| Al-Abid Silk Mills Limited |
|
|
|
|
|
|
|
|
| Annual
Report 1999 |
|
|
|
| CONTENTS |
|
| Board
of Directors |
|
| Notice
of Annual General Meeting |
|
| Report
of Directors |
|
| Auditor's
Report to the Members |
|
| Balance Sheet |
|
| Profit
& Loss Account |
|
| Cash
Flow Statement |
|
| Notes
to the Accounts |
|
| Pattern
of Shareholdings |
|
|
|
| BOARD
OF DIRECTORS |
|
|
| Mr.
Naseem A. Sattar |
Chairman & Chief
Executive |
|
| Mr.
Azim Ahmed |
Director |
|
| Mr.
Amir Naseem |
Director |
|
| Mrs.
Zarina Naseem |
Director |
|
| Mrs.
Sadaf Nadeem |
Director |
|
| Mrs.
Reena Azim |
Director |
|
| Mrs. Asra Amir |
|
Director |
|
| Mr. Nasim Beg |
|
Nominee Director (N.I.T.) |
|
| Mrs.
Muhammad Shafi |
Nominee Director (N.I.T.) |
|
| Mr.
Muhammad Ashraf |
Nominee Director (N.I.T.) |
|
|
| SECRETARY |
|
| Mr.
S.M. Jawed Azam |
|
|
| AUDITORS |
|
| Muniff
Ziauddin & Company |
|
| Chartered
Accountants |
|
|
| REGISTRARS |
|
| (a)
Adam Patel & Co. (Pvt.) Ltd. |
|
| 34/2-F,
Block-5, Clifton, Karachi. |
|
|
| (b)
Gangjees Associates (For C.D.C. Purpose) |
|
| 516,
Clifton Centre, Khayaban-e-Roomi, |
|
| Kehkashan,
Block-5, Clifton, Karachi. |
|
|
| BANKERS |
|
| Habib
Bank Limited |
|
| Habib
Bank A.G. Zurich |
|
| Citibank, N.A. |
|
| National
Bank of Pakistan |
|
| Deutsche Bank |
|
| Metropolitan
Bank Limited |
|
|
| REGISTERED
OFFICE |
|
| A-39, S.I.T.E., |
|
| Manghopir
Road, Karachi |
|
|
| MILLS |
|
| A-39, |
|
| A-51/B, |
|
| A-34/A, |
|
| D-14/C-1 |
|
| S.I.T.E., Karachi. |
|
|
|
| NOTICE
OF MEETING |
|
|
| Notice
is hereby given that the 31st Annual General Meeting of the shareholders of
the |
|
| Company
will be held at Hotel Metropole, Club Road, Karachi on Tuesday, December 28,
1999 at |
|
| 4.00
p.m. to transact the following business: |
|
|
| 1.
To confirm the minutes of the 30th Annual General Meeting of the Company held
on |
|
| December
28, 1998. |
|
|
| 2.
To receive, consider and adopt the audited accounts of the Company together
with the |
|
| Directors'
and Auditors' reports thereon for the year ended June 30, 1999. |
|
|
| 3.
To approve Final Cash Dividend at Rs. 4.00 per share to the shareholders for
the year |
|
| ended
June 30, 1999. |
|
|
| 4.
To appoint auditors and fix their remuneration. |
|
|
| 5.
To approve remuneration of the Directors. |
|
|
| 6.
To consider any other business with the permission of the Chair. |
|
|
|
|
BY ORDER OF THE BOARD |
|
|
|
|
|
|
|
|
|
|
|
(S. M. JAWED AZAM) |
|
| Karachi:
3rd December, 1999. |
|
Company Secretary |
|
|
|
|
| NOTES: |
|
|
| 1.
The Share Transfer Books of the Company will remain closed from December 22,
1999 to |
|
| December
31, 1999 (both days inclusive). |
|
|
|
|
|
|
| 2.
A member entitled to attend and vote at this meeting may appoint another
member as his/ |
|
| her
proxy to attend and vote instead of him/her. Proxies in order to be
effective, must be |
|
| received
at the Registered Office of the Company not less than 48 hours before the
time |
|
| of meeting. |
|
|
|
|
| 3.
CDC Shareholders desiring to attend the meeting are requested to bring their
original |
|
| National
Identity Cards, Account and Participant's ID numbers, for Identification
purpose, |
|
| and
in case of proxy, to enclose an attested copy of his/her National Identity
Card. |
|
|
| 4.
Members are requested to promptly notify the Company of any change in their
addresses. |
|
|
|
| THIRTYFIRST
ANNUAL REPORT OF THE DIRECTORS |
|
|
| Dear
Shareholders, |
|
|
| WELCOME:
I accord you a hearty welcome to the 31st Annual General Meeting of the
Company. |
|
|
| PREAMBLE:
The accounts for the year are before you and the figures speak for themselves
which |
|
| performance
is indicated in the following paragraphs. |
|
|
| PERFORMANCE:
As reported to you also in the past, the Company is making continuous efforts |
|
| to
increase its export sales which is the need of the Company as well as of the
country. In spite of |
|
| growing
international competition, we have been able to increase our export sales
from Rs. 1.354 |
|
| billion
of preceding year to Rs. 1.497 billion for the year under report. The total
sales of the |
|
| Company
have been increased from Rs. 1.565 billion to Rs. 1.665 billion. The
Company's policy is |
|
| still
to continue further increase of the export sales and in pursuit of this goal,
the new Rotary |
|
| Printing
machine has been installed which was commissioned towards the end of the
closing |
|
| year
and a most modern Stitching Unit has been set-up in keeping with the
international market |
|
| culture
and to face the competition. These investments in Balancing and Modernization
will enable |
|
| the
Company not only to retain its export markets but also to help in increasing
the export sales |
|
| in
times to come, although these investments have increased charge of
depreciation which is |
|
| reflected
on the Profit and Loss Account as depreciation in the year under report is
higher by |
|
| Rs.
13.47 million compared with the depreciation of the preceding year. |
|
|
| As
mentioned above, the Company will continue to pursue its expanding export
policy. In |
|
| accordance
with this policy following plans have been implemented. |
|
|
| 1.
The Stitching Unit which was reported last year has been completed and
commissioned. |
|
| The
second phase of Stitching Unit is reaching its completion and full
commissioning by |
|
| end
December 1999 including most modern Switchtrack system for quality stitching. |
|
|
|
|
| 2.
The Rotary Printing Machine, L/C of which was reported last year, as
mentioned above, was |
|
| installed
and commissioned towards the end of this financial year. |
|
|
|
| DIVIDEND:
Profit after tax for the year as you will note is Rs. 55.47 million. Cash
Dividend of |
|
| Rs.
4/- per share is proposed which works out to 42.83% cash distribution of the
profit after tax for |
|
| the year. |
|
|
| REMUNERATION:
The remuneration of Directors is proposed to be increased by 35%. |
|
|
| Y2K
COMPLIANCE: All core software have been modified and it is ensured that
software are Y2K |
|
| compliant. |
|
|
| PATTERN
OF SHAREHOLDING: The pattern of share holding as on June 30, 1999 is included
in |
|
| this
Annual Report. |
|
|
| EARNING
PER SHARE: The earning per share has been given in note 32 to the accounts. |
|
|
| ACKNOWLEDGMENT:
In the end your Directors express recognition for the efforts put in by the |
|
| workers,
staff and executives of the Company. We also acknowledge the cooperation
extended by |
|
| our
banks and financial institutions. At the same time, we do not want to miss to
appreciate the |
|
| well
wishes of our valued shareholders. |
|
|
| Thanks
to all of you. |
|
|
|
|
For and on behalf of the Board of Directors |
|
|
|
|
|
|
|
|
|
NASEEM A. SATTER |
|
| Karachi:
3rd December, 1999. |
|
Chairman & Managing Director |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of AL-ABID SILK MILLS LIMITED as at 30
June 1999 |
|
| and
the related profit and loss account and cash flow statement, 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 and, after due |
|
| verification
thereof, we report that; |
|
|
| (a)
in our opinion, proper books of account and cash flow statement 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 & loss account, together with the notes forming
part thereof, |
|
| 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 |
|
| 1999
and of the profit 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. |
|
|
|
|
|
|
|
MUNIFF ZIAUDDIN & CO. |
|
| KARACHI:
3rd December, 1999. |
|
Chartered Accountants |
|
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1999 |
|
|
|
Note |
1999 |
1998 |
|
|
|
Rupees |
Rupees |
|
|
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
| Authorised
Capital |
|
|
|
| 10,000,000
Ordinary Shares of Rs. 10/- each |
|
100,000,000 |
100,000,000 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| Issued,
subscribed and paid-up capital |
|
3 |
59,400,000 |
59,400,000 |
|
|
|
|
| Reserves |
|
|
|
| Capital reserve |
|
4 |
39,600,000 |
39,600,000 |
|
| Unappropriated
profit |
|
|
177,683,401 |
145,971,476 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
217,283,401 |
185,571,476 |
|
|
|
|
------------------ |
------------------ |
|
|
|
5 |
276,683,401 |
244,971,476 |
|
| LONG
TERM LOANS |
|
6 |
67,990,889 |
68,642,907 |
|
| LIABILITIES
AGAINST ASSETS SUBJECT |
|
|
|
| TO
FINANCE LEASE |
|
7 |
56,872,100 |
18,873,444 |
|
|
|
|
|
|
| DEFERRED
LIABILITIES |
|
8 |
14,426,470 |
12,116,387 |
|
|
|
|
| CURRENT
LIABILITIES AND PROVISIONS |
|
|
| Short
term finances |
|
9 |
644,434,723 |
475,436,575 |
|
| Current
maturity of long-term loans and finances |
|
10 |
24,692,859 |
16,994,548 |
|
| Creditors,
accrued charges and other liabilities |
|
11 |
357,698,018 |
376,247,978 |
|
| Dividends |
|
12 |
23,838,546 |
4,707,413 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
1,050,664,146 |
873,386,514 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
13 |
-- |
-- |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
1,466,637,006 |
1,217,990,728 |
|
|
|
|
========== |
========== |
|
|
| FIXED
CAPITAL EXPENDITURE |
|
|
|
| Operating
fixed assets |
|
|
14 |
451,281,212 |
335,842,317 |
|
| Capital
work-in-progress |
|
|
15 |
5,030,190 |
20,296,878 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
456,311,402 |
356,296,195 |
|
|
|
|
|
| ADVANCE
FOR SHARES |
|
|
16 |
1,027,545 |
1,024,545 |
|
| LONG
TERM DEPOSITS, PREPAYMENTS |
|
|
|
| AND
DEFERRED COST |
|
|
17 |
2,356,905 |
1,635,455 |
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
|
| Stores
and spares |
|
|
18 |
65,717,491 |
48,850,682 |
|
| Stock-in-trade |
|
|
19 |
760,089,635 |
601,546,290 |
|
| Trade debtors |
|
|
20 |
27,804,589 |
43,422,108 |
|
| Advances,
deposits and prepayments |
|
21 |
68,455,904 |
51,603,601 |
|
| Other
receivables |
|
|
22 |
59,968,156 |
99,634,100 |
|
| Cash
and bank balances |
|
|
23 |
24,905,379 |
14,134,752 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
1,006,941,154 |
859,191,533 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
1,466,637,006 |
1,217,990,728 |
|
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
| Karachi:
3rd December, 1999. |
|
|
|
NASEEM A. SATTAR |
|
AZIM AHMED |
|
|
Chairman & Chief Executive |
|
Director |
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 1999 |
|
|
|
Note |
1999 |
1998 |
|
|
|
Rupees |
Rupees |
|
|
|
|
| Sales
and services |
|
24 |
1,665,150,607 |
1,565,553,176 |
|
| Cost of sales |
|
|
25 |
1,410,141,328 |
1,319,669,734 |
|
|
|
|
------------------ |
------------------ |
|
| GROSS
PROFIT |
|
|
255,009,279 |
245,883,442 |
|
|
|
|
|
|
|
| OPERATING
EXPENSES |
|
|
|
| Administrative |
|
26 |
60,042,482 |
53,098,523 |
|
| Selling
and distribution |
|
27 |
34,446,387 |
27,956,453 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
94,488,869 |
81,054,976 |
|
|
|
|
------------------ |
------------------ |
|
| OPERATING
PROFIT |
|
|
160,520,410 |
164,828,466 |
|
| Other income |
|
28 |
3,205,680 |
2,677,946 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
163,726,090 |
167,506,412 |
|
|
|
|
------------------ |
------------------ |
|
| Financial
charges |
|
29 |
94,786,242 |
90,772,418 |
|
| Other Charges |
|
|
30 |
3,446,992 |
3,850,590 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
98,233,234 |
94,623,008 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
before taxation |
|
|
65,492,856 |
72,883,404 |
|
| Taxation |
|
31 |
(10,020,931) |
(8,171,435) |
|
|
|
|
------------------ |
------------------ |
|
| Profit
after taxation |
|
|
55,471,925 |
64,711,969 |
|
| Unappropriated
profit brought forward |
|
|
145,971,476 |
85,714,507 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
201,443,401 |
150,426,476 |
|
|
|
|
|
|
|
| APPROPRIATION |
|
|
|
| Proposed
dividend Rs. 4.00 per share |
|
|
23,760,000 |
4,455,000 |
|
| (1998:
Re. 0.75 per share) |
|
|
|
|
|
------------------ |
------------------ |
|
| Unappropriated
profit carried forward |
|
|
177,683,401 |
145,971,476 |
|
|
|
|
========== |
========== |
|
| Basic
Earning Per Share |
|
32 |
9.34 |
10.89 |
|
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
NASEEM A. SATTAR |
|
AZIM AHMED |
|
|
Chairman & Chief Executive |
|
Director |
|
|
|
|
|
|
|
| CASH
FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
|
|
1999 |
1998 |
|
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
|
|
|
| FUNDS
PROVIDED FROM OPERATION |
|
|
| Profit
after taxation |
|
55,471,925 |
64,711,969 |
|
| Adjustment
of items not involving movement of funds |
|
|
|
| Depreciation |
|
49,879,635 |
36,410,050 |
|
| Provision
for gratuity - net |
|
2,310,083 |
2,982,106 |
|
| Profit
on disposal of fixed assets |
|
|
(896,193) |
(924,695) |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
106,765,450 |
103,179,430 |
|
|
|
|
|
| (INCREASE)
/ DECREASE IN CURRENT ASSETS |
|
|
| Stores
and spares |
|
(16,866,809) |
1,969,207 |
|
| Stock-in-trade |
|
(158,543,345) |
(146,365,988) |
|
| Trade debtors |
|
15,617,519 |
6,467,163 |
|
| Advances,
deposits and prepayments |
|
(16,852,303) |
(6,917,040) |
|
| Other
receivables |
|
39,665,944 |
(41,185,594) |
|
|
|
------------------ |
------------------ |
|
|
|
(136,978,994) |
(186,032,252) |
|
|
|
|
| INCREASE
/ (DECREASE) IN CURRENT LIABILITIES |
|
| Short
term finances |
|
168,998,148 |
162,646,730 |
|
| Creditors,
accrued charges and other liabilities |
|
(18,549,963) |
(29,664,424) |
|
|
|
------------------ |
------------------ |
|
|
|
150,448,185 |
132,982,306 |
|
|
|
------------------ |
------------------ |
|
| NET
CASH INFLOW FROM OPERATING ACTIVITIES |
|
120,234,641 |
50,129,484 |
|
|
|
|
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
| Advance
for shares |
|
(3,000) |
(58,925) |
|
| Capital
expenditure |
|
(151,291,901) |
(55,542,767) |
|
| Proceeds
from disposal of fixed assets |
|
2,136,254 |
2,305,000 |
|
| Long
term deposits and deferred cost |
|
(721,450) |
75,075 |
|
|
|
------------------ |
------------------ |
|
| NET
CASH (OUTFLOW) FROM INVESTING ACTIVITIES |
|
(149,880,097) |
(53,221,617) |
|
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
| Proceeds
from obligation under finance lease |
|
72,845,450 |
3,859,000 |
|
| Payments
of obligation under finance lease |
|
(27,148,482) |
(14,422,564) |
|
| Payments
of long term loans |
|
-- |
(3,154,994) |
|
| Long
term loans acquired |
|
(652,018) |
(571,800) |
|
| Dividends paid |
|
(4,628,867) |
(2,951,597) |
|
|
|
------------------ |
------------------ |
|
| NET
CASH INFLOW / (OUTFLOW) FROM FINANCING ACTIVITIES |
40,416,083 |
(17,241,955) |
|
|
|
|
|
------------------ |
------------------ |
|
| NET
INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS |
10,770,627 |
(20,334,088) |
|
| CASH
AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR |
14,134,752 |
34,468,840 |
|
|
|
|
|
------------------ |
------------------ |
|
| CASH
AND CASH EQUIVALENTS AT THE END OF THE YEAR |
|
24,905,379 |
14,134,752 |
|
|
|
|
========== |
========== |
|
|
|
|
NASEEM A. SATTAR |
|
AZIM AHMED |
|
|
Chairman & Chief Executive |
|
Director |
|
|
|
| NOTES
TO THE ACCOUNTS FOR THE YEAR ENDED JUNE 30, 1999 |
|
|
| 1.
COMPANY AND ITS BUSINESS |
|
| The
company was incorporated in the year 1968 as a Private Limited Company and
was |
|
| converted
into Public Limited Company on 24th December, 1987 under the Companies |
|
| Ordinance,
1984. The Company is listed on the Karachi and Lahore Stock Exchanges. The |
|
| principal
activity of the Company is manufacturing and processing of various kinds of
fabrics and |
|
| export
of printed and dyed cloth, bed sets and garments made-up. |
|
|
| 2.
ACCOUNTING POLICIES |
|
|
| 2.1
ACCOUNTING CONVENTION |
|
| These
accounts have been prepared on the basis of "historical cost"
convention. |
|
|
|
| 2.2
STAFF GRATUITY |
|
| The
Company operates an unfunded gratuity scheme covering all employees
(excluding |
|
| managerial
staff). Full provision is made in the accounts for gratuity payable to
employees |
|
| as per law. |
|
|
|
|
| 2.3 TAXATION |
|
|
|
|
| Current |
|
|
| Provision
for the year is based on taxable income at the current rates of taxation
after |
|
| taking
into account tax credit and rebates, if any. |
|
|
| Deferred |
|
|
| 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. |
|
|
| 2.4
FIXED CAPITAL EXPENDITURE AND DEPRECIATION |
|
|
| a.
Operating fixed assets are stated at cost less accumulated depreciation
except land |
|
| and
capital work-in-progress which are stated at cost. |
|
|
|
|
|
| b.
Depreciation is charged to income applying the reducing balance method
without |
|
| considering
extra shifts worked. |
|
|
|
|
| c.
No depreciation is charged on assets disposed off during the year while
charge for |
|
| the
full year is made on additions during the year. |
|
|
| d.
Minor renewals, replacements, maintenance and repairs are charged to expense. |
|
| Major
renewals and betterments are capitalized. Gains and losses on deleted assets |
|
| are
reflected in the accounts. |
|
|
|
|
| 2.5
ACCOUNTING FOR LEASES |
|
| The
Company records assets acquired under finance lease and related liabilities
at lower |
|
| of
present value of minimum lease payments under the lease agreement and the
fair value |
|
| of
assets. Finance charges are allocated to accounting period in a manner so as
to produce |
|
| a
constant periodic rate of charge on the outstanding liability. Depreciation
is provided at |
|
| the
rates applicable to operating fixed assets. |
|
|
| 2.6
CAPITALIZATION OF BORROWING COST |
|
|
|
| Borrowing
cost on loans obtained for acquisition of plant and machinery for the period
till |
|
| commissioning
of production is capitalized. |
|
|
|
|
| 2.7
STORES AND SPARES |
|
| These
are valued at cost using the moving average method. |
|
|
| 2.8
STOCK-IN-TRADE |
|
| Stock
of raw materials, work-in-process and finished goods are valued at lower of
moving |
|
| average
cost and net realizable value. Cost in relation to work-in-process and
finished |
|
| goods
represents direct cost of materials, direct wages and an appropriate portion
of |
|
| production
overheads. |
|
|
|
| Items
in transit are valued at cost comprising invoice values plus other charges
paid |
|
