| Artistic Denim Mills Limited |
|
|
|
|
|
|
|
|
|
| Annual
Report 2001 |
|
|
|
|
| CONTENTS |
|
|
| COMPANY
INFORMATION |
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
| YEAR
WISE STATISTICAL SUMMARY |
|
| DIRECTORS'
REPORTTO THE MEMBERS |
|
| AUDITORS'
REPORTTOTHE MEMBERS |
|
| BALANCE
SHEET |
|
| PROFIT
AND LOSS ACCOUNT |
|
| CASH
FLOW STATEMENT |
|
| STATEMENT
OF CHANGES IN EQUITY |
|
| NOTES
TO THE FINANCIAL STATEMENTS |
|
| PATTERN
OF SHAREHOLDING |
|
|
|
| COMPANY
INFORMATION |
|
|
| Board
of Directors |
Muhammed Yaqoob Ahmed |
|
|
Chairman & Chief
Executive |
|
|
|
Muhammad Iqbal Ahmed |
|
|
MuhammadYousuf Ahmed |
|
|
Muhammad Javed Ahmed |
|
|
Muhammad Faisal Ahmed |
|
|
Muhammad All Ahmed |
|
|
Mrs. Hajra Ahmed |
|
|
| Company
Secretary |
S.D. Siddiqui |
|
|
|
| Auditors |
|
Ford, Rhodes, Robson,
Morrow |
|
|
|
| Bankers |
|
Bank AL-Habib Limited |
|
|
Habib Bank AG Zurich |
|
|
Habib Bank Limited |
|
|
Soneri Bank Limited |
|
|
American Express Bank
Limited |
|
|
Pakistan Industrial
Credit & Investment |
|
|
Corporation Limited |
|
|
| Legal
Adviser |
Monawwer Ghani |
|
|
(Advocate) |
|
|
| Registered
office |
39-A, Block 6, RE.C.H.S., |
|
|
Karachi. |
|
|
| Factory |
|
Plot No. 7,8,9, & 26,
Sector 16, |
|
|
Korangi Industrial Area,
Karachi. |
|
|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
|
| Notice
is hereby given to the Members that the 9th Annual General Meeting of
ARTISTIC DENIM MILLS |
|
| LIMITED
will be held at the Registered Office of the Company at 39-A, Block-6,
P.E.C.H.S., Karachi, on |
|
| Saturday,
December 22, 2001 at 4.30 p.m. to transact the following business: |
|
|
| ORDINARY
BUSINESS |
|
| 1.
To confirm the minutes of the 8th Annual General Meeting held on December
11,2000. |
|
|
| 2.
To receive, consider and adopt the Audited Accounts of the Company for the
year ended June 30, 2001 |
|
| together
with Reports of the Directors' and Auditors' thereon. |
|
|
| 3.
To consider and approve payment of 30% Cash Dividend for the year ended June
30, 2001 as |
|
| recommended
by the Board of Directors. |
|
|
| 4.
To appoint Auditors for theYear 2001-2002 and to fix their remuneration. |
|
|
| 5.
To transact with permission of the Chair any other business which may be
transacted at an Annual |
|
| General
Meeting. |
|
|
| SPECIAL
BUSINESS |
|
|
| 6.
To approve the remuneration of the Chief Executive & Director. |
|
|
|
By Order of the Board |
|
|
|
S.D. SlDDIQUI |
|
| Karachi:
November 30, 2001 |
|
Company Secretary |
|
|
| NOTES: |
|
| 1.
The Share Transfer Books of the Company will remain closed from December 16,
2001 to |
|
| December
22, 2001 (both days inclusive). Transfers received in order at the Registered
Office of the |
|
| Company
by close of business on December 15, 2001 will be treated in time to
determine the entitle- |
|
| ment
of 30% dividend recommended by the Board of Directors. |
|
|
| 2.
A Member entitled to attend, speak and vote at the General Meeting is
entitled to appoint another |
|
| Member
as his/her proxy to attend, speak and vote on his/her behalf. |
|
|
| 3.
Instrument appointing proxy and the power of attorney or other authority
under which it is signed or a |
|
| notarially
certified copy of the power or authority must be deposited at the Registered
Office of the |
|
| Company
at least 48 hours before at the time of the meeting. Form of Proxy is
enclosed. |
|
|
| 4.
A Corporation, which is a member of the Company, may by resolution of its
Board of Directors or |
|
| Governing
Body authorize a person to act as its representative at the meeting. |
|
|
| 5.
Members are requested to submit declaration for Zakat on the required format
and to advise change in |
|
| address,
if any. |
|
|
| Statement
U/s 160 of the Companies Ordinance, 1984. |
|
| This
statement sets out the material facts concerning Item 6 of the "Special
Business" to be transacted |
|
| at
the 9th Annual General Meeting of the Company to be held on December 22,
2001. |
|
|
| 6.
The approval of remuneration of the Chief Executive and the Director in the
draft resolution is set out |
|
| below. |
|
|
| The
Members are accordingly requested to pass with or without modification, the
following resolution as |
|
| an
Ordinary Resolution: |
|
|
| "RESOLVED
THAT the remuneration of the Chief Executive shall not exceed Rs.150,000/=
per |
|
| month
exclusive of perquisites benefits and other allowances to which he is
entitled under the terms |
|
| of
this appointment with an increment not exceeding 15% per annum." |
|
|
| "FURTHER
RESOLVEDTHAT the remuneration of the Director shall not exceed Rs.100,000/=
per |
|
| month
exclusive of perquisites, benefits and other allowances to which he is
entitled under the |
|
| terms
of his appointment with an increment not exceeding 15% per annum." |
|
|
|
| YEAR
WISE STATISTICAL SUMMARY |
|
|
|
2001 |
2000 |
1999 |
1998 |
1997 |
|
|
---------------------------------Rupees
in thousands------------------------------- |
|
| ASSETS
EMPLOYED |
|
| Fixed Assets |
|
519,925 |
334,471 |
349,166 |
379,702 |
347,638 |
|
| Capital
work-in-prog ress |
|
3,588 |
71,866 |
-- |
-- |
-- |
|
| Long
term deposits |
|
1,388 |
829 |
965 |
2,703 |
4,548 |
|
| Net
Current Assets / (Liabilities) |
(34,270) |
70,389 |
120,593 |
90,804 |
117,210 |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
|
|
| Total
Assets Employed |
|
490,631 |
477,555 |
470,724 |
473,209 |
469,396 |
|
|
========== |
========== |
========== |
========== |
========== |
|
| FINANCED
BY |
|
| Shareholders
Equity |
|
365,171 |
321,153 |
293,758 |
284,870 |
271,977 |
|
| LongTer
m Loan |
|
105,456 |
131,211 |
163,209 |
180,835 |
195,981 |
|
| Deferred
Liabilities |
|
20,004 |
25,191 |
13,757 |
7,504 |
1,438 |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
|
|
490,631 |
477,555 |
470,724 |
473,209 |
469,396 |
|
|
========== |
========== |
========== |
========== |
========== |
|
| SALES
& PROFITS |
|
| Sales |
|
1,095,819 |
917,190 |
937,478 |
787,037 |
729,594 |
|
| Gross
Profit |
|
147,280 |
130,888 |
101,453 |
87,571 |
118,712 |
|
| Operating
Profit |
|
122,341 |
108,228 |
87,126 |
80,570 |
100,534 |
|
| Profit
before taxation |
|
90,641 |
79,896 |
56,395 |
48,035 |
69,909 |
|
| Net
Profit after taxation |
|
86,018 |
55,395 |
36,888 |
40,892 |
66,407 |
|
| Dividend |
|
42,000 |
28,000 |
28,000 |
28,000 |
28,000 |
|
| Unappropriated
Profit |
|
120,171 |
76,153 |
48,758 |
39,870 |
26,977 |
|
|
| FINANCIAL
RATIOS |
|
|
2001 |
2000 |
|
| Gross
Profit - % of sales |
|
13.44 |
14.27 |
|
| Operating
Profit - % of sales |
|
11.16 |
118 |
|
| Profit
before taxation - % of sales |
|
8.27 |
8.71 |
|
| Net
Profit after taxation - % of sales |
|
7.85 |
6.04 |
|
| Basic
Earning per share - Rupees |
|
6.14 |
3.96 |
|
| Dividend
- % of Share Capital |
|
30.00 |
20.00 |
|
|
| Increase
/ (Decrease) in Sale - % |
|
19.48 |
(2.16) |
|
| Raw
and Packing Materials - % of sales |
|
68.27 |
68.22 |
|
| Labour
- % of sales |
|
463 |
4.13 |
|
| Other
Cost of goods manufactured - % of sales |
|
13.36 |
13.34 |
|
| Administrative
expenses - % of sales |
|
1.32 |
1.35 |
|
| Selling
expenses - % of sales |
|
0.91 |
1.00 |
|
| Financial
charges - % of sales |
|
2.89 |
3.09 |
|
| Taxation
- % of sales |
|
0.42 |
2.67 |
|
| Inventory
turn over |
|
10.50 |
8.96 |
|
| Receivable
turn over |
|
13.21 |
10.58 |
|
|
| SHORT
TERM SOLVENCY |
|
|
|
| Current
Ratio |
|
0.87 |
1.66 |
|
| Acid
Test Ratio |
|
0.47 |
0.87 |
|
|
|
|
| OVERALLVALUATION
AND ASSESSMENT |
|
|
|
| Return
on capital employed before taxation (average) - % |
20 |
18 |
|
| RE.Ratio
before taxation |
|
2.78 |
2.80 |
|
| Book
value per share |
|
26.08 |
22.94 |
|
| Long
term debts: equity |
|
26: 74 |
33: 67 |
|
|
|
| DIRECTORS'
REPORT TO THE MEMBERS |
|
|
| The
Directors of your Company have the pleasure in presenting the 9th Annual
Report along with the |
|
| Audited
Accounts for the year ended June 30, 2001. |
|
|
| YEAR
UNDER REVIEW |
|
| AIhamdolillah
performance of the Company remained excellent during the year. Total sales of
the |
|
| Company
crossed the milestone of Rs.1 billion and stood at Rs.1.1 billion which is
19.5% higher than |
|
| the
previous year. Gross profit was 13.4% of sales as compared to 14.3% in the
previous year. Profit |
|
| before
tax was 8.3% of sales as against 8.7% in the previous year. This lower profit
is attributed to |
|
| depreciation
on the new Spinning Unit, Genset, looms and other equipment which has
partially been |
|
| offset
by reduction in financial charges which are 2.9% of sales as compared to 3.1%
in previous year. |
|
| Basic
earnings per share is Rs.6.14 as against Rs.3.96 in the previous year. |
|
|
| We
have the pleasure in proposing 30% cash dividend for the year under review.
This has been achieved |
|
| after
meeting all the commitments of repayments of the installments of long term
loan along with mark |
|
| up. |
|
|
| PRODUCTION |
|
| Production
of denim fabric increased to 11.1 million meters from 10.8 million meters in
the previous |
|
| year.
In the quarter April-June, 2001 weaving production capacity was enhanced with
addition of ten |
|
| new
looms. Spinning unit was installed, operations of which commenced in April
2001. Up to June |
|
| 2001
production of yarn was 801,489 Kgs, all of which was consumed in the
manufacture of denim |
|
| fabric. |
|
|
| SALES
AND MARKETING |
|
| Due
to focus on export sale the domestic sales decreased by 65% as compared to
the previous year. |
|
| However,
export sales (direct and indirect) increased by 349% over the previous year.
Combined sales |
|
| volume
grew by 19.5% over the previous year. Extensive efforts have been made to
improve and |
|
| maintain
quality of the denim fabric. Emphasis is to explore new export market and to
focus on |
|
| selected
quality customers. |
|
|
| FUTURE
OUTLOOK |
|
| Irishallah,
with operations of the Spinning unit at full capacity in coming years we will
see a favourable |
|
| impact
on the unit cost of denim. With the continuously volatile rupee and the
escalating local costs |
|
| such
as electricity and gas, margins will be under pressure. The management of
your Company will |
|
| continue
to monitor costs with a view to control these wherever possible. |
|
|
| ARTISTIC
DENIM MILLS LTD. |
|
| We
see additional opportunities for growth in the Domestic and Export markets
and are therefore |
|
| considering
added capacities and capital investments so that opportunities can be availed
when these |
|
| arise.
New plot of land has been acquired in September, 2001 adjacent to the
existing factory. |
|
| Expansion
of weaving production capacity is planned by acquiring further new looms,
thus enabling |
|
| enhanced
production, local and export sales. |
|
|
| AUDITORS |
|
| The
present auditors Messrs. Ford, Rhodes, Robson, Morrow, Chartered Accountants,
Karachi retire |
|
| and
being eligible, offer themselves for re-appointment. |
|
|
| ACKNOWLEDGEMENT |
|
| We
wish to express our sincere thanks to all the financial institutions who have
been associated with |
|
| us
for their continued support and co-operation. We also would like to thank all
our valued customers |
|
| and
suppliers for rendering their patronage to the Company. |
|
|
| We
are confident that with continued support of the employees and all concerned
the Company will |
|
| Irishallah
continue to grow and prosper in future. |
|
|
|
ON BEHALF OFTHE BOARD |
|
|
|
|
|
YAQOOB AHMED |
|
| Karachi:
November 19, 2001 |
|
(CHIEF EXECUTIVE) |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of ARTISTC DENIM MILLS LIMITED as at
June 30, 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
purposes 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. |
|
|
| VVe
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 discloures 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 presen- |
|
| tation
of the above said statements. We believe that our audit provides a reasonable
basis for our opinion and, |
|
| after
due verification, we report that: |
|
|
| (a)
in our opinion, proper books of account have been kept by the Company as
required by the Companies |
|
| Ordinance,
1984; |
|
|
| (b)
in our opinion: |
|
| i)
the balance sheet and profit and loss 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 the 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, the profit and loss account, cash flows statement and statement of
changes in equity |
|
| together
with the notes forming part thereof, conform with approved accounting
standards as applicaNe |
|
| in
Pakistan, ancL 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 dune 30, |
|
| 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. |
|
|
FORD, RHODES, ROBSON, MORROW |
|
| KARACHI:
November 21,2001 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 2001 |
|
|
|
|
June 30, |
June 30, |
|
|
|
2001 |
2000 |
|
|
Note |
Rupees |
Rupees |
|
| ASSETS |
|
| NON-CURRENT
ASSETS |
|
| Tangible
fixed assets |
|
| Operating
fixed assets |
|
3 |
519,924,845 |
334,471,518 |
|
| Capital
work-in-progress |
|
4 |
3,588,300 |
71,865,505 |
|
|
|
---------- |
---------- |
|
|
|
523,513,145 |
406,337,023 |
|
| Long
term deposits |
|
5 |
1,388,451 |
829,250 |
|
| CURRENT
ASSETS |
|
|
|
|
| Stores
and spares |
|
6 |
2,737,831 |
2,775,483 |
|
| Stock-in-trade |
|
7 |
99,508,064 |
81,112,883 |
|
| Trade debts |
|
8 |
86,488,969 |
79,442,155 |
|
| Loans
and advances |
|
9 |
9,212,634 |
1,040,329 |
|
| Prepayments
and other receivables |
|
10 |
23,793,543 |
5,102,744 |
|
| Cash
and bank balances |
|
11 |
1,288,477 |
7,575,695 |
|
|
|
---------- |
---------- |
|
|
|
223,029,518 |
177,049,289 |
|
|
|
---------- |
---------- |
|
| TOTAL
ASSETS |
|
|
747,931,114 |
584,215,562 |
|
|
|
|
========== |
========== |
|
| EQUITY
AND LIABILITIES |
|
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
|
| Share
Capital |
|
|
|
| Authorised |
|
|
|
| 20,000,000
Ordinary shares of Rs.10 each |
|
|
200,000,000 |
200,000,000 |
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up |
|
|
|
| 14,000,000
Ordinary shares of Rs.10 each |
|
|
|
| fully
paid in cash |
|
|
140,000,000 |
140,000,000 |
|
| Reserves |
|
12 |
225,171,136 |
181,153,049 |
|
|
|
|
---------- |
---------- |
|
|
|
365,171,136 |
321,153,049 |
|
| NON
CURRENT LIABILITIES |
|
|
|
|
| Long
term loan |
|
13 |
105,456,006 |
131,211,006 |
|
| Deferred
liabilities |
|
14 |
20,003,736 |
25,191,448 |
|
| CURRENT
LIABILITIES |
|
|
|
|
| Current
maturity of long term loan |
|
|
25,755,000 |
22,130,000 |
|
| Short
term running finances |
|
15 |
94,062,870 |
-- |
|
| Short
term loan |
|
16 |
38,000,000 |
-- |
|
| Creditors,
accrued and other liabilities |
|
17 |
57,417,125 |
48,567,736 |
|
| Provision
for taxation - net |
|
|
-- |
7,908,182 |
|
| Dividends |
|
18 |
42,065,241 |
28,054,141 |
|
|
|
---------- |
---------- |
|
|
|
257,300,236 |
106,660,059 |
|
|
|
---------- |
---------- |
|
| CONTINGENCIES
AND COMMITMENTS |
19 |
|
|
| TOTAL
EQUITY AND LIABILITIES |
|
747,931,114 |
584,215,562 |
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these financial statements. |
|
|
|
YAQOOB AHMED |
|
FAISAL AHMED |
|
|
Chief Executive |
|
Director |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 2001 |
|
|
|
|
2001 |
2000 |
|
|
Note |
Rupees |
Rupees |
|
| SALES |
|
20 |
1,095,818,679 |
917,189,692 |
|
| Cost
of goods sold |
|
21 |
948,538,658 |
786,301,587 |
|
|
|
---------- |
---------- |
|
| GROSS
PROFIT |
|
|
147,280,021 |
130,888,105 |
|
| OTHER
INCOME |
|
22 |
4,502,381 |
3,938,943 |
|
|
|
|
---------- |
---------- |
|
|
|
151,782,402 |
134,827,048 |
|
| Administrative
expenses |
|
23 |
14,489,494 |
12,511,190 |
|
| Selling
and distribution expenses |
|
24 |
9,994,139 |
9,184,569 |
|
| Other
charges |
|
25 |
4,957,859 |
4,903,088 |
|
|
---------- |
---------- |
|
|
29,441,492 |
26,598,847 |
|
|
---------- |
---------- |
|
| OPERATING
PROFIT |
|
122,340,910 |
108,228,201 |
|
| Financial
charges |
|
26 |
31,699,603 |
28,332,376 |
|
|
---------- |
---------- |
|
| PROFIT
BEFORE TAXATION |
|
90,641,307 |
79,895,825 |
|
| Taxation |
|
27 |
4,623,220 |
24,500,352 |
|
|
---------- |
---------- |
|
| NET
PROFIT FOR THE YEAR |
|
86,018,087 |
55,395,473 |
|
| Unappropriated
profit brought forward |
|
76,153,049 |
48,757,576 |
|
|
---------- |
---------- |
|
| PROFIT
AVAILABLE FOR APPROPRIATION |
|
162,171,136 |
104,153,049 |
|
|
| APPROPRIATION: |
|
| Proposed
final dividend @ Rs.3.00 (2000: Rs.2.00) |
|
42,000,000 |
28,000,000 |
|
| per
Ordinary share of Rs.10 each |
|
|
---------- |
---------- |
|
| UNAPPROPRIATED
PROFIT CARRIED FORWARD |
|
120,171,136 |
76,153,049 |
|
|
========== |
========== |
|
| BASIC
EARNINGS PER SHARE |
|
28 |
6.14 |
3.96 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these financial statements. |
|
|
|
YAQOOB AHMED |
|
FAISAL AHMED |
|
|
Chief Executive |
|
Director |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30, 2001 |
|
|
|
|
2001 |
2000 |
|
|
Note |
Rupees |
Rupees |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Cash
generated from operations |
|
30 |
141,371,530 |
187,067,862 |
|
| Income
tax paid |
|
(26,174,425) |
(13,150,511) |
|
| Gratuity paid |
|
(1,606,232) |
(628,537) |
|
| Financial
charges paid |
|
(28,524,993) |
(28,335,675) |
|
| Long
term deposits |
|
(559,201) |
(29,699) |
|
|
---------- |
---------- |
|
| Net
cash generated from operating activities |
|
84,506,679 |
144,923,440 |
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
| Capital
expenditure |
|
(174,303,540) |
(93,601,205) |
|
| Return
on bank deposits received |
|
1,510,918 |
2,190,224 |
|
| Sale
proceeds of fixed assets |
|
54,755 |
648,425 |
|
|
---------- |
---------- |
|
| Net
cash used in investing activities |
|
(172,737,867) |
(90,762,556) |
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Long
term loan paid |
|
(22,130,000) |
(19,015,000) |
|
| Dividend
paid |
|
(27,988,900) |
(27,971,054) |
|
|
---------- |
---------- |
|
| Net
cash used in financing activities |
|
(50,118,900) |
(46,986,054) |
|
|
---------- |
---------- |
|
| NET
(DECREASE) / INCREASE IN CASH |
|
|
|
| AND
CASH EQUIVALENTS |
|
(138,350,088) |
7,174,830 |
|
|
|
|
| CASH
AND CASH EQUIVALENTS |
|
| AT
THE BEGINNING OF THE YEAR |
|
7,575,695 |
400,865 |
|
|
