directors |
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|
Dewan Ghulam Mustafa Khalid |
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| 27 February 2002 |
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Vice Chairman / Director |
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| AUDITORS'
REPORT TO THE MEMBERS |
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| We
have audited the annexed balance sheet of Dewan Mushtaq
Textile Mills Limited, as at 30 |
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| September
2001 and the related profit and loss account, cash flow statement and
statement of changes |
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| 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 purposes of our audit. |
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| It
is the responsibility of the company's management to establish and maintain a
system of internal |
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| control,
and prepare and present the above said statements in conformity with the
approved accounting |
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| standards
and the requirements of the Companies Ordinance, 1984. Our responsibility is
to express an |
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| opinion
on these statements based on our audit. |
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| We
conducted our audit in accordance with the auditing standards as applicable
in Pakistan. These |
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| standards
require that we plan and perform the audit to obtain reasonable assurance
about whether the |
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| above
said statements are free of any material misstatement. An audit includes
examining, on a test |
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| basis,
evidence supporting the amounts and disclosures in the above said statements.
An audit also |
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| includes
assessing the accounting policies and significant estimates made by
management, as well as, |
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| evaluating
the overall presentation of the above said statements. We believe that our
audit provides a |
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| reasonable
basis for our opinion and, after due verification, we report that: |
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| (a)
in our opinion, proper books of accounts have been kept by company as
required by the |
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| Companies
Ordinance, 1984 |
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|
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| (b)
in our opinion: |
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|
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| (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 |
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| agreement
with the books of account and are further in accordance with accounting |
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| policies
consistently applied; except for the change in accounting policy as described |
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| in
note 2.10.4, with which we concur; |
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|
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| (ii)
the expenditure incurred during the year was for the purpose of the company's
business; and |
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| (iii)
the business conducted, investment made and the expenditure incurred during
the |
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| year
were in accordance with the objects of the company; |
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|
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| (c)
in our opinion and to the best of our information and according to the
explanations given |
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| to
us, the balance sheet, profit and loss account, cash flow statement and
statement of |
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| changes
in equity together with the notes forming part thereof conform with approved |
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| accounting
standards as applicable in Pakistan, and give the information required by the |
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| Companies
Ordinance, 1984, in the manner so required and respectively give a true and |
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| fair
view of the state of the company's affairs as at September 30, 2001 and of
the profit, |
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| its
cash flows and changes in equity for the year then ended; and |
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| (d)
in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance,
1980 (XVIII |
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| of
1980), was deducted by the company and deposited in the Central Zakat fund
established |
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| under
Section 7 of that Ordinance. |
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| 27
February, 2002 |
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| Karachi. |
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|
Chartered Accountants |
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| BALANCE
SHEET AS ON 30TH SEPTEMBER, 2001 |
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|
Notes |
2001 |
2000 |
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|
Rupees |
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| CAPITAL
& LIABILITIES |
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| SHAREHOLDER'S
EQUITY |
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| Share Capital |
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| Authorized |
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| 10,000,000
Ordinary Shares of Rs. 10/=each |
|
100,000,000 |
100,000,000 |
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|
========== |
========== |
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| Issued,
Subscribed & Paid up Share Capital |
3 |
21,322,620 |
21,322,620 |
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| Reserves
and Surplus |
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4 |
109,047,024 |
103,519,497 |
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|
------------------ |
------------------ |
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|
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|
130,369,644 |
124,842,117 |
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| LIABILITY
AGAINST ASSETS SUBJECT |
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| TO
FINANCE LEASE |
|
5 |
119,681,343 |
94,678,060 |
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| DEFERRED
LIABILITY FOR STAFF GRATUITY |
|
20,920,834 |
18,594,216 |
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| CURRENT
LIABILITIES |
|
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| Current
Portion of Lease Liabilities |
|
58,781,626 |
374,672,851 |
|
| Short
Term Running Finances |
|
6 |
448,509,027 |
308,128,275 |
|
| Creditors,
Accrued Expenses & Other Liabilities |
7 |
3,551,878,921 |
385,245,337 |
|
| Provision
for Taxation |
|
|
39,950,641 |
32,950,641 |
|
| Dividend
Payable |
|
|
345,262 |
210,243 |
|
| Proposed
Dividend |
|
|
42,641,524 |
15,458,900 |
|
|
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|
------------------ |
------------------ |
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|
|
|
907,038,972 |
779,460,681 |
|
| Contingencies
and Commitments |
8 |
|
|
------------------ |
------------------ |
|
|
|
1,178,010,793 |
1,017,575,074 |
|
|
|
========== |
========== |
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|
|
|
| PROPERTY
& ASSETS |
|
|
|
| Operating
Fixed Assets - at cost less |
|
|
| accumulated
depreciation |
|
9 |
223,508,295 |
186,766,717 |
|
|
|
|
|
| CAPITAL
WORK IN PROGRESS |
10 |
160,321,361 |
59,611,754 |
|
| LONG
TERM INVESTMENTS |
|
11 |
40,003,000 |
40,003,000 |
|
| LONG
TERM DEPOSITS |
|
12 |
60,736 |
55,736 |
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores
and Spares |
|
13 |
13,571,425 |
13,169,107 |
|
| Stock in Trade |
|
14 |
346,629,481 |
381,070,765 |
|
| Trade Debts |
|
15 |
271,173,953 |
248,644,721 |
|
| Advances,
Deposits, Prepayments & Other Receivables |
16 |
116,106,302 |
843,001,820 |
|
| Cash
and Bank Balances |
|
17 |
6,636,240 |
3,952,454 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
754,117,401 |
731,137,867 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
1,178,010,793 |
1,017,575,074 |
|
|
|
========== |
========== |
|
|
|
|
| The
annexed notes form an integral parts of these accounts. |
|
|
|
Dewan Ghulam Mustafa Khalid |
|
Dewan Abdul Rehman Farooqui |
|
|
Vice Chairman/Director |
|
Director |
|
|
|
| PROFIT
& LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED 30TH SEPTEMBER, 2001 |
|
|
|
|
Notes |
2001 |
2000 |
|
|
|
Rupees |
|
|
|
|
|
| SALES - Gross |
|
|
18 |
965,447,787 |
866,378,792 |
|
| Less: Sales Tax |
|
|
|
87,680,836 |
99,004,432 |
|
| Commission |
|
|
11,833,924 |
5,870,400 |
|
| Export Duty |
|
|
712,697 |
352,238 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
100,227,457 |
105,227,070 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
865,220,330 |
761,151,722 |
|
| COST
OF SALES |
|
19 |
761,083,764 |
669,816,962 |
|
|
|
|
|
------------------ |
------------------ |
|
| GROSS
PROFIT |
|
|
104,136,566 |
91,334,760 |
|
|
|
|
|
|
|
| OPERATING
EXPENSES |
|
|
|
| Administrative
& General |
|
20 |
10,194,170 |
7,320,516 |
|
| Selling
and Distribution |
|
21 |
15,328,495 |
3,923,282 |
|
|
|
|
------------------ |
------------------ |
|
|
|
25,522,665 |
11,243,798 |
|
|
|
------------------ |
------------------ |
|
| OPERATING
PROFIT |
|
78,613,901 |
80,090,962 |
|
|
|
| OTHER
CHARGES |
|
| Financial
Charges |
|
22 |
60,406,724 |
36,029,363 |
|
| Workers'
Profit Participation Fund |
|
910,359 |
2,203,080 |
|
| Workers'
Welfare Fund |
|
|
504,767 |
1,130,280 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
61,821,850 |
39,362,723 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
16,792,051 |
40,728,239 |
|
|
|
|
|
| OTHER
INCOME |
|
23 |
-- |
7,300,212 |
|
|
|
|
|
------------------ |
------------------ |
|
| PROFIT
BEFORE TAXATION |
|
|
16,792,051 |
48,028,451 |
|
| TAXATION
- Current |
|
|
7,000,000 |
9,500,000 |
|
|
|
|
|
------------------ |
------------------ |
|
| PROFIT
AFTER TAXATION |
|
|
9,792,051 |
38,528,451 |
|
| UNAPPROPRIATED
PROFIT BROUGHT FORWARD |
58,519,497 |
35,449,946 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
68,311,548 |
73,978,397 |
|
| Appropriation |
|
|
|
| Proposed
Cash Dividend 20 % (2000 72.50 %) |
|
4,264,524 |
15,458,900 |
|
|
|
|
------------------ |
------------------ |
|
| UNAPPROPRIATED
PROFIT CARRIED FORWARD |
64,047,024 |
58,519,497 |
|
|
|
|
|
========== |
========== |
|
| Earning
per Share |
|
28 |
4.59 |
18.06 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
| The
annexed notes from an integral part of these account |
|
|
|
Dewan Ghulam Mustafa Khalid |
|
Dewan Abdul Rehman Farooqui |
|
|
Vice Chairman/Director |
|
Director |
|
|
| NOTE:
Chief Executive of the Company is out of Pakistan, therefore the Financial
Statements are signed by two Directors. |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED 30TH SEPTEMBER, 2001 |
|
|
|
|
2001 |
2000 |
|
|
|
Rupees |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Net
profit before tax |
|
|
16,792,051 |
48,028,451 |
|
| Adjustment
for non-cash and other items |
|
|
|
| Depreciation |
|
|
25,952,353 |
21,450,193 |
|
| Financial
Charges accrued |
|
|
60,406,724 |
36,029,363 |
|
| Provision
for Gratuity |
|
|
5,753,810 |
10,159,028 |
|
