| Ferozsons Laboratories Limited |
|
|
|
|
|
|
|
|
| Annual
Report 2001 |
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|
|
| Contents |
|
|
| Board
of Directors |
|
| Summary
of Financial Results |
|
| Notice
of Annual General Meeting |
|
| Director's Report |
|
| Auditor's Report |
|
| Balance Sheet |
|
| Profit
& Loss Account |
|
| Cash
Flow Statement |
|
| Statement
of Changes in Equity |
|
| Notes
to the Accounts |
|
| Pattern
of Shareholding |
|
|
|
| BOARD
OF DIRECTORS |
|
|
|
| Chairperson
and Chief Executive |
Mrs. Akhter Khalid Waheed |
|
|
| Directors |
|
Mr. Osman Khalid Waheed,
President |
|
|
Mrs. Munize Azhar Peracha |
|
|
Mr. Firozuddin A. Cassim |
|
|
Mr. M.M. Ispahani |
|
|
Mr. Walid Iqbal |
|
|
Mr. Taj Muhammad Khanzada |
|
|
Mr. Farooq Mazhar |
|
|
Khan Dost Muhammad Khan
Sherpao |
|
|
Mr. Mummad Nawaz Tishna |
|
|
Begum S. Waheed |
|
|
Mr. A.U. Zafar, Executive
Director |
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|
| Secretary |
|
Mr. Maqbool Ahmed |
|
|
| General
Manager Nowshera |
Mr. Omar Khalid Waheed |
|
|
| Auditors |
|
Messrs Taseer Hadi Khalid
& Co. |
|
|
Chartered Accountants |
|
|
6th Floor, State Life
Building No. 5, |
|
|
Blue Area, Islamabad. |
|
|
| Bankers |
|
Standard Chartered
Grindlays Bank Ltd. |
|
|
| Registered
Office |
197-A, The Mall,
Rawalpindi |
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|
Phones; (051) 5562155-57 |
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|
Fax: (051) 5584195 |
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|
e-mail:
ferozson@comsats.net.pk |
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|
internet:
http://www.ferozsons-labs.com |
|
|
| Factories |
|
P.O. Ferozsons, Nowshera
(N.W.F.P.) |
|
|
|
| Summary
of Financial Results |
|
|
|
2000 |
2001 |
Growth |
|
|
(Rs.) |
(Rs.) |
(%) |
|
|
| Net Sales |
|
297,618,660 |
351,148,935 |
17.99 |
|
| Operating
Expenses |
|
76,089,558 |
85,789,829 |
12.75 |
|
| Operating Profit |
|
30,463,453 |
65,389,138 |
114.65 |
|
| Profit after Tax |
|
18,552,765 |
40,046,686 |
115.85 |
|
| Return
on Equity (After Tax) |
|
20.57 |
30.75 |
49.49 |
|
| Return
on Total Assets |
|
16.49 |
29.15 |
76.77 |
|
| Earning
per Share |
|
5.25 |
11.34 |
116.00 |
|
|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
|
| Notice
is hereby given that the 45th Annual General Meeting of FEROZSONS
LABORATORIES |
|
| LIMITED
will be held on Thursday, the November 29, 2001 at 11.30 A.M. at its
Registered Office, |
|
| 197-A,
The Mall, Rawalpindi to transact the following business: |
|
|
| 1.
To confirm the Minutes of 44th Annual General Meeting held on December 20,
2000. |
|
|
| 2.
To receive, consider, and adopt the Annual Audited Accounts for the year
ended June 30, 2001 |
|
| and
Directors' and Auditors' Reports thereon. |
|
|
| 3.
To approve payment of Cash Dividend at the rate of 70% (Rs. 7/- per share of
Rs. 10/- each) |
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| for
the year ended June 30, 2001 as recommended by Directors. |
|
|
| 4.
To appoint Auditors and to fix their remuneration. The present Auditors
Messrs Taseer Hadi |
|
| Khalid
& Co., Chartered Accountants, being eligible, have offered themselves for
re-appointment. |
|
|
| 5.
To transact any other business with the permission of the Chair. |
|
|
|
BY ORDER OF THE BOARD |
|
|
|
|
|
(Maqbool Ahmed) |
|
| Dated:
October 29, 2001 |
|
Secretary |
|
|
| Notes: |
|
|
| 1.
The Share Transfer Books of the Company will remain closed from 22-11-2001 to
30-11-2001 (both days inclusive). |
|
| Shares
for transfers will be received at the Registered Office of the Company at
197-A, The Mall, Rawalpindi. |
|
|
| 2.
A member entitled to attend and vote at this meeting may appoint another
member as his/her proxy to attend and vote. The |
|
| Form
of Proxy duly completed, should reach the Registered Office of the Company 48
hours before the time of the |
|
| Meeting. |
|
|
| 3.
CDC Account Holders are advised to follow further guidelines of the
Securities & Exchange Commission of Pakistan as |
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| under: |
|
|
| (A)
For Attending the Meeting |
|
| 1.
In 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 per the Regulations,
shall authenticate his |
|
| identity
by showing his original National Identity Card or original passport at the
time of attending the |
|
| meeting. |
|
|
| 2.
In case of corporate entity, the Board of Directors' Resolution/Power of
Attorney with specimen signature |
|
| of
the nominee shall be produced at the meeting. |
|
|
| (B)
For appointing proxies: |
|
| 1.
In case of individuals, the account holder or sub-account holder and/or the
persons whose securities are in |
|
| group
account and their registration details are uploaded as per the Regulations,
shall submit the Proxy |
|
| Form
of another member as per the above requirement. |
|
|
| 2.
The Proxy Form shall be witnessed by two persons whose names, address and NIC
numbers shall be |
|
| mentioned
on the Form. |
|
|
| 3.
Attested copies of NIC or the passport of the beneficial owners and the proxy
shall be furnished with the |
|
| Proxy Form. |
|
|
| 4.
The Proxy shall produce his original NIC or original passport at the time of
meeting. |
|
|
| 5.
In case of corporate entity, the Board of Directors' Resolution/Power of
Attorney with specimen signature |
|
| shall
be submitted, along with Proxy Form to the Company. |
|
|
| 4.
Members are requested to notify any change in address immediately. |
|
|
|
| DIRECTORS'
REPORT TO SHAREHOLDERS |
|
|
| We
are pleased to present your company's audited accounts for the year ended
June 30, 2001. |
|
|
| Industry
Scenario |
|
| while
the negative growth that had been exhibited by the pharmaceutical industry
was reversed during |
|
| the
year under review, demand remained sluggish under the weight of recessionary
pressure. The |
|
| pharmaceutical
industry grew by 3% during the year under review, in part due to the price
adjustment |
|
| granted
at the end of June, 2000. |
|
|
| Your
Company's performance |
|
| We
are glad to report that during the period under review, your Company was able
to succeed on two |
|
| fronts:
first, in achieving an improved sales mix through high prescription growth in
our specialty |
|
| products,
and second, in aggressively controlling inventory and production costs. |
|
|
| Overall
Net Sales grew by 17.99% from Rs. 297.619 Million last year to Rs. 351.149
Million during the |
|
| year
under review. Embedded in this figure is a substantially greater growth
achieved from our most |
|
| profitable
prescription brands, which now increasingly account for the bulk of the
company's sales. |
|
|
| The
benefits from an improved product portfolio and better inventory management
are evident in the cost |
|
| of
sales, which increased by only 4.66% against a nearly 18% increase in sales.
As a consequence, our |
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| Gross
Profit improved by 41.88%, from Rs. 106.553 Million during the period ended
June 30, 2000 to Rs. |
|
| 151.179
Million during the year under review. |
|
|
| Administrative
expenses during the same period increased by 5.79%, while selling expenses
grew by |
|
| 19.6%
to Rs. 65.714 Million (2000: Rs. 54.970 Million). The increase in selling
expenses is reflective of |
|
| our
continued emphasis on brand building as a means to achieving sustained growth
in sales and |
|
| profitability
in the future. |
|
|
| We
are glad to report that owing to an improved cash flow position, financial
expenses during the year |
|
| fell
by 45.97%, from Rs. 4.380 Million last year to Rs. 2.367 Million during the
year under review. |
|
|
| After
a provision for taxation and other government levies of Rs. 22.158 Million
(2000: Rs. 10.609 |
|
| Million),
the Net Profit of the company stands at Rs. 40.047 Million for the period, an
improvement of |
|
| 115.85%
over the figure of Rs. 18.552 Million achieved during 2000. The Earnings per
share for the |
|
| period
stand at Rs. 11.34 (2000: Rs. 5.25). |
|
|
| Product
Pipeline |
|
| In
a pharmaceutical industry characterized by intense competition and relatively
short product life cycles, |
|
| new
product launches play a crucial role in the financial health of a firm. |
|
|
| During
the first Quarter of the current year, we launched two major
products-Loramax, a non-sedating |
|
| anti-allergy
tablet, and Xavor, a new class of antihypertensive medication that has an
unparalleled safety |
|
| profile.
We plan during the coming year to develop and launch more products in the
cardiovascular |
|
| segment
to establish the company's presence in this critical market. It is our key
aim during the coming |
|
| year
to diversify our product base, which is as yet focused primarily on the
Gastroenterology and Anti- |
|
| infectives
segments of the market. |
|
|
| Future
Prospects |
|
| In
the aftermath of the tragic events of September 11, Pakistan finds itself a
frontline state in an |
|
| increasingly
volatile global situation. The immediate economic impact of this crisis has
been extremely |
|
| negative:
the cost of goods being brought in and out of the country has gone up
significantly, both by the |
|
| inappropriate
application of war risk insurance to a country not at war, and in the case of
air freight-a |
|
| major
portion of pharmaceutical material logistics cost-significantly higher rates
being charged by PIA, |
|
| which
finds itself in a virtual monopoly for air traffic in and out of the country.
However, we have |
|
| managed,
with the help of our international suppliers, to ensure that the impact of
this cost rise on the |
|
| Company
is minimal, and that raw material supplies remain uninterrupted. |
|
|
| It
is nevertheless important, at a time of heightened uncertainty, to recognize
the Government's efforts in |
|
| retaining
calm in the country as well as in fighting Pakistan's case on the economic
and foreign policy |
|
| fronts.
The Government has also rightly put pressure on international relief agencies
to purchase relief |
|
| supplies
from the domestic market to help the ailing local economy. It is our sincere
hope that a humane |
|
| solution
can be found to the crisis that engulfs our borders, so that we can work as a
nation towards |
|
| building
a stable and unified Pakistan along the line of our founder's vision. |
|
|
| Affirmation |
|
| We
feel privileged, once again, to thank the company staff and workers at all
levels for their dedication |
|
| and
professionalism, without which these results would not have been possible. |
|
|
| Auditors |
|
| The
Company's auditors, Messrs. Taseer Hadi, Khalid & Co., stand retired and
have offered themselves |
|
| for
reappointment. |
|
|
| Pattern
of Shareholding |
|
| The
statement indicating the number of shareholders and their categories forming
the pattern of |
|
| shareholding
is annexed. |
|
|
|
For and on Behalf of the Board of Directors, |
|
|
|
|
| Rawalpindi |
|
(Mrs. Akhter Khalid Waheed) |
|
| October
29, 2001 |
|
Chairperson & Chief Executive |
|
|
|
| AUDITORS
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of Ferozsons Laboratories Limited as
at 30 June 2001 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 statements |
|
| are
free of any material misstatement. An audit includes examining, on 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 30 June |
|
| 2001
and of the profit, its cash flows and changes in equity for the year then
ended; and |
|
|
| (d)
in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance,
1980 (XVIII of 1980), |
|
| was
deducted by the company and deposited in the Central Zakat Fund established
under Section 7 of |
|
| that Ordinance. |
|
|
| Islamabad |
|
TASEER HADI KHALID & CO. |
|
| October
29, 2001 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT 30TH JUNE, 2001 |
|
|
|
NOTE |
2001 |
2000 |
|
|
|
(RUPEES) |
(RUPEES) |
|
|
| SHARE
CAPITAL AND RESERVES |
|
| Share capital |
|
3 |
35,329,130 |
35,329,130 |
|
| Capital reserve |
|
321,843 |
321,843 |
|
| Unappropriated
profit |
|
69,864,368 |
54,548,073 |
|
|
------------------ |
------------------ |
|
|
105,515,341 |
90,199,046 |
|
|
|
|
| SURPLUS
ON REVALUATION OF FIXED ASSETS |
4 |
45,725,290 |
45,725,290 |
|
| DEFERRED
LIABILITY FOR TAXATION |
|
5,046,478 |
4,887,985 |
|
| OBLIGATIONS
UNDER FINANCE LEASES |
5 |
-- |
723,500 |
|
|
|
|
| CURRENT
LIABILITIES |
|
| Bank
borrowings |
|
6 |
-- |
12,782,463 |
|
| Current
maturity of long term liabilities |
7 |
723,500 |
1,487,400 |
|
| Creditors,
accrued and other liabilities |
8 |
26,058,715 |
33,967,533 |
|
| Revolving
advances |
|
9 |
67,456 |
429,456 |
|
| Provision
for taxation |
|
22,728,243 |
10,570,686 |
|
| Unclaimed
dividend |
|
1,840,365 |
1,651,186 |
|
| Proposed
dividend |
|
24,730,391 |
8,832,283 |
|
|
------------------ |
------------------ |
|
|
76,148,670 |
69,721,007 |
|
|
------------------ |
------------------ |
|
|
232,435,779 |
211,256,828 |
|
|
========== |
========== |
|
|
|
|
| FIXED ASSETS |
|
10 |
110,244,807 |
103,135,645 |
|
| CAPITAL
WORK IN PROGRESS |
|
3,458 |
5,388 |
|
| LONG
TERM INVESTMENTS |
|
11 |
33,085 |
33,085 |
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores,
spares and loose tools |
|
12 |
2,218,485 |
1,933,404 |
|
| Stock in trade |
|
13 |
87,150,800 |
79,057,782 |
|
| Trade
debts-unsecured (considered good) |
|
6,419,389 |
8,001,468 |
|
| Advances,
deposits, prepayments and |
|
|
|
| other
receivables |
|
14 |
12,031,726 |
16,238,543 |
|
| Cash
and bank balances |
|
15 |
14,334,029 |
2,851,513 |
|
|
|
------------------ |
------------------ |
|
|
|
122,154,429 |
108,082,710 |
|
|
|
------------------ |
------------------ |
|
|
232,435,779 |
211,256,828 |
|
|
========== |
========== |
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Firozuddin A. Cassim |
|
A.U. Zafar |
|
|
Director |
|
Executive Director |
|
|
|
| Rawalpindi |
|
Osman Khalid Waheed |
|
Mrs. Akhter Khalid Waheed |
|
| October
29, 2001 |
|
Director/President |
|
Chairperson & Chief Executive |
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR ENDED 30TH JUNE, 2001 |
|
|
|
|
|
NOTE |
2001 |
2000 |
|
|
|
(RUPEES) |
(RUPEES) |
|
|
|
|
| NET SALES |
|
16 |
351,148,935 |
297,618,660 |
|
| LESS:
COST OF SALES |
|
17 |
(199,969,968) |
(191,065,649) |
|
|
|
|
------------------ |
------------------ |
|
| GROSS PROFIT |
|
151,178,967 |
106,553,011 |
|
|
|
| LESS:
OPERATING EXPENSES |
|
|
|
| Administrative
expenses |
|
18 |
17,708,748 |
16,739,459 |
|
| Selling expenses |
|
19 |
65,714,540 |
54,970,318 |
|
| Financial
expenses |
|
20 |
2,366,541 |
4,379,781 |
|
|
|
------------------ |
------------------ |
|
|
|
85,789,829 |
76,089,558 |
|
|
|
------------------ |
------------------ |
|
| OPERATING
PROFIT |
|
65,389,138 |
30,463,453 |
|
|
|
|
| OTHER
INCOME |
|
21 |
700,545 |
508,515 |
|
|
|
|
------------------ |
------------------ |
|
| PROFIT
FOR THE YEAR |
|
|
66,089,683 |
30,971,968 |
|
|
|
|
------------------ |
------------------ |
|
| LESS:
WORKERS' (PROFIT) PARTICIPATION FUND |
3,269,457 |
1,523,173 |
|
| CENTRAL
RESEARCH FUND |
|
|
615,047 |
286,538 |
|
|
|
------------------ |
------------------ |
|
|
|
3,884,504 |
1,809,711 |
|
|
------------------ |
------------------ |
|
| PROFIT
BEFORE TAXATION |
|
62,205,179 |
29,162,257 |
|
|
| PROVISION
FOR TAXATION |
|
| - Current |
|
22,000,000 |
10,100,000 |
|
| -
Deferred |
|
158,493 |
509,492 |
|
|
------------------ |
------------------ |
|
|
22,158,493 |
10,609,492 |
|
|
------------------ |
------------------ |
|
| PROFIT
AFTER TAXATION |
|
40,046,686 |
18,552,765 |
|
| ACCUMULATED
PROFIT BROUGHT FORWARD |
|
54,548,073 |
44,827,591 |
|
|
|
------------------ |
------------------ |
|
| PROFIT
AVAILABLE FOR APPROPRIATION |
|
94,594,759 |
63,380,356 |
|
|
|
| APPROPRIATIONS: |
|
| Proposed
Dividend @ 70% (2000: 25%) |
|
24,730,391 |
(8,832,283) |
|
|
------------------ |
------------------ |
|
| UNAPPROPRIATED
PROFIT CARROED FORWARD |
69,864,368 |
54,548,073 |
|
|
|
========== |
========== |
|
| EARNINGS
PER SHARE-BASIC |
|
11.34 |
5.25 |
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Firozuddin A. Cassim |
|
A.U. Zafar |
|
|
Director |
|
Executive Director |
|
|
|
| Rawalpindi |
|
Osman Khalid Waheed |
|
Mrs. Akhter Khalid Waheed |
|
| October
29, 2001 |
|
Director/President |
|
Chairperson & Chief Executive |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED 30TH JUNE, 2001 |
|
|
|
2001 |
2000 |
|
|
(RUPEES) |
(RUPEES) |
|
|
| Profit
before taxation |
|
62,205,179 |
29,162,257 |
|
|
| Cash
flow from operating activities |
|
|
| Adjustment for: |
|
| Depreciation |
|
9,422,727 |
8,300,141 |
|
| Profit
on sale of fixed assets |
|
(576,897) |
(346,822) |
|
|
------------------ |
------------------ |
|
|
8,845,830 |
7,953,319 |
|
|
------------------ |
------------------ |
|
| Operating
profit before working capital changes |
|
71,051,009 |
37,115,576 |
|
|
| (Increase)/decrease
in: |
|
| Stocks
and stores |
|
(8,378,099) |
(9,566,289) |
|
| Trade debtors |
|
1,582,079 |
(1,797,813) |
|
| Advances,
deposits, prepayments and other receivables |
4,206,817 |
(1,825,922) |
|
|
------------------ |
------------------ |
|
|
(2,589,203) |
(13,190,024) |
|
|
|
|
| (Decrease)/increase
in current liabilities |
|
(21,053,281) |
2,396,735 |
|
|
------------------ |
------------------ |
|
|
47,408,525 |
26,322,287 |
|
|
| Payment of tax |
|
(9,842,443) |
(5,907,352) |
|
| Payment
of dividend |
|
(8,643,104) |
(6,008,818) |
|
|
------------------ |
------------------ |
|
| Net
cash from operating activities |
|
28,922,978 |
14,406,117 |
|
|
| Cash
flow from investing activities |
|
| Capital
expenditure |
|
(16,968,759) |
(13,712,506) |
|
| Compensation
receivable from Government written off |
-- |
738,076 |
|
| Sale
proceeds of fixed assets |
|
1,015,697 |
1,212,842 |
|
|
------------------ |
------------------ |
|
| Net
cash used in investing activities |
|
(15,953,062) |
(11,761,588) |
|
|
| Cash
flow from financing activities |
|
| Payments-finance
lease |
|
(1,487,400) |
(1,640,032) |
|
|
------------------ |
------------------ |
|
| Net
cash from/(used in) financing activities |
|
(1,487,400) |
(1,640,032) |
|
|
------------------ |
------------------ |
|
| Net
increase/(decrease) in cash and cash equivalents |
11,482,516 |
1,004,497 |
|
| Cash
and cash equivalents at the beginning of the year |
2,851,513 |
1,847,016 |
|
|
------------------ |
------------------ |
|
| Cash
and cash equivalents at the end of the year |
|
14,334,029 |
2,851,513 |
|
|
========== |
========== |
|
|
|
Firozuddin A. Cassim |
|
A.U. Zafar |
|
|
Director |
|
Executive Director |
|
|
|
| Rawalpindi |
|
Osman Khalid Waheed |
|
Mrs. Akhter Khalid Waheed |
|
| October
29, 2001 |
|
Director/President |
|
Chairperson & Chief Executive |
|
|
|
| STATEMENT
OF CHANGES IN EQUITY YEAR ENDED 30 JUNE 2001 |
|
|
|
Share |
Capital |
Unappropriated |
|
|
|
Capital |
Reserve |
Profit |
Total |
|
|
|
|
|
(RUPEES) |
(RUPEES) |
(RUPEES) |
(RUPEES) |
|
|
| Balance
as at June 30, 1999 |
35,329,130 |
321,843 |
44,827,591 |
80,478,564 |
|
| Net
profit for the year |
-- |
-- |
18,552,765 |
18,552,765 |
|
| Dividends |
|
-- |
-- |
(8,832,283) |
(8,832,283) |
|
|
------------------ |
------------------ |
------------------ |
------------------ |
|
| Balance
as at June 30, 2000 |
35,329,130 |
321,843 |
54,548,073 |
90,199,046 |
|
| Net
profit for the year |
-- |
-- |
40,046,686 |
40,046,686 |
|
| Dividends</ |
