| S.G Fibre Limited |
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| Annual
Report 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 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 SHAREHOLDING |
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| Company
Information |
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| BOARD
OF DIRECTORS |
|
| Mr. S. M. Ahmed |
Chairman |
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| Mr.
Sohail Ahmed |
Chief Executive |
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| Mst.
Zubaida Khatoon |
Director |
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| Mr.
Asim Ahmed |
Director |
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| Mrs.
Tania Asim |
Director |
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| Mrs.
Saba Sohail |
Director |
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| Mr.
Wajahat A. Baqai |
Nominee Directors of
N.B.P. |
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| COMPANY SECRETARY |
Mr. Muneer Ahmed |
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| AUDITORS |
|
M/s. Muniff Ziauddin
& Co. |
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|
(Chartered Accountants) |
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| BANKERS |
|
Habib Bank Limited |
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ABN Amro Bank |
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|
Habib Bank A. G. Zurich |
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Bank Alfalah |
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| REGISTERED OFFICE |
B-40, S.I.T.E., Karachi. |
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| Notice
of Annual General Meeting |
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| Notice
is hereby given, that the 33rd Annual General Meeting of S.G. Fibre Ltd will
be held on |
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| Monday,
31st December 2001 at 3:00 p.m. at the Registered Office of the Company at
B-40, S.I.T.E., |
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| Karachi
to transact the following business: |
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| ORDINARY
BUSINESS: |
|
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| 1.
To confirm the minutes of the Annual General Meeting held on December 30,
2000. |
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|
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| 2.
To receive consider and adopt the audited accounts of the Company for the
year ended June |
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| 30,
2001 together with the Directors' and Auditors' Reports thereon. |
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| 3.
To approve the payment of Final Dividend of 22% for the year ended June 30,
2001 as recommended |
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| by
the Directors. |
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| 4.
To appoint the Auditors of the Company for the year ended June 30, 2002 and
fix :heir remuneration. |
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| M/s.
Muniff Ziauddin & Co., Chartered Accountants, the present Auditors retire
and being |
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| eligible,
offer themselves for reappointment. |
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|
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| 5.
To transact any other business with the permission of the Chair. |
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|
By order of the Board |
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|
Muneer Ahmed |
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| Karachi:
03-12-2001 |
|
Company Secretary |
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| NOTES: |
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| 1.
The Share transfer books of the Company will remain closed from 24-12-2001 to
31-12-2001 |
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| (both
days inclusive). |
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| 2.
A Member entitled to attend and vote at the meeting shall be entitled to
appoint another person |
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| as
his / her proxy to attend and vote instead of him / her. Proxies in order to
be effective must |
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| be
received at the registered office of the company not less than 48 hours
before the time of |
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| the Meeting. |
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|
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| 3.
Members are requested to communicate to the Company of any change in their
addresses. |
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| Directors'
Report 2001 |
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|
| Dear
Shareholders, |
|
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| The
Directors of your Company take pleasure in presenting Annual Report of the
Company together with |
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| the
Auditors' Report thereon for the year ended 30th June 2001. |
|
|
| Although
overall business conditions did not remain satisfactory during the year under
review, however, the |
|
| management
is pleased to inform you that the financial results of the Company for the
year have been |
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| encouraging.
In the first half of the year Company made very nominal profit, but the
persisting efforts of the |
|
| Directors
proved to be fruitful, and A1 Hamdolillah Company has earned good profits in
the last six months |
|
| of the year. |
|
|
| ISSUE
WITH NATIONAL BANK |
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| A
dispute with National Bank of Pakistan regarding buy back agreement is still
pending. The fact of the case |
|
| are
that the Bank had agreed on more than three occasions that
there will be no buy back agreement |
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| with
the sponsors. But after floatation of shares by the Company the Bank insisted
for a letter of |
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| Undertaking
from the sponsors. The Bank further insisted that only on execution of such
undertaking |
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| it
would acquire the shares. Needless to say that the Bank had already agreed to
underwrite the shares |
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| of
the Company without prior condition of buy back agreement from the sponsors,
thus the insistence |
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| of
the Bank with the sponsors for execution of letter of undertaking was
completely without any basis |
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| or
legal justification. When the Company failed to convince
the Bank against their illegitimate demand it |
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| filed
a suit against the Bank before the High Court of Sindh. Later on National
Bank of Pakistan also filed a |
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| suit
against the Company before the High Court. Both these suits are pending
before the Court. To get the |
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| issue
resolved the Company also approached Securities & Exchange Commission of
Pakistan for their in- |
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| dulgence.
As per history Company is having good relationship and
enjoying excellent reputation among |
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| the
top banks. This was advised by some Senior bankers as well as National Bank
of Pakistan that a |
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| consultant's
firm be engaged to mediate to resolve the issue. For this purpose the name of
Global |
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| Securities
Pakistan Limited was recommended by National Bank of Pakistan. |
|
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| Therefore
M/s. Global Securities Pakistan Limited has been appointed to negotiate with
the Bank on various |
|
| options.
Several proposals were presented and discussed by the aforesaid consultants.
Company welcomed |
|
| their
suggestions and accepted whatever was proposed and gave green signal to the
consultant to go ahead. |
|
| But
there has been no progress in this respect since long and nothing has yet
been materialized for reasons |
|
| not
known to us. Due to this issue the scheme for amalgamation of S.G. Power Ltd.
with S.G. Fibre Ltd. has |
|
| also
been shelved for the time being on the advice of Messrs. Global Securities
Pakistan Limited. |
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|
| FUTURE
OUTLOOK: |
|
| As
has been mentioned above that the results of last six months of the year have
been very positive. As you |
|
| may
be well aware that in present circumstances only those units can survive who
have diversified line of |
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| products.
Your management is also concentrating on value added items, and Inshallah
best possible results |
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| can
be envisaged in years to come. |
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|
| AUDITORS: |
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| The
present auditors M/s. Muniff Ziauddin & Company, Chartered Accountants,
retire and being eligible |
|
| offer
themselves for reappointment. |
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| ACKNOWLEDGMENT: |
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| Relationship
with the staff especially with the workers remains very cordial. They deserve
appreciation for |
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| their
dedication, devotion and hard work. |
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|
On behalf of the Board |
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|
S.M. AHMED |
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| Dated:
December 03, 2001 |
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Chairman |
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| Auditors
Report to the Members |
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| We
have audited the annexed balance sheet of S.G. FIBRE
LIMITED as at 30 June, 2001 and the related |
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| profit
and loss account, cash flow statement and statement of changes in equity
together with the notes |
|
| forming
part thereof, for the year then ended and we state that we have obtained all
the information and |
|
| explanations
which, to the best of our knowledge and belief, were necessary for the
purposes of our audit. |
|
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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 standards |
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| 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 |
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| the
accounting policies and significant estimates made by management, as well as,
evaluating the overall |
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| presentation
of the above said statements. We believe that our audit provides a reasonable
basis for our |
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| 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; |
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|
|
|
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| (b)
in our opinion: |
|
|
|
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| (i)
the balance sheet and profit and loss account together with the notes thereon
have been |
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| 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; |
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|
|
|
| (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 |
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| 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, |
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| the
balance sheet, profit and loss account, cash flow statement and statement of
changes in equity |
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| 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 of the profit, its cash flows and statement of changes in equity
for the year then |
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| ended; and |
|
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| (d)
in our opinion, no Zakat was 'deductible at source under the Zakat and Ushr
Ordinance, 1980. |
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| Karachi: |
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|
Muniff Ziauddin & Co. |
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| Date:
4th December, 2001 |
|
Chartered Accountants |
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|
|
| Balance
Sheet as at 30th June, 2001 |
|
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|
Notes |
2001 |
2000 |
|
|
|
Rupees |
Rupees |
|
|
| SHARE
CAPITAL & RESERVES |
|
|
| Authorised
Capital |
|
| 15,000,000
Ordinary shares of Rs10/- each |
|
150,000,000 |
150,000,000 |
|
|
========== |
========== |
|
| Issued
Subscribed & Paid up Capital |
3 |
150,000,000 |
150,000,000 |
|
| Share Premium |
|
|
337,400,000 |
337,400,000 |
|
| Unappropriated
Profit |
|
|
(9,213,009) |
(69,428,725) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
478,186,991 |
417,971,275 |
|
|
| LONG
TERM LOAN AND DEFERRED LIABILITIES |
|
| Long
Term Loan |
|
4 |
152,556,923 |
110,840,000 |
|
| Long
Term Loan from Directors |
|
5 |
96,135,478 |
78,881,139 |
|
| Deferred
Liabilities |
|
6 |
13,413,063 |
13,212,713 |
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Current
portion of long term loans |
7 |
73,063,077 |
133,360,000 |
|
| Short
term finance |
|
8 |
36,508,304 |
81,913,422 |
|
| Creditors,
accrued & other liabilities |
9 |
348,420,707 |
310,221,146 |
|
| Provision
for Taxation |
|
|
4,871,205 |
4,080,785 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
462,863,293 |
529,575,353 |
|
| CONTIGENCIES
AND COMMITMENTS |
10 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
1,203,155,748 |
1,150,480,480 |
|
|
|
========== |
========== |
|
|
| TANGIBLE
FIXED ASSETS |
|
|
|
| Operating
Fixed Assets |
|
11 |
761,733,074 |
829,775,118 |
|
| Capital
Work in Progress |
|
12 |
13,802,401 |
9,787,297 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
775,535,475 |
839,562,415 |
|
| Long
Term Deposits |
|
13 |
2,098,807 |
2,011,807 |
|
| Deferred Cost |
|
14 |
-- |
320,400 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores
and Spares |
|
15 |
73,565,540 |
57,672,700 |
|
| Stock in Trade |
|
16 |
228,409,522 |
217,301,616 |
|
| Trade Debts |
|
17 |
25,252,521 |
9,353,476 |
|
| Loans,
advances, deposits, |
|
18 |
92,983,638 |
24,110,876 |
|
| prepayments
and other receivables |
|
|
| Cash
& bank balances |
|
19 |
5,310,244 |
147,190 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
425,521,466 |
308,585,858 |
|
|
------------------ |
------------------ |
|
|
|
1,203,155,748 |
1,150,480,480 |
|
|
========== |
========== |
|
|
|
|
| The
annexed notes form an integral part of these accounts |
|
|
|
Chief Executive |
|
Director |
|
|
|
|
|
|
| Profit
and Loss Account |
|
| For
the year ended June 30, 2001 |
|
|
|
|
|
Notes |
2001 |
2000 |
|
|
|
Rupees |
Rupees |
|
|
|
|
| Sales |
|
20 |
972,570,773 |
808,032,031 |
|
| Cost of Sales |
|
21 |
770,269,455 |
704,917,272 |
|
|
|
|
------------------ |
------------------ |
|
| Gross Profit |
|
|
202,301,318 |
103,114,759 |
|
|
|
|
------------------ |
------------------ |
|
| Administrative
& Selling expenses |
22 |
23,722,373 |
22,141,496 |
|
| Amortization |
|
|
320,400 |
3,553,296 |
|
| Depreciation |
|
|
77,125,667 |
84,760,583 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
101,168,440 |
110,455,375 |
|
|
|
|
------------------ |
------------------ |
|
| Operating
Profit/(Loss) |
|
|
101,132,878 |
(7,340,616) |
|
| Other Income |
|
23 |
7,653,291 |
6,749,436 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
108,786,169 |
(591,180) |
|
|
|
|
------------------ |
------------------ |
|
| Financial
Charges |
|
24 |
40,779,699 |
60,622,095 |
|
| Other Charges |
|
25 |
2,919,549 |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
43,699,248 |
60,622,095 |
|
|
|
|
------------------ |
------------------ |
|
| Profit/(Loss)
before taxation |
|
|
65,086,921 |
(61,213,275) |
|
|
|
|
|
|
| Provision
for taxation |
|
| - Current |
|
4,871,205 |
4,080,785 |
|
| - Prior |
|
-- |
1,202,734 |
|
|
|
------------------ |
------------------ |
|
|
|
4,871,205 |
5,283,519 |
|
|
|
------------------ |
------------------ |
|
| Profit/(Loss)
after taxation |
|
60,215,716 |
66,496,794) |
|
| Unappropriated
Profit/(Loss) brought forward |
|
(69,428,725) |
(2,931,931) |
|
|
|
------------------ |
------------------ |
|
| Profit/(Loss)
available for appropriation |
|
(9,213,009) |
(69,428,725) |
|
|
|
========== |
========== |
|
| Basic
earnings per share |
|
4.01 |
(4.43) |
|
|
|
|
========== |
========== |
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Chief Executive |
|
|
Director |
|
|
|
| Cash
Flow Statement |
|
| For
the year ended June 30, 2001 |
|
|
|
|
|
2001 |
2000 |
|
|
|
|
Rupees |
Rupees |
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Net
Profit/(Loss) before taxation |
|
|
65,086,922 |
(61,213,275) |
|
| Adjustment
of items not involving movement of funds |
|
|
| Depreciation |
|
|
77,125,667 |
84,760,583 |
|
| Amortization
of deferred cost |
|
|
320,400 |
3,553,296 |
|
| Loss
on sale of fixed assets |
|
|
1,301,082 |
1,659,651 |
|
| Provision
for gratuity |
|
|
1,663,217 |
1,881,708 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
80,410,366 |
91,855,238 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
145,497,288 |
30,641,963 |
|
| (Increase)/Decrease
in current assets |
|
| Stores
and spares |
|
|
(15,892,840) |
(4,695,942) |
|
| Stock-in-trade |
|
|
(11,107,907) |
(44,162,400) |
|
| Trade debts |
|
|
(15,899,045) |
(9,353,476) |
|
| Advances,
deposits, prepayments and other receivables |
(67,331,739) |
(6,600,169) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(110,231,531) |
(64,811,987) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
35,265,757 |
(34,170,024) |
|
| (Decrease)/Increase
in current liabilities |
|
| Creditors,
accrued and other liabilities |
|
38,199,561 |
94,800,994 |
|
|
|
------------------ |
------------------ |
|
| Net
cash from operating activities before tax |
|
73,465,318 |
60,630,970 |
|
|
|
|
|
| Tax paid |
|
(5,621,809) |
(4,848,354) |
|
| Gratuity paid |
|
(1,462,867) |
(799,916) |
|
|
|
------------------ |
------------------ |
|
|
|
(7,084,676) |
(5,648,270) |
|
|
|
------------------ |
------------------ |
|
| Net
cash from operating activities |
|
66,380,642 |
54,982,700 |
|
|
|
|
------------------ |
------------------ |
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
| Addition
to fixed assets including CWIP |
|
(20,270,510) |
(11,598,502) |
|
| Proceeds
from disposal of fixed assets |
|
5,870,701 |
1,250,441 |
|
| Long
term deposits and deferred cost |
|
(87,000) |
(352,400) |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash from investing activities |
|
(14,486,809) |
(10,700,461) |
|
|
|
|
========== |
========== |
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
|
| Repayment
of long term loans |
|
(130,580,000) |
(114,450,653) |
|
| Long
term loans acquired |
|
112,000,000 |
100,000,000 |
|
| Short
term running finance |
|
(45,405,118) |
(13,453,757) |
|
| Long
Term Loan From Directors |
|
17,254,339 |
(16,393,456) |
|
|
|
------------------ |
------------------ |
|
| Net
cash from financing activities |
|
(46,730,779) |
(44,297,866) |
|
|
|
------------------ |
------------------ |
|
| Net
Increase/(decrease) in cash and cash equivalents |
5,163,054 |
(15,627) |
|
| Cash
and cash equivalents at the beginning of the year |
147,190 |
162,817 |
|
|
|
------------------ |
------------------ |
|
| Cash
and cash equivalents at the end of the year |
|
5,310,244 |
147,190 |
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts |
|
|
|
Chief Executive |
|
Director |
|
|
|
|
| Statement
of Changes in Equity |
|
| For
the year ended June 30, 2001 |
|
|
|
|
Unappropriated |
|
|
|
Share |
Share |
Profit/ |
|
|
|
Capital |
Premium |
(Accumulated |
Total |
|
|
|
loss) |
|
|
|
| Balance
as at 30th June, 1999 |
150,000,000 |
337,400,000 |
(2,931,931) |
484,4685)69 |
|
|
|
|
|
| Loss
for the year ended |
|
|
| 30th June, 2000 |
|
-- |
-- |
(66,496,794) |
(66,496,794) |
|
|
------------------ |
------------------ |
------------------ |
------------------ |
|
| Balance
as at 30th June, 2000 |
150,000,000 |
337,400,000 |
(69,428,725) |
417,971.28 |
|
|
|
|
|
| Profit
for the year ended |
|
|
| 30th June, 2001 |
|
-- |
-- |
60,215,716 |
60,215,716 |
|
|
|
------------------ |
------------------ |
------------------ |
------------------ |
|
| Balance
as at 30th June, 2001 |
150,000,000 |
337,400,000 |
(9,213,009) |
478,186.99 |
|
|
|
========== |
========== |
========== |
========== |
|
|
|
Chief Executive |
|
Director |
|
|
|
|
| Notes
to the Accounts |
|
| For
the year ended June 30, 2001 |
|
|
| 1.
STATUS OF THE COMPANY |
|
|
|
| The
Company was incorporated in Pakistan under the Companies Act 1913 (now
Companies |
|
| Ordinance,
1984) and is listed on Karachi Stock Exchange. Its principal activity is
manufacturing |
|
| of
polyester filament yarn, and fibre. |
|
|
|
|
|
|
| 2.
ACCOUNTING POLICIES |
|
|
|
|
| 2.1
Accounting Convention and basis of preparation |
|
|
| These
accounts are prepared in accordance with the historical cost convention and
in |
|
| accordance
with International Accounting Standards as applicable in Pakistan. |
|
|
| 2.2
Fixed Capital Expenditure & Depreciation |
|
|
| These
are stated at cost less accumulated depreciation except lease hold land and
capital |
|
| work-in-progress,
which are stated at cost. Depreciation on operating assets is charged |
|
| on
reducing balance method without considering extra shifts worked. Acquisitions
during |
|
| the
year are depreciated for the full year irrespective of the date of purchase
and no |
|
| depreciation
is charged on assets in the year of disposal. Minor renewals, replacements, |
|
| repairs
and maintenance are charged to expenses. Major renewals and betterment are |
|
| capitalised.
Gains and losses on disposal of fixed assets are included in current year's |
|
| income. |
|
|
|
|
| 2.3
Deferred Cost |
|
|
|
| Deferred
cost is being amortized over a period of five years commencing from the first |
|
| year
in which these are incurred. |
|
|
|
|
|
|
| 2.4
Stores and Spares |
|
|
|
| These
are valued at cost using the average cost method. |
|
|
|
|
| 2.5
Stock-in-trade |
|
|
|
| Stock
of raw and packing materials, except for those in transit, work-in-process
and |
|
| finished
goods are valued principally at lower of average cost and net realizable
value. |
|
| Cost
of work-in-process and manufactured finished goods comprises of cost of
direct |
|
| materials,
labour and an appropriate portion of production overheads. |
|
|
| Items
in transit are stated at cost comprising invoice values plus other charges
incurred |
|
| thereon. |
|
|
|
|
|
|
| 2.6 Taxation |
|
|
|
| The
charge for current taxation is based on taxable income after taking into
account |
|
| tax-credits
and rebates available, if any. The company accounts for deferred taxation |
|
| on
all major timing differences using the liability method. However, deferred
tax is not |
|
| provided
if it can be established with reasonable probability that the timing
differences |
|
| will
not reverse in the foreseeable future. |
|
|
|
