| ISHAQ TEXTILE MILLS LIMITED |
|
|
|
|
|
|
| ANNUAL
REPORT 2004 |
|
|
| CHAIRMAN: |
|
MR.MUHAMMAD ARSHAD |
|
| CHIEF
EXECUTIVE: |
MR.NISAR AHMED SHEIKH |
|
| DIRECTORS: |
|
MR.MUHAMMAD SAEED SHEIKH |
|
|
MR.M. ANWAR SAJJAD |
|
|
MR.AMJAD SAEED |
|
|
MR.SHAHZAD AHMAD SHEIKH |
|
| CHAIRMAN |
|
MR.SHAMIM AHMAD (NIT) |
|
|
| CHIEF
FINANCIAL OFFICER |
MR.MUHAMMAD TARIQ IQBAL |
|
|
| AUDIT
COMMITTEE: |
MR.M. ANWAR SAJJAD |
MEMBER |
|
|
MR.MUHAMMAD SAEED |
MEMBER |
|
|
MR.AMJAD SAEED |
MEMBER |
|
|
| COMPANY
SECRETARY: |
MR.MUHAMMAD IKRAM ELAHI |
|
|
| AUDITORS: |
|
M. YOUSUF ADIL SALEEM
& CO. |
|
|
CHARTERED ACCOUNTANTS |
|
|
| BANKERS: |
|
HABIB BANK LIMITED |
|
|
FAYSAL BANK LIMITED |
|
|
UNION BANK LIMITED |
|
|
AL- BARAKA ISLAMIC BANK
B.S.C. (E C |
|
|
BANK AL-HABIB LIMITED |
|
|
BANK ALFALAH LIMITED |
|
|
| REGISTERED
OFFICES |
ROOM # 404-405, 4 FLOOR, |
|
| SHARES
DEPARTMENT: |
BUSINESS CENTRE, |
|
|
DUNALLY ROAD, KARACHI. |
|
|
| FACTORY: |
|
SHEIKHUPURA ROAD, |
|
|
TEHSIL JARANWALA, |
|
|
DISTRICT FAISALABAD. |
|
|
| DIRECTORS'
REPORT TO THE SHARE HOLDERS |
|
|
| The
Directors of your Company feel pleasure in submitting audited financial
statements |
|
| of
your Company for the year ended September 30, 2004. |
|
|
| FINANCIAL
RESULTS |
|
2003-2004 |
2002-200 |
|
| Operating profit |
|
84,626,733 |
82,865,182 |
|
| Trading profit |
|
2,321,581 |
3,125,167 |
|
|
86,948,314 |
85,990,349 |
|
| Less
financial and other charges |
|
44,113,832 |
49,878,860 |
|
|
42,834,482 |
36 11 1 489 |
|
| Other
income & Profit/(loss) on disposal of fixed assets |
|
1,129,997 |
547,037 |
|
| Provision
for Taxation |
|
43,964,479 |
36,658,526 |
|
| Current |
|
7,533,268 |
8,665.37 |
|
| Prior year's |
|
2,957,811 |
130,812 |
|
| Deferred |
|
6,012,873 |
7,878,928 |
|
|
|
|
|
| Net
profit for the year after taxation |
|
27,460,527 |
20,114,232 |
|
| Unappropriated
profit brought forward Surplus realized on disposal |
152,099,687 |
137,125,574 |
|
| for the year |
|
3,522,351 |
4,519,881 |
|
| Profit
available for appropriations |
|
183,213,377 |
161,759,687 |
|
| APPROPRIATION |
|
|
|
| Proposed
cash dividend (2003-@ Re.1 per share) |
|
16,503,952 |
9,660,000 |
|
| Unappropriated
profit carried forward |
|
183,213,377 |
152,099,687 |
|
| Earnings
per share - basic |
|
2.84 |
2.08 |
|
|
| REVIEW
OF OPERATING RESULTS |
|
|
| During
the year under review the sales were Rs. 1,469.358 Million as compared to |
|
| Rs.
1,426.684 Million for the last year. Similarly gross profit is Rs. 137.710
Million as |
|
| compared
to Rs.142.731 Million in the previous year. A minor decrease in gross profit |
|
| i.e.
from 10% to 9.37% is due to increase in the prices of raw material. During
the year, |
|
| the
prices of raw cotton and polyester fibre were Rs.3,030/- per Md. and Rs 72 00
per |
|
| Kg.
as compared to Rs.2,015/- per Md. and Rs.62.00 per Kg, respectively in the |
|
| previous year. |
|
|
| By
the grace of almighty Allah, your management has succeeded to earn net profit
for |
|
| the
year before taxation Rs.43.964 Million as compared to Rs.36.658 Million in
the |
|
| previous year. |
|
|
| FUTURE
PROSPECTS |
|
|
| By
the grace of almighty Allah, the position of cotton crop in the country is
very much |
|
| encouraging.
Production as well as quality of the crop is better as compared to previous |
|
| years,
but the prices of man made fibre are increasing day by day. Your Management
is |
|
| doing
its best and we hope that by the grace of almighty Allah, the results of the
coming |
|
| year
will be encouraging. |
|
|
| STAFF
RETIREMENT BENEFITS |
|
|
| Employees
of the Company are entitled to gratuity as per !aw and provision has been |
|
| made
in accordance with IAS 19 in the financial statements. |
|
|
| EXPANSION/MODERNISATION |
|
|
| Your
management is upgrading the machinery to meet the requirements of
international |
|
| market.
The following machinery has been replaced during the year: |
|
|
| 1. Ring Spinning Frames |
|
|
| 2. Carding Machines |
|
| TAXATION |
|
|
| The
assessment of Income Tax up to Tax Year 2003 (Financial Year ended September |
|
| 30,
2002) has been completed. Provision for turnover tax has been made in the
financial |
|
| statements. |
|
|
| DIVIDEND |
|
|
| Due
to tight liquidity position and expansion/modernisation programme, the
Directors |
|
| have
not proposed cash dividend for the year. |
|
|
| CHANGE
IN FINANCIAL YEAR ENDING |
|
|
| Central
Board of Revenue has directed a change in the close of accounting year of |
|
| "Cotton
Textile Units" from September to June vide its SRO No.684(l)/2004 dated |
|
| August
10, 2004. So that the next financial year will be closed on June 30, 2005. |
|
|
| EARNINGS
PER SHARE |
|
|
| Earnings
per share at the year end is Rs.2.84 as compared to Rs.2.08 in the last year. |
|
| AUDITORS |
|
|
| The
present auditors M/S M.Yousuf Adil Saleem And Co., Chartered Accountants
retire |
|
| and
not eligible for re-appointment. However, Securities and Exchange Commission
of |
|
| Pakistan
have exempted the rotation of external auditors for one year vide their
Letter |
|
| No.EMD/233/258/2002-3010
Dated November 11, 2004 and M/S M.Yousuf Adil Saleem |
|
| &
Co., Chartered Accountants offer themselves for re-appointment |
|
| PATTERN
OF SHAREHOLDING |
|
|
| Pattern
of shareholding as on September 30, 2004 is annexed. |
|
|
| NAME
OF DIRECTOR |
|
MEETINGS ATTENDED |
|
|
| Mr.Nisar
Ahmad Sheikh |
|
5 |
|
| Mr.
Muhammad Arshad |
|
4 |
|
| Mr.
Muhammad Saeed |
|
4 |
|
| Mr.
M.Anwar Sajjad |
|
4 |
|
| Mr.Shahzad
Ahmad |
|
3 |
|
| Mr.Amjad Saeed |
|
5 |
|
| Mr.Shamim
Ahmad Mr.S.Hussain Aqa Naqvi |
2 |
|
|
| RELATED
PARTY TRANSACTIONS |
|
|
| All
transactions with related parties are carried out at arm's length. The prices
are |
|
| determined
in accordance with comparable un-controlled price method. The power is |
|
| purchased
from related party at WAPDA price tariff. |
|
|
| CORPORATE
AND FINANCIAL REPORTING FRAME WORK |
|
|
| In
compliance to listing regulations of stock exchanges and as required under
the |
|
| Companies
Ordinance, 1984, your Directors are pleased to state as under: |
|
|
| 1. The financial statements prepared by the
Management of your Company present |
|
| fairly
its state of affairs, the results of its operations, cash flow and changes in
equity. |
|
|
| 2. Proper books of accounts of the Company
have been maintained. |
|
|
| 3. Appropriate accounting policies have been
consistently applied in preparation of |
|
| financial
statements and accounting estimates, which are based on reasonable and |
|
| prudent judgment. |
|
|
| 4. International Accounting Standards, as
applicable in Pakistan, have been followed in |
|
| preparation
of financial statements. The system of internal control is sound in design |
|
| and
has been effectively implemented and monitored. |
|
|
| 5. There is no doubt upon the Company's
ability to continue as a going concern. |
|
|
| 6. There
has been no
material departure from
the best practices
of corporate |
|
| governance,
as detailed in the listing regulations. |
|
|
| 7. Key operating financial data of last six
years in summarized form is annexed. |
|
|
| ACKNOWLEDGEMENT: |
|
|
| The
Board places on record its appreciation for the loyalty and devotion to work
by staff |
|
| and
workers of the Company and hope that they will do more in future. |
|
|
| STATEMENT
OF COMPLIANCE WITH THE BEST PRACTICES OF |
|
| CORPORATE
GOVERNANCE TO THE MEMBERS |
|
|
| This
statement is being presented to comply with the code of corporate governance
contared in |
|
| the
Regulations No. 37, chapter no. xiii of the listing regulations of Karachi
and Lahore Stock |
|
| Exchanges
for the purpose of establishing a frame work of good governance, where by a
listed |
|
| company
is managed in compliance with the best practice of corporate governance- The |
|
| company
had applied the principles contained in the code in the following manner. |
|
|
| 1. The Company encourages representation of
independent non-executive director and |
|
| directors representing minority interest on its
Board of Directors At present beard |
|
| includes
five independent non-executive directors. |
|
|
| 2. The directors have confirmed that none of
them is serving as a director in rno~e than ten |
|
| listed
companies, including this Company. |
|
|
| 3. All the resident directors of the Company
are registerec as taxpayers and none c^ Inem |
|
| has
defaulted in payment of any loan to a banking company, a DPI or an NBFI or.
being a |
|
| member
of a stock exchange, has been declared as a defaulter by that stock exchange. |
|
|
| 4. If a casual vacancy occurs in the Board
that will be filled up by the directors witn in 15 |
|
| days there of. |
|
|
| 5. The company has prepared a
"statement of ethics ana business practices' ;A!ij,;n has |
|
| been
signed by all directors and employees of the company |
|
|
| 6. The Board has developed a mission
statement, overall corporate strategy an^ significant |
|
| policies
of the company. A complete record of particulars of significant policies
along with |
|
| the
dates on which they were approved and amended has been maintained. |
|
|
| 7. All
the powers of the
Board have been
duly exercised and decisions
on material |
|
| transactions,
includes appointment and determination of remuneration ana terms and |
|
| conditions
of employment of CEO and other executive directors, have been taken by the |
|
| Board. |
|
|
| 8. The meeting of Board were presided over by the Chairman
and, in his absence, by a |
|
| director
elected by the Board for this purpose and the Board met at least once in
every |
|
| quarter.
Written notices of the Board meetings, along with agenda and worKing papers, |
|
| were
circulated at least seven days before the meetings. The minutes of the
meeting |
|
| were
appropriately recorded and circulated. |
|
|
| 9 The Board arranged an orientation course
for its directors on October 04, 2003 to apprise |
|
| them
of their duties and responsibilities. |
|
|
| 10. The Board has approved the appointment of
CFO, Company Secretary arid Head of |
|
| Internal
Audit, including their remuneration and terms and conditions of employment as |
|
| determined
by the CEO. |
|
|
| 11. The directors' report for this year has
been prepared in compliance with the requirement |
|
| of
the Code and fully describes the salient matters required to be disclosed. |
|
|
| 12. The financial statement of the Company
were duly endorsed by CEO and CFO before |
|
| approval
of the Board. |
|
|
| 13. The directors, CEO and executives do not
hold any interest in the shares of the company |
|
| other
than that disclosed in the pattern of shareholding. |
|
|
| 14. The Company has complied with all the
corporate and financial reporting requirements of |
|
| the Code. |
|
|
| 15. The Board has formed an audit committee.
It comprises three members, who are non- |
|
| executive
directors including the chairman of the committee. |
|
|
| 16. The meeting of the audit committee held at
least once every quarter prior to approval of |
|
| interim
and final results of the company and as required by the Code. The terms of |
|
| reference of the
committee have been
formed and advised
to the committee
for |
|
| compliance. |
|
|
| 17. The Board has set-up an effective internal
audit function. The audit staff are suitably |
|
| qualified
and experienced for the purpose and are conversant with the policies and |
|
| procedures
of the company and they (or their representative) are involved in the
internal |
|
| audit
function on a full time basis. |
|
|
| 18
The statutory auditors of the Company have confirmed that they have been
given a |
|
| satisfactory
rating under the quality control review programme of the Institute of |
|
| Chartered
Accountants of Pakistan, that they or any of the partners of the firm, their |
|
| spouses
and minor children do not hold shares of the Company and that the firm and
all |
|
| its
partners are in compliance with International Federation of Accountants
(IFAC) |
|
| guidance
on code of ethics as adopted by Institute of Chartered Accountants of |
|
| Pakistan. |
|
|
| 19. The statutory auditors or the persons
associated with them have not been appointed to |
|
| provide
other services except in accordance with the listing regulations and the
auditors |
|
| have
confirm that they have observed IFAC guidelines in this regard. |
|
|
| 20. We confirm that all other material
principles contained in the Code have been complied |
|
|
| with. |
|
|
| KEY
OPERATING AND FINANCIAL DATA |
|
| FOR
LAST SIX YEARS |
|
|
|
| PARTICULARS |
|
2004 |
|
2002 |
2001 |
2000 |
1999 |
1998 |
|
(RUPEES IN THOUSNAD) |
|
| FINANCIAL
POSITION |
|
|
|
| Paid up capital |
|
96.6 |
|
96.6 |
96.6 |
96.6 |
96 600 |
52,523 |
| Share premium |
|
17,250 |
|
17.25 |
17,250 |
17.25 |
17.25 |
1 7,250 |
| Fixed
assets at cost |
1,060,554 |
2003 |
991,980 |
889,320 |
570.783 |
587,309 |
586 362 |
| Accumlated
depreciation |
344,597 |
|
276.27C |
209,140 |
340.124 |
330 890 |
303 508 |
| Current assets |
|
871,691 |
|
495.513 |
716,419 |
511.086 |
445.515 |
418083 |
| Current liabilities |
|
941,748 |
96.6 |
545.025 |
762.358 |
563.265 |
471 223 |
454,798 |
| INCOME |
|
|
17,250 |
|
| Sales |
|
1,469,358 |
993,893 |
1,497,795 |
,189.253 |
742,776 |
o47 7/0 |
909.643 |
| Other income |
|
1,052 |
290,400 |
404 |
1,783 |
-1.984 |
451 |
719 |
| Pre tax profit |
|
43,964 |
624.902 |
37.378 |
31.666 |
23.208 |
20.204 |
50.472 |
| Taxation |
|
16,504 |
632,157 |
7,602 |
7.523 |
12.439 |
5 351 |
3.537 |
| STATISTICS
AND RATIOS |
|
| Pre
tax profit to sales % |
299 |
1,426,684 |
2.5 |
266 |
312 |
2,38 |
5.55 |
| Pre
tax profit to capital °o |
45.51 |
1,384 |
3869 |
32.78 |
24.02 |
20,92 |
522o |
| Current ratio |
|
1:1.03 |
36.659 |
1:1.05 |
1:1.03 |
1:1 |
1:097 |
1 099 |
| Paid
up value per share (Rs.) |
10 |
16,544 |
10 |
10 |
10 |
10,00 |
1 0 00 |
| Earning
after tax per share (Rs.) |
2.84 |
|
3.08 |
2.5 |
1 11 |
1 54 |
4 85 |
| Cash dividend % |
|
-- |
257 |
12.5 |
10 |
12.5 |
1250 |
20,00 |
| Break
up value per share (Rs,) |
30.75 |
3795 |
25.97 |
24.14 |
2264 |
22,77 |
23 23 |
|
|
|
| REVIEW
REPORT TO THE MEMBERS ON STATEMNET OF COMPLIANCE |
|
| WITH
BEST PRACTICES OF CODE OF CORPORATE GOVERNANCE |
|
|
|
|
| We
have reviewed the Statement of Compliance with the best practices |
|
| contained
in the Code of Corporate Governance prepared by the Board of |
|
| Directors
of Ishaq Textile Mills Limited to comply with the Listing Regulation No. |
|
| 37
and Chapter No. XIII of the Karachi and Lahore Stock Exchanges respectively |
|
| where
the company is listed. |
|
|
| The
responsibility for compliance with the Code of Corporate Governance is that |
|
| of
the Board of Directors of the Company. Our responsibility is to review, to
the |
|
| extent
where such compliance can be objectively verified, whether the Statement |
|
| of
Compliance reflects the status of the Company's compliance with the |
|
| provisions
of the Code of Corporate Governance and report if it does not. A |
|
| review
is limited primarily to inquiries of the Company personnel and review of |
|
| various
documents prepared by the Company to comply with the Code. |
|
|
| As
part of our audit of financial statements we are required to obtain an |
|
| understanding
of the accounting and internal control systems sufficient to plan |
|
| the
audit and develop an effective audit approach. We have not carried out any |
|
| special
review of the internal control system to enable us to express an opinion |
|
| as
to whether the Board's statement on internal control covers all controls and |
|
| the
effectiveness of such internal controls. |
|
|
| Based
on our review, nothing has come to our attention which causes us to |
|
| believe
that the Statement of Compliance does not appropriately reflect the |
|
| Company's
compliance, in all material respects, with the best practices contained |
|
| in
the Code of Corporate Governance. |
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of ISHAQ TEXTILE MILLS UNITED as at |
|
| September
30, 2004 and the related profit and loss account, statement of changes in
equity and |
|
| cash
flow statement together with the notes forming patt 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 |
|
|
| 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 obte:n reasonable
assurance |
|
| about
whether the above said statements are free of any material misstatement. An
audit |
|
| includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the |
|
| above
said statements. An audit also includes assessing the accounting policies and
significant |
|
| estimates
made by management, as well as, evaluating the overall presentation of the
above said |
|
| statements.
We believe that our audit provides a reasonable basis for our opinion and.
after due |
|
| verification,
we report that: |
|
|
| (a) 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, arid are in |
|
| agreement
with the books of account and are further in accordance with accounting |
|
| policies
consistently applied except for the changes stated in Note 4 1 with which |
|
| we concur; |
|
|
| (li)
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, statement of changes in
equity and |
|
| cash
flow statement 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 September 30, 2004 and of
the profit, |
|
| its
changes in equity and cash flows for the year then ended; and |
|
|
| (d) in our opinion Zakat deductible at
source under the Zakat and Ushr Ordinance, 1980. |
|
| was
deducted by the company and deposited in the Central Zakat Fund established |
|
| under
Section 7 of that Ordinance. |
|
|
| BALANCE
SHEET AS AT |
|
|
|
|
Note |
2004 |
2003 |
|
| SHARE
CAPITAL AND RESERVES |
|
|
Rupees |
Rupees |
|
| Authorised
capital 10,000,000 Ordinary shares of Rs.10/= each |
100,000,000 |
100,000.00 |
|
|
|
|
| Issued,
subscribed and paid up capita |
|
96,600,000 |
96,600,000 |
|
| Capital
reserve-share premium Unappropriated profit |
|
17,250,000 |
152,099.69 |
|
|
297,063,377 |
265,949,687 |
|
| SURPLUS
ON REVALUATION OF FIXED ASSETS |
6 |
93,170,162 |
96,823,325 |
|
| NON
CURRENT LIABILITIES Long term loans Deferred liabilities |
7 |
170,431,558 |
280,664,214 |
|
| Taxation
Staff retirement gratuity |
|
|
74,522,329 |
68,509,456 |
|
| CURRENT
LIABILITIES |
|
9.660.000 |
183,213,377 |
|
| Trade
and other payables |
|
10 |
120,572,710 |
127,704,989 |
|
| Interest/mark
up payable |
|
11 |
8,545,689 |
6,350,461 |
|
| Short
term borrowings |
|
12 |
692,534,911 |
431,420,078 |
|
| Current
portion of long term loans |
|
101,358,391 |
38,216,398 |
|
| Taxation Dividend |
|
13 |
18,736,247 |
18,805,143 |
|
|
|
14 |
941,747,948 |
632,157,069 |
|
|
|
|
|
|
|
|
Note |
2004 |
2003 |
|
|
|
|
Rupees |
Rupees |
|
| NON
CURRENT ASSETS |
|
|
1,588 |
583,143 |
|
| Fixed
capital expenditure Property, plant and equipment |
15 |
452,56 |
703,493.28 |
|
| Capital
work in progress-Machinery |
|
|
568,23 |
25,937,206 |
|
|
|
689,69 |
729,430,484 |
|
| LONG
TERM DEPOSITS |
|
|
49,254,503 |
952,572 |
|
