| Baig Spinning Mills Limited |
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| Annual
Report 1999 |
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| CONTENTS |
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| COMPANY
INFORMATION |
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| NOTICE
OF ANNUAL GENERAL MEETING |
|
| DIRECTORS'
REPORT |
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| BALANCE
SHEET |
|
| PROFIT
AND LOSS ACCOUNT |
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| NOTES
TO THE ACCOUNTS |
|
| PATTERN
OF SHAREHOLDING |
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|
| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
|
| Mr.
Dr. Mirza Ikhtiar Baig |
|
Chairman & Chief
Executive |
|
| Mr.
M. Ishtiaq Baig |
|
Director |
|
| Mr.
Mirza Mukhtar Baig |
|
Director |
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| Mrs.
Qudsia Baig |
|
Director |
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| Mrs.
Shireen Baig |
|
Director |
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| Mrs.
Afreen Baig |
|
Director |
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| Mr.
Muhammad Farooq |
|
Director (Nominee I.C.P.) |
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|
| COMPANY
SECRETARY |
|
| Mr.
Nadeem Khan |
|
|
| AUDITORS |
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| Hyder
Bhimji & Co. |
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| Chartered
Accountants |
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| REGISTERED
OFFICE |
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| F-225,
Textile Avenue, Street No. 5, |
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| S.I.T.E.,
Karachi. |
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| Tel: 2566411 - 6 |
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| Fax: 2566417 |
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| MILL |
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| A-5/A,
Manghopir Road, S.I.T.E., |
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| Karachi-
Pakistan. |
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| BANKERS |
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| Habib
Bank Limited |
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| Allied
Bank of Pakistan Limited |
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| NOTICE
OF 27th ANNUAL GENERAL MEETING |
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| Notice
is hereby given that the 27th Annual General Meeting of the members of Baig
Spinning Mills |
|
| Limited
will be held on Monday 27th, March 2000 at 3:00 p.m. at the Registered office
of the Company, |
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| F-225,
Textile Avenue, Street No. 5, S.I.T.E., Karachi to transact the following
business. |
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| 1.
To confirm the minutes of Extra-ordinary General Meeting of the Company held
on 30-12-1999. |
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|
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| 2.
To receive, and consider and adopt the Audited Accounts of the Company for
the year |
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| ended
September 30, 1999 together with Directors and Auditors report thereon. |
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|
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| 3.
To appoint Auditors for the year ended September 30, 2000 and fix their
remuneration. The |
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| retiring
Auditors M/s. Hyder Bhimji and Co. Chartered Accountants, have offered
themselves |
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| for
Re-appointment. |
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|
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|
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| 3.
To transact any other business with the permission of the Chair. |
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|
BY ORDER OF THE BOARD |
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|
NADEEM KHAN |
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| Dated:
March 5th, 2000 |
|
(Company Secretary) |
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| NOTES: |
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|
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| 1.
The Share Transfer books of the Company will be closed from March 21st, 2000
to March |
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| 27th,
2000 (both days inclusive) |
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|
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| 2.
A Members of the Company entitled to attend and vote may appoint another
member on |
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| his/her
proxy to attend and vote instead of himself/herself. Proxies in order to be
effective |
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| must
be received by the Company not less than 48 hours before the meeting. |
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| DIRECTORS'
REPORT TO THE SHAREHOLDERS |
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| During
the year under review the company incurred Net Loss of Rs. 11.840 M as
against Net Loss of |
|
| Rs.
30.071 M in the preceding year. The annual operating loss has been
substantially reduced and |
|
| such
improvement is mainly due to expansion in Nos. of Spindles from 12,816 to
14,560 spindles, |
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| financed
by sponsors from their own resources, and completed during the year. The loss
represent |
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| unabsorbed
financial charges which has been eroding company's profit over the years.
However, the |
|
| Directors
are pleased to mention that through the best endeavors of the management we
have |
|
| succeeded
in securing a re-scheduling package from our project financier M/s. Habib
Bank Limited |
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| under
which the Bank's total liabilities of Rs. 234.321 M, including mark-up,
outstanding on 19-08- |
|
| 1999
have been re-scheduled and rationalized with the Cash Generation capacity of
the project. |
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| Under
this re-scheduling package the company's annual financial charges will be
reduced by about |
|
| Rs.
15.000 M by viture of freezer of outstanding Mark-up. |
|
|
| As
such the Company's Profits which have been completely eroded by the heavy
financial charges |
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| will
be largely relieved from such undue burden and you will see Net Profit on
Company's Profit and |
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| Loss
Account in the ensuing years. |
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| MANUFACTURING
AND OPERATING RESULTS |
|
|
| a) Production |
|
|
| This
year the company has produced Kgs. 4.432 M (20/s Converted) yarn with the |
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| capacity
utilization of 97% as against Kgs. 3.782 M of Yarn and 94% capacity
utilization |
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| in
the previous year, recording an increase of 17.18% in the production. During
the |
|
| year
the production capacity has increased from Kgs. 4.037 M to Kgs. 4.535 M due |
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| to
the addition of 1744 spindles in the original 12,816 Nos. of Spindles. The
Company |
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| spun
10/s to 22/s counts of carded yarn on customers demand at best market prices. |
|
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| b)
Sales and Marketing |
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| During
the year under review the company's aggregate sales have increased from |
|
| Rs.
409.824 M to Rs. 432.935 M in the preceding year recording and increase of |
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| 5.63%.
The company maintained good quality of yarn and as a result better selling |
|
| rate
of yarn were realized. The Company could not export its yarn simply due to
the |
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| better
selling price available in the domestic market. |
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|
|
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| c)
Gross and Net Profit/(Loss) |
|
|
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| The
company's gross profit has increased from 6.74% in the preceding year to
8.65% |
|
|
| during
the year. This is mainly due to increase in sales both in terms of quantity
and |
|
|
| selling
prices and the better average rate of raw cotton of Rs. 2,126/- per mound
achieved |
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| during
the year as against Rs. 2,296/- per mound during the preceding year. |
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|
|
| The
manufacturing Expenses have increased partly due to 17.18% increase in the |
|
| production
of yarn and also due to the increase in Additional Surcharge by KESC |
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| leading
to increase in cost & Power. Bonus and increments given to workers and |
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| staff,
replacement of Major Parts of the plant and over haul of the Generator Set. |
|
|
| The
Administrative and Selling expenses increased by 2% from Rs. 10.242 M in the |
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| preceding
year to Rs. 10.456 M during the year, mainly due to increase in sales |
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| commission
as the sales during the year were also increase. However in percentage |
|
| terms
of the Sales these expenses decreased from 2.50% to 2.41% during the year |
|
|
| The
profit before financial charges has increased from Rs. 17.401 to Rs. 27.363 |
|
| M
in the preceding year due to better operating results achieved during the
year. |
|
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| The
Financial Charges has decreased by 18.12% from Rs. 45.237 M in the preceding |
|
| year
to Rs. 37.039 M during the year. The decrease in Financial Charges is mainly |
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| due
to a new rescheduling package secured from HBL. |
|
|
| The
after tax accumulated losses of the company has increased from Rs. 150.278 |
|
| M
in the preceding years to Rs. 162.119M during the year and have converted |
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| company's
equity base into negative at Rs. 55.119 M. However through effects of |
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| enhanced
production capacity and saving in Mark-up as addressed above the |
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| company
will Insha Allah gradually recover its accumulated losses. |
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|
| CURRENT
PROSPECTS: |
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| By
the grace of God Almighty our Country is having Bumper Crop during the
current |
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| season
1999-2000 estimated at more than 10 M. Bales. The rate of Raw Cotton has |
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| drastically
declined. At the beginning of the season the rates were around Rs. 1900 |
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| per
mound but in the mid of the season the rates were reduced to Rs. 1200 to Rs. |
|
| 1500
per mound lowest ever since last five years. Incidentally the selling price
of yarn |
|
| were
also reduced however not directly in proportion to reduction in Raw Cotton
Rates. |
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| Since
your company manufactures high quality yarn, the customer demand is remain |
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| stable.
Under this favourable cotton scenario we hope that your company will perform |
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| even better. |
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| The
export potentials are not good. Our export of yarn particularly the courser
yarn has |
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| declined
sharply as Indonesia, India, China and Uzbekistan are offering greater
competition |
|
| to
Pakistan. Feedback received from importers indicate that there is no prospect
of major |
|
| reversal.
The Yarn Market in Japan has greatly shrunk and many units have shifted their |
|
| production
to China. |
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|
| Y2K
COMPLIANCE |
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| The
company has successfully completed Y2K Compliance of their computerized
equipment |
|
| and activities. |
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| AUDITORS |
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| The
present Auditors M/s. Hyder Bhimji & CO, Chartered Accountants, retire
and being |
|
| eligible
offer themselves for re-appointment. |
|
|
| ACKNOWLEDGMENT |
|
| The
directors take this opportunity to record thanks to our bankers for their
valued support |
|
| and
a note of appreciation for all the employees of the company who have
contributed their |
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| sincere
efforts and services toward the business affairs of the company. |
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|
For and on behalf of Directors of |
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|
BAIG SPINNING MILLS LTD |
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|
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|
DR. MIRZA IKHTIAR BAIG |
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| KARACHI:
7th February, 2000 |
|
CHAIRMAN |
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
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| We
have audited the annexed balance sheet of BAIG SPINNING MILLS LIMITED as at
30th September, |
|
| 1999
and the related profit and loss account and statement of changes in Financial
Position (Cash Flow), |
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| together
with the notes forming part thereof, for the year then ended and we state
that we have obtained |
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| all
the information and explanations which to the best of our knowledge and
belief were necessary for the |
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| purpose
of our audit and, after due verification thereof, 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 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 |
|
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| business; and |
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|
|
|
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| iii)
the business conducted, investments made and the expenditure incurred |
|
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| 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 and the statement of changes
in Financial |
|
| Position,
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 September 30, 1999 and of
the loss |
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| and
the changes in financial position (Cash Flow)for the year then ended; and |
|
|
|
|
| (d)
in our opinion, no Zakat was deductible at source under the Zakat and Ushr
Ordinance, |
|
| 1980. |
|
|
|
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| Without
qualifying our opinion we draw attention to the Note No. 26 in the Financial
Statement |
|
| wherein
the events more fully explained in the said note substantiates that the
Company will |
|
| be
able to continue as a going concern. |
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|
|
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|
HYDER BHIMJI & CO. |
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| Karachi:
7th February, 2000 |
|
CHARTERED ACCOUNTANTS |
|
|
|
|
| BALANCE
SHEET AS AT SEPTEMBER 30, 1999 |
|
|
|
|
Note |
1999 |
1998 |
|
|
|
|
Rupees |
Rupees |
|
| CAPITAL
& LIABILITIES. |
|
|
|
|
|
|
|
| SHARE
CAPITAL. |
|
|
|
| Authorised |
|
|
|
|
| 10,000,000
Ordinary Shares of Rs. 10/- Each. |
|
|
100,000,000 |
100,000,000 |
|
|
|
|
========== |
========== |
|
| Issued,
Subscribed and Paid-up. |
|
|
| 9,100,000
Ordinary Shares of |
|
|
|
|
| Rs:
10/- each fully paid in Cash. |
|
|
91,000,000 |
91,000,000 |
|
|
|
|
|
|
| CAPITAL
RESERVE. |
|
|
16,000,000 |
16,000,000 |
|
| ACCUMULATED
(LOSS). |
|
|
(162,119,883) |
(150,278,942) |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
(55,119,883) |
(43,278,942) |
|
| SURPLUS
ON REVALUATION |
|
|
|
| OF
FIXED ASSETS. |
|
|
29,828,087 |
29,828,087 |
|
|
|
|
| LOAN
FROM DIRECTORS. |
|
|
3 |
30,128,004 |
20,800,000 |
|
| REDEEMABLE
CAPITAL. |
|
4 |
213,020,718 |
128,496,850 |
|
| LONG-TERM
LOAN. |
|
|
5 |
-- |
59,742,795 |
|
| DEFERRED
LIABILITY |
|
|
6 |
1,245,603 |
1,061,100 |
|
|
|
|
|
|
|
| CURRENT
LIABILITIES. |
|
|
|
| Short
Term Finance Utilized under |
|
|
|
| Mark-up
arrangements. |
|
7 |
48,351,395 |
24,972,097 |
|
| Custom
Debentures. |
|
|
4,995,590 |
4,995,590 |
|
| Current
Portion of Redeemable Capital & |
|
|
|
| Long-Term
Loan. |
|
|
15,806,381 |
30,586,384 |
|
| Creditors,
Accrued & Other Liabilities. |
|
8 |
9,902,788 |
15,900,050 |
|
| Provision
for taxation. |
|
|
1,889,061 |
1,971,406 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
80,945,215 |
78,425,527 |
|
|
|
|
| CONTINGENCIES
AND COMMITMENTS. |
|
9 |
-- |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
Total |
300,047,744 |
275,075,417 |
|
|
|
|
========== |
========== |
|
|
| PROPERTY
AND ASSETS. |
|
|
|
| TANGIBLE
FIXED ASSETS. |
|
|
|
| Operating
Fixed Assets. |
|
10 |
182,241,923 |
171,444,052 |
|
| CAPITAL
WORK IN PROGRESS. |
|
11 |
-- |
22,021,428 |
|
| LONG-TERM
DEPOSITS AND |
|
|
|
| DEFERRED
COST |
|
12 |
807,763 |
1,747,564 |
|
|
|
|
|
| CURRENT
ASSETS. |
|
|
|
| Stores,
Spares & Loose Tools. |
|
13 |
6,964,605 |
6,768,741 |
|
| Stock-in-Trade. |
|
14 |
70,180,870 |
30,057,731 |
|
| Trade Debts. |
|
15 |
28,920,444 |
29,734,112 |
|
| Advances,
Deposits & Prepayments. |
|
16 |
4,944,217 |
5,491,154 |
|
| Cash
& Bank Balances. |
|
17 |
5,987,922 |
7,810,635 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
116,998,058 |
79,862,373 |
|
|
|
|
------------------ |
------------------ |
|
|
Total |
300,047,744 |
275,075,417 |
|
|
|
========== |
========== |
|
|
| NOTE:
The annexed notes form an integral part of these accounts. |
|
|
|
Dr. MIRZA IKHTIAR BAIG |
|
|
M. ISHTIAQ BAIG |
|
|
Chief Executive |
|
|
Director |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1999 |
|
|
|
Note |
1999 |
1998 |
|
|
|
Rupees |
Rupees |
|
|
|
|
|
| Sales |
|
|
18 |
432,935,043 |
409,824,820 |
|
| Cost of Sales |
|
|
19 |
395,454,151 |
382,181,024 |
|
|
|
|
------------------ |
------------------ |
|
| Gross Profit |
|
|
|
37,480,892 |
27,643,796 |
|
| Operating
Expenses: |
|
|
|
|
| Administrative. |
|
|
20 |
6,934,259 |
6,560,820 |
|
| Selling
& Distribution. |
|
|
21 |
3,521,831 |
3,681,110 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
10,456,090 |
10,241,930 |
|
|
|
|
------------------ |
------------------ |
|
| Operating
Profit. |
|
|
|
27,024,802 |
17,401,866 |
|
| Other Income. |
|
|
22 |
338,883 |
-- |
|
|
|
|
------------------ |
------------------ |
|
| Profit
before Financial Charges. |
|
|
|
27,363,685 |
17,401,866 |
|
| Financial
Charges. |
|
|
23 |
(37,039,951) |
(45,237,037) |
|
|
|
|
------------------ |
------------------ |
|
| Net
Loss before Tax |
|
|
|
(9,676,266) |
(27,835,171) |
|
| Provision
for Income Tax |
- Current |
|
24 |
(2,164,675) |
(2,049,124) |
|
|
- Prior years |
|
|
-- |
(187,643) |
|
|
|
|
------------------ |
------------------ |
|
| Net
Loss for the. year |
|
|
|
(11,840,941) |
(30,071,938) |
|
| Accumulated
Loss brought forward |
|
|
(150,278,942) |
(120,207,004) |
|
|
|
|
------------------ |
------------------ |
|
| Accumulated
Loss carried to Balance Sheet |
|
|
(162,119,883) |
(150,278,942) |
|
|
|
|
========== |
========== |
|
|
| NOTE:
The annexed notes form an integral part of these accounts. |
|
|
|
Dr. MIRZA IKHTIAR BAIG |
|
|
M. ISHTIAQ BAIG |
|
|
Chief Executive |
|
|
Director |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1999. |
|
|
|
|
|
|
1999 |
1998 |
|
|
|
Rupees |
Rupees |
|
|
|
|
| CASH
INFLOW FROM OPERATING ACTIVITIES |
|
|
| (Loss)
before taxation |
|
(9,676,266) |
(27,835,171) |
|
| Adjustment
for : Depreciation |
|
13,037,619 |
12,493,751 |
|
|
: Financial Charges |
|
37,039,951 |
45,237,037 |
|
| Gain
on disposal of Fixed Asset |
|
(297,168) |
-- |
|
| Provision
for gratuity - Net |
|
569,880 |
738,549 |
|
| Amortization
of Deferred Costs |
|
1,242,149 |
1,242,144 |
|
| Cash
generated from operations before |
|
------------------ |
------------------ |
|
| working
capital changes |
|
41,916,165 |
31,876,310 |
|
|
|
|
|
|
|
| Changes
in Working Capital |
|
|
|
|
|
|
| (Increase)/Decrease
in Current Assets |
|
|
| Stores,
Spares and Loose Tools |
|
(195,864) |
(593,364) |
|
| Stock-in-Trade |
|
(40,123,139) |
20,954,625 |
|
| Trade Debts |
|
813,668 |
(2,476,370) |
|
| Advances,
Deposits, Prepayments |
|
|
|
| and
other Receivable |
|
546,937 |
(1,585,661) |
|
| Increase/(Decrease)
in Short Term Finance |
|
23,379,298 |
(20,888,824) |
|
| Increase/(Decrease)
in Creditors, Accrued and |
|
|
|
| other liabilities. |
|
|
(990,933) |
581,373 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(16,570,033) |
(4,008,221) |
|
|
|
|
------------------ |
------------------ |
|
| Cash
inflow from operations |
|
|
25,346,132 |
27,868,089 |
|
| Financial
Charges Paid |
|
|
(21,092,473) |
(40,095,778) |
|
| Payment
of Income Tax |
|
|
(2,247,020) |
(2,161,914) |
|
| Increase
in Long Term Deposits |
|
|
(302,348) |
(10,041) |
|
| Payment
of Gratuity |
|
|
(385,377) |
(404,411) |
|
|
|
|
------------------ |
------------------ |
|
| Net
Cash Inflow/(Outflow) from operating activities |
|
1,318,914 |
(14,804,055) |
|
|
|
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
|
|
| Proceeds
from disposal of Fixed Asset |
|
|
575,000 |
-- |
|
| Fixed
Capital Expenditure |
|
|
(2,091,894) |
(8,589,055) |
|
|
|
|
------------------ |
------------------ |
|
| Net
Cash utilised in Investing Activities |
|
|
(1,516,894) |
(8,589,055) |
|
|
|
|
|
|
1999 |
1998 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
| Loan
from Directors. |
|
|
9,328,004 |
7,800,000 |
|
| Demand
Finance. |
|
|
102,978,653 |
43,088,105 |
|
| Payment
of Demand Finance. |
|
|
(13,320,522) |
-- |
|
| Settlement
of F.C. Loan installments by |
|
|
|
|
| Demand
Finance. |
|
|
(79,657,061) |
(19,914,266) |
|
| Settlement
of Interest by Demand Finance. |
|
|
(20,953,807) |
(3,173,839) |
|
|
|
|
------------------ |
------------------ |
|
| Net
Cash (outflow)/inflow from financing activities. |
|
(1,624,733) |
27,800,000 |
|
|
|
|
------------------ |
------------------ |
|
| Net
(Decrease)/Increase in Cash and Bank Balances |
|
(1,822,713) |
4,406,890 |
|
| Cash
and bank balances at beginning of the year |
|
|
7,810,635 |
3,403,745 |
|
|
|
|
------------------ |
------------------ |
|
| Cash
and bank balances at the-end of the year. |
|
|
5,987,922 |
7,810,635 |
|
|
|
|
|
========== |
========== |
|
|
|
Dr. MIRZA IKHTIAR BAIG |
|
|
M. ISHTIAQ BAIG |
|
|
Chief Executive |
|
|
Director |
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1999. |
|
|
| 1.
STATUS AND NATURE OF BUSINESS: |
|
| The
Company was incorporated on 12th August, 1972 as a Private Limited Company
and |
|
| was
converted into Public Limited Company on 4th September, 1990. The Shares of
the |
|
| Company
were quoted on Karachi Stock Exchange on 15th October, 1995. The principal |
|
| activity
of the Company is manufacturing and sales of Cotton Yarn. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES: |
|
|
|
|
|
| 2.1
Accounting Convention: |
|
|
|
| The
accounts of the Company have been prepared under historical cost convention |
|
| modified
by revaluation of fixed assets. |
|
|
|
| 2.2
Foreign Currency Translation: |
|
| Assets
and liabilities in foreign currencies are translated into rupees at the rates
of |
|
| exchange
prevailing on the balance sheet date except where exchange risk cover |
|
| has
been obtained for repayment of liabilities in which case the rate contracted
for |
|
| is
used. Exchange differences in respect of foreign currency loans obtained for |
|
| acquisition
of fixed assets are incorporated in the cost of the relevant assets. All |
|
| others
exchange differences are taken to profit and loss account. |
|
|
| 2.3 Gratuity: |
|
|
|
| The
company operates an unfunded gratuity scheme for its employees. Provision is |
|
| made
annually to cover obligations under the scheme. |
|
|
|
|
|
| 2.4 Taxation: |
|
|
|
| The
provision for current income tax is made in accordance with the provisions of
the |
|
| Income
Tax Ordinance, 1979. The Company Accounts for deferred taxation for all |
|
| material
timing differences by using the liability method. |
|
|
|
| 2.5
Tangible Fixed Assets: |
|
|
|
| These
are stated at cost as modified by revaluation less accumulated depreciation |
|
| except
work in progress which is stated at cost. Depreciation is charged using the |
|
| reducing
balance method. |
|
|
|
|
|
|
| Full
year depreciation is charged on additions during the year except in case of |
|
| significant
additions or expansions where the charge for depreciation is made with |
|
| reference
to the date of commencement and operations of such assets. No |
|
