| Ismail Industries Limited |
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| Annual
Report 1999 |
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| CONTENTS |
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| COMPANY
PROFILE |
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| NOTICE
OF ANNUAL GENERAL MEETING |
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| DIRECTORS'
REPORT AND CHIEF EXECUTIVE'S REVIEW |
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| FINANCIAL
HIGHLIGHTS |
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| PORTRAYED
BY GRAPHIC ILLUSTRATIONS |
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| AUDITORS'
REPORT TO THE MEMBERS |
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| BALANCE
SHEET |
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| PROFIT
AND LOSS ACCOUNT |
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| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
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| NOTES
TO THE FINANCIAL STATEMENTS |
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| PATTERN
OF SHAREHOLDING |
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| COMPANY
PROFILE |
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| Principal/ |
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| Registered
Office |
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| 17,
Banglore Town |
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| Main
Shahra-e-Faisal |
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| Karachi. |
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| Factory |
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| C230-241 |
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| Hub Chowki |
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| Distt. Lasbella |
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| Baluchistan |
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| Company
Secretary |
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| Mohammad
Aslam |
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| Auditor |
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| M/s
Khalid Majid Husain Rahman |
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| Chartered
Accountants |
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| Legal Advisor |
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| Mr.
Farooq Rasheed |
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| Tax Advisor |
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| Munaf
Yusuf & Co. |
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| Chartered
Accountants |
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| Bankers |
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| Habib
Bank Limited |
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| Faysal
Islamic Bank Limited |
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| Muslim
Commercial Bank Limited |
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| Bank
A1-Habib Limited |
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| Habib
Bank A. G. Zurich |
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| Metropolitan
Bank Limited |
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| National
Bank of Pakistan |
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| Our business |
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| Ismail
Industries Limited is a public limited company incorporated on June 21, 1988.
The |
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| company
manufactures and sells high quality sugar confectionery products under the
brand |
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| name
of CANDYLAND. The company's manufacturing facilities are located at Hub |
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| Industrial
Trading Estate. |
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| Stock
exchange listing |
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| Ismail
Industries Limited is listed on the Karachi and Lahore Stock Exchanges in
Pakistan. Daily |
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| quotations
on the Company's stocks are printed in the leading newspapers. The company is
listed |
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| under
"Food and allied sector". |
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| Public
Information |
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| Financial
analysts, stock brokers, interested investors and financial media desiring
information |
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| about
Ismail Industries Limited should contact Mr. Mohammad Aslam at company's
principal/ |
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| registered
office at Karachi. |
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| Tel:
4554961, 4554935, 4554819 |
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| Fax:
(92-021) 4547843 |
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| E-mail:
smile@khi.compol.com |
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|
| Shareholder
information |
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| Enquiries
concerning lost share certificates, changes of address, verification of
transfer deeds |
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| and
share transfer should be directed to our Registrar Messers Khalid Majid
Husain Rahman, |
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| 16K,
Block-6, P.E.C.H.S., Shahra-e-Faisal, Karachi. |
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| Annual
General Meeting |
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| Eleventh
Annual General Meeting of the Company will be held on December 24, 1999,
R.C.M. Hall, |
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| Sidco
Avenue Centre at 12:00 noon. |
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| BOARD
OF DIRECTORS |
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| MR.
MUHAMMAD M. ISMAIL |
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| CHAIRMAN
& CHIEF EXECUTIVE |
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| MR.
MAQSOOD ISMAIL |
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| MR.
MIFTAH ISMAIL |
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| MR.
MUNSARIM SAIF |
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| MRS.
KHADIJA ISMAIL |
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| MRS.
ANISA NAVIWALA |
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| MRS.
NAFISA Y. PALLA |
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| MRS.
RASHIDA IQBAL |
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| MRS.
UZMA ARIF |
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| NOTICE
OF ANNUAL GENERAL MEETING |
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| Notice
is hereby given that the Eleventh Annual General Meeting of Ismail Industries
Limited will be held |
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| on
Friday, December 24, 1999 at 12:00 noon at the Raffia Chaudhary Memorial
(R.C.M.) Hall, Ground Floor, |
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| Sidco
Avenue Centre, 264 R.A. Lines, Karachi, to transact the following business: |
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| ORDINARY
BUSINESS |
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| 1.
To confirm the minutes of the Tenth Annual General Meeting of the Company
held on December 28, 1998. |
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| 2.
To receive, consider and adopt the Audited Accounts of the Company for the
year ended June 30, |
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| 1999
together with the Directors' and Auditors' Report thereon. |
|
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| 3.
To approve Cash Dividend @ 17.50% for the year ended June 30, 1999 as
recommended by the Board |
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| of
Directors (sponsors and associates have waived their right to dividend). |
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| 4.
To appoint Auditors of the Company for the ensuing year (1999-2000) and to
fix their remuneration. |
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| The
retiring Auditors M/s. Khalid Majid Husain Rahman, Chartered Accountants,
being eligible have |
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| offered
themselves for re-appointment. |
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| 5.
To transact any other business, which may be placed before the meeting, with
the permission of the |
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| chair. |
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| SPECIAL
BUSINESS |
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| 6.
To consider and approve the remuneration payable to the Chief
Executive/Director and three other |
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| Directors
for ensuing year (1999-2000) |
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By order of the Board |
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|
MUHAMMAD ASLAM |
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| Karachi:
December 01, 1999. |
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Company Secretary |
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| Notes: |
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| 1.
A member eligible to attend and vote at this meeting may appoint another as
his/her proxy to attend |
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| and
vote instead of him/her. Proxies, in order to be effective must reach the
Company s Registrar s |
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| Office
not less than 48 hours before the time of the meeting during working hours. |
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| 2.
The Share Transfer books of the Company shall remain closed with effect from
December 17 to De- |
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| cember
24, 1999 (both days inclusive). Shares may be lodged for transfer with our
Registrar M/s. |
|
| Khalid
Majid Husain Rahman, Chartered Accountants, 16-K, Block No. 6, P.E.C.H.S.,
Shahra-e-Faisal, |
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| Karachi.
The shareholders are advised to notify the Registrar of any change in their
addresses. |
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|
| STATEMENT
UNDER SECTION 160 OF |
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| THE
COMPANIES ORDINANCE, 1984 |
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| The
following statement under section 160 of the Companies Ordinance, 1984 is
made regarding the Spe- |
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| cial
Business to be conducted at the Eleventh Annual General Meeting of the
company to be held on De- |
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| cember 24, 1999. |
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| CHIEF
EXECUTIVE/DIRECTORS REMUNERATION |
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| Approval
is being sought for the payment of remuneration to the full time Chief
Executive/Director and |
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| three
other Directors. |
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| For
this purpose the following Special Resolution will be moved at the meeting. |
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| RESOLUTION |
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| Resolved
that the company be and hereby approves and authorises the payment as
remuneration to |
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| Mr.
Muhammad M. Ismail (Chief Executive and Director) of a sum of Rs. 360,000 per
annum and to |
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| Mr.
Maqsood Ismail (Director), Mr. Miftah Ismail (Director) and Mr. Munsarim Sail
(Director) of a sum of |
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| Rs.
300,000 per annum to each one of them, for the year ending June 30, 2000. It
is further resolved that in |
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| addition
to the above remuneration, all the utilities, telephone bills and membership
fee of the directors |
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| will
be paid by the Company. |
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| DIRECTORS
REPORT AND THE |
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| CHIEF
EXECUTIVE'S REVIEW |
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| We
are pleased to present the company's eleventh annual report for the year
ended June 30, 1999. After |
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| a
decade of its existence, we are thankful to al-mighty Allah that your company
has emerged as a |
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| major
manufacturer of premium quality confectionery products. Once again, we are
glad to report |
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| that
your company has attained almost all the performance and operating targets
that were fixed for |
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| the
year. A review of the enclosed financial statements of the company will
highlight that almost |
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| all
the indicators are showing robust growth. Revenue, gross profit, profit
before tax and profit |
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| after
tax have all grown significantly compared to last year. |
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| During
the year, your management vigorously pursued the strategy of product
innovation and |
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| improvement,
expanding further its sales force and penetrating into the new markets
through |
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| widening
of its distribution network and by launching creative advertisement
campaigns. The |
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| result
was a strong growth in our sales, both local and exports, which was sustained
as predicted in |
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| the
last year's annual report despite slow-down of the economy. Total sales
increased to Rs. 468 million |
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| compared
to Rs. 348 million reflecting a rise of 34% over the previous year. The
export sales went |
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| up
by 23% to Rs. 125 million compared to Rs. 101 million in the previous year
despite the overall |
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| slump
in the international markets that resulted in considerable reduction in the
country's exports |
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| during
the year. Through close and effective monitoring the cost of production was
contained and |
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| your
company was able to post handsome increase in gross profit that amounted to
Rs. 77 million up |
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| 28%
compared to the corresponding year. The net profit after tax jumped up to 13
million, reflecting |
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| an
increase Of 116% compared to the corresponding year. The increase in your
company's sales and |
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| profit
after tax compared to 1997 comes to 100% and 713%. As a result, the break-up
value of your |
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| company
that had plunged to Rs. 6.7 per share at June 1997 after heavy losses in the
years 94-95 and |
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| 95-96
has been resurrected to Rs. 9.2, nearly its face value. The earnings per
share for the year comes to |
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| Rs.
1.80 compared to Rs. 0.87 in the previous year. |
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| Seen
in the background of continuing slow-down of the economy in the last few
years, the perform- |
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| ance
of your company, which is candidly portrayed by the above improvements in the
company's |
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| volume,
gross profit and bottom line, is indeed impressive and satisfying for all of
us. We express |
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| our
gratitude to Allah for his blessings and hope that your company will continue
this pace of |
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| advancement
in the ensuing years. |
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| DIVIDEND |
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| We
have great pleasure in announcing that the directors have recommended a
dividend of 17.5% |
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| (1998:
15%) to be paid to the minority share-holders while the directors and the
majority share- |
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| holders
continue to forego their right to dividend until the previous years
accumulated losses are |
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| completely
wiped out. Your directors also hope to maintain a healthy and consistent
dividend pay |
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| out
policy in the ensuing years. |
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| EXPANSION
PROJECT |
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| As
reported last year, we had initiated an expansion project in view of the vast
unsatisfied demand |
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| of
CandyLand products. The expansion envisaged partly addition in the capacity
of our existing |
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| products
and partly introduction of new Chocolate products. The total capital cost
incurred on this |
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| project
is estimated at Rs. 121 million which has been financed as follows: |
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|
Rs. in million |
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| Long-term
loan from a commercial bank |
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55 |
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| Interest
free loan from directors |
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|
35 |
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| Funds
generated from operations |
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31 |
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------------------ |
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121 |
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------------------ |
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| With
the grace of Allah, the entire plant and machinery has been imported/acquired
and installed |
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| successfully
as planned. In November, we also launched our first Chocolate based product |
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| "NOW"
consisting of thick chocolate coated caramel. As expected, the market
response to this |
|
| product
has been overwhelming. Soon we expect to launch a few other such products.
Based on the |
|
| initial
response, I am confident that our chocolate products will become market
leaders like our |
|
| other
CandyLand products due to their superior quality and exceptional taste. |
|
|
| We
are also happy to report that despite increased financing needs of expansion,
your company's |
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| liquidity
position remains stable and its liquidity ratios are in line with the
prudential regulations. |
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| FUTURE
PROSPECTS |
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|
|
|
|
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| In
the first four months subsequent to the year end, the company's overall sales
have grown by |
|
| nearly
10%. Again, this is remarkably fine performance, and viewed in the background
of an |
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| overall
recession in the economy and continued stagnancy in the country's exports in
the first four |
|
| months
of the year, it deserves to be appreciated. With the proposed expansion
having implemented, |
|
| that
also includes introduction of some new high premium products including
chocolates, |
|
| we
envisage significant increase in revenues and profitability of your company
during the year |
|
| 1999-2000
and beyond. |
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|
|
|
|
| OUR
STRATEGY AND VISION |
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|
|
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|
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| Our
vision statement is to become the top confectionery producers in Pakistan and
South Asian |
|
| markets
while retaining our competitive advantage through excellent quality of our
products that |
|
| are
continuously redesigned and innovated to satisfy our customers. Our strategy
for accomplishing |
|
| this
vision, at the dawn of a new millennium is our renewed commitment to
relentless innovation and |
|
| enrichment
of our products through the policy of investment in two major factors, the
human re- |
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| sources
and the latest technology. We hope to continue our investment in these two
vital elements of |
|
| productivity
and profitability to maintain the company's supremacy in the confectionery
industry. |
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|
|
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| We
are also in the process of reshaping our Information Resource Management
(IRM) and stream- |
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| lining
our business processes by placing enhanced emphasis on the customer. |
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|
|
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| Our
strategy, in terms of financial goals, encompasses the following performance
objectives: |
|
|
|
|
| *
To attain an annual growth in volume of above 20%; |
|
|
| *
To maintain the gross profit margin above 16%; |
|
|
| *
To maintain yearly earnings at the rate of Rs. 1.6 per share; and |
|
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| *
A consistent dividend policy. |
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| RISKS
FACTORS |
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|
|
|
|
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| Major
risks that may hamper the attainment of the corporate objectives, which are
continuously |
|
| monitored
by your management to minimize their adverse effects are: |
|
|
|
|
| *
Volatile movements in the prices of our major raw materials of sugar and
glucose, which |
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| largely
depend on the growth of agriculture sector and the government policies
relating to |
|
| regulation
of prices of relevant agricultural commodities. |
|
|
| *
The possibility of continuing recession in the domestic market. |
|
|
| *
Increased competition, especially from the small producers of low quality
confectionery |
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| products
in the informal sector who do not pay their taxes, indulge in piracy and have |
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| minimum
overhead costs. |
|
|
| Your
management has designed appropriate strategies to address and mitigate the
above risk |
|
| factors
so as to minimize their adverse effects on the company's future
profitability. Already, due to |
|
| vigorous
pursuit of such policies, your company has shown remarkable resilience by
growing de- |
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| spite
adverse economic conditions. |
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|
| MANAGEMENT
EMPLOYEES RELATIONS |
|
|
| The
relations between the management and the employees remained cordial and the
directors |
|
| would
like to record their appreciation of the valuable contribution made by the
employees at all |
|
| levels
in attaining the company's goals during the year. |
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| PATTERN
OF SHARE HOLDING |
|
|
| The
pattern of shareholding is attached to the financial statements included in
this report. |
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|
| AUDITORS |
|
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| The
auditors of the company Messrs Khalid Majid Husain Rahman, Chartered Account- |
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| ants,
retire and being eligible offer themselves for re-appointment. |
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|
|
|
For and on behalf of the board. |
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|
|
|
|
|
(MUHAMMAD M. ISMAIL) |
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| December
01, 1999 |
|
Chairman & Chief Executive |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of Ismail Industries Limited as at
June 30, 1999 and |
|
| the
related profit and loss account and statement of changes in financial
position, 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 have been kept by the company as
required by |
|
| the
Companies Ordinance, 1984; |
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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 |
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| 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 account- |
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| ing
policies consistently applied; |
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|
|
|
|
| (ii)
the expenditure incurred during the year was for the purpose of the company's |
|
| business; and |
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|
|
|
|
| (iii)
the business conducted, investments made and the expenditure incurred during |
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| 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
re- |
|
| quired
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 June 30,
1999 and of |
|
| the
profit and the changes in financial position for the year then ended; and |
|
|
| (d)
Zakat deductible at source under the Zakat and Ushr Ordinance, 1980 has been
de- |
|
| ducted
by the company and deposited in the Central Zakat Fund established under Sec- |
|
| tion
7 of that Ordinance. |
|
|
| Karachi. |
|
Khalid Majid Husain Rahman |
|
| December 01, 1999 |
|
Chartered Accountants |
|
|
|
|
|
| BALANCE
SHEET |
|
| as
at June 30, 1999 |
|
|
|
|
Note |
1999 |
1998 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
| Authorised
capital |
|
|
|
| 8,000,000
ordinary shares |
|
|
|
| of Rs. 10/- each |
|
|
80,000,000 |
80,000,000 |
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up capital |
|
|
|
| 7,260,000
ordinary shares of |
|
|
|
| Rs.
10/- each fully paid in cash |
|
72,600,000 |
72,600,000 |
|
| ACCUMULATED
LOSS |
|
(6,113,371) |
(18,458,333) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
66,486,629 |
54,141,667 |
|
|
|
|
|
|
| LONG-TERM
FINANCES AND LOANS |
|
3 |
139,406,338 |
63,365,449 |
|
| OBLIGATIONS
UNDER FINANCE LEASE |
|
4 |
110,360 |
-- |
|
| DEFERRED
LIABILITIES |
|
5 |
6,402,902 |
5,271,984 |
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Short-term
finances |
|
6 |
49,000,000 |
24,000,000 |
|
| Running
finances under mark-up arrangements |
|
7 |
37,059,497 |
64,021,801 |
|
| Current
maturity of long-term finances |
|
8 |
13,959,111 |
8,502,000 |
|
| Current
maturity of obligations under |
|
|
|
| finance lease |
|
4 |
80,359 |
-- |
|
| Creditors,
accrued and other liabilities |
|
9 |
78,983,435 |
43,973,254 |
|
| Proposed
dividend |
|
|
954,625 |
914,400 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
180,037,027 |
141,411,455 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
10 |
-- |
-- |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
392,443,256 |
264,190,555 |
|
|
|
|
========== |
========== |
|
|
| TANGIBLE
FIXED ASSETS |
|
|
|
| Operating
fixed assets |
|
11 |
181,423,223 |
112,076,700 |
|
| Capital
work-in-progress |
|
12 |
38,599,753 |
7,391,687 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
220,022,976 |
119,468,387 |
|
| LONG
TERM DEPOSITS AND |
|
|
|
| DEFERRED
COSTS |
|
13 |
631,746 |
1,100,672 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores
and spares |
|
|
784,875 |
707,529 |
|
| Stock-in-trade |
|
|
14 |
77,804,467 |
77,768,981 |
|
| Trade
debts - unsecured, |
|
|
|
|
| considered
good |
|
|
71,350,559 |
8,705,506 |
|
| Advances,
deposits, prepayments |
|
|
|
|
| and
other receivables |
|
15 |
17,260,754 |
30,099,893 |
|
| Deposit
under the debt retirement scheme |
|
16 |
-- |
23,000,000 |
|
| Cash
and bank balances |
|
17 |
4,587,879 |
3,339,587 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
171,788,534 |
143,621,496 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
392,443,256 |
264,190,555 |
|
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these financial statements. |
|
|
|
MUHAMMAD M. ISMAIL |
|
|
MAQSOOD ISMAIL |
|
|
CHIEF EXECUTIVE |
|
|
DIRECTOR |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| for
the year ended June 30, 1999 |
|
|
|
|
Note |
1999 |
1998 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| Net sales |
|
|
18 |
468,490,273 |
348,116,571 |
|
| Cost
of goods sold |
|
|
19 |
391,124,919 |
287,675,260 |
|
|
|
|
------------------ |
------------------ |
|
| Gross profit |
|
|
|
77,365,354 |
60,441,311 |
|
|
|
|
------------------ |
------------------ |
|
| Administrative
expenses |
|
|
20 |
7,543,338 |
5,273,402 |
|
| Selling expenses |
|
|
21 |
41,678,725 |
33,805,224 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
49,222,063 |
39,078,626 |
|
|
|
|
------------------ |
------------------ |
|
| Operating profit |
|
|
|
28,143,291 |
21,362,685 |
|
| Financial
charges |
|
|
22 |
(15,452,992) |
(16,089,993) |
|
| Other income |
|
|
23 |
4,248,563 |
4,612,192 |
|
| Workers'
profit participation fund |
|
|
|
(846,943) |
(494,244) |
|
| Workers'
welfare fund |
|
|
|
(338,777) |
(197,698) |
|
|
|
|
------------------ |
------------------ |
|
| Profit
before taxation |
|
|
|
15,753,142 |
9,192,942 |
|
| Provision
for current taxation - for the year |
|
|
(2,674,755) |
(2,884,635) |
|
|
|
|
------------------ |
------------------ |
|
| Profit
after taxation |
|
|
|
13,078,387 |
6,308,307 |
|
| Proposed
dividend @ 17.5% (1998: 15%) |
|
|
|
| (Sponsors
and associates have waived |
|
|
|
| their
right to dividend) |
|
|
(954,625) |
(914,400) |
|
|
|
|
|
| Dividend
reversed |
|
24 |
221,200 |
314,522 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
12,344,962 |
5,708,429 |
|
| Accumulated
loss brought forward |
|
|
(18,458,333) |
(24,166,762) |
|
|
|
|
------------------ |
------------------ |
|
| Accumulated
loss carried forward |
|
|
(6,113,371) |
(18,458,333) |
|
|
|
|
========== |
========== |
|
| Earnings
per share |
|
25 |
1.80 |
0.87 |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these financial statements |
|
|
|
MUHAMMAD M. ISMAIL |
|
MAQSOOD ISMAIL |
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (Cash
Flow Statement) for the year ended June 30, 1999 |
|
|
|
|
|
1999 |
1998 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| Profit
before taxation |
|
|
15,753,142 |
9,192,942 |
|
| Adjustments
for: |
|
|
|
|
| Deferred
costs amortized |
|
|
847,926 |
847,925 |
|
| Depreciation |
|
|
20,880,201 |
12,919,338 |
|
| Gain
on disposal of fixed assets |
|
|
-- |
(178,159) |
|
| Exchange
difference |
|
|
-- |
(2,225,000) |
|
| Provision
for gratuity |
|
|
1,491,557 |
737,027 |
|
| Interest
expenses |
|
|
15,474,037 |
15,754,201 |
|
|
|
|
------------------ |
------------------ |
|
| Operating
profit before working capital changes |
|
|
54,446,863 |
37,048,274 |
|
| Decrease
in working capital (Note 26) |
|
|
2,953,362 |
11,577,748 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
57,400,225 |
48,626,022 |
|
| Payments for: |
|
|
|
|
| Gratuity |
|
|
(360,640) |
(237,978) |
|
| Income tax |
|
|
(3,146,910) |
(3,768,515) |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash generated from operating activities |
|
|
53,892,675 |
44,619,529 |
|
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
| Fixed
capital expenditure |
|
|
(121,151,790) |
(18,919,848) |
|
| Proceeds
from disposal of fixed assets |
|
-- |
622,362 |
|
| Repayment
of deposits |
|
(379,000) |
598,700 |
|
|
|
------------------ |
------------------ |
|
| Net
cash used in investing activities |
|
(121,530,790) |
(17,698,786) |
|
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
| Proceeds
of long-term finance |
|
|
90,000,000 |
-- |
|
| Repayment
of long-term finance |
|
|
(3,549,000) |
(3,610,221) |
|
| Repayment
of Frozen mark-up account |
|
|
(4,953,000) |
(5,045,000) |
|
| Repayment
of finance lease liability |
|
|
(92,281) |
-- |
|
| Interest paid |
|
|
(11,872,243) |
(15,514,938) |
|
| Dividend paid |
|
|
(647,069) |
(660,152) |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash generated from/(used in) financing activities |
|
68,886,407 |
(24,830,311) |
|
|
|
|
------------------ |
------------------ |
|
| Net
Increase in cash and bank balances |
|
|
1,248,292 |
2,090,432 |
|
| Cash
and bank balances as at July 1 |
|
|
3,339,587 |
1,249,155 |
|
|
|
|
------------------ |
------------------ |
|
| Cash
and bank balances as at June 30 |
|
|
4,587,879 |
3,339,587 |
|
|
|
|
========== |
========== |
|
|
|
|
MUHAMMAD M. ISMAIL |
|
MAQSOOD ISMAIL |
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
| NOTES
TO THE FINANCIAL STATEMENTS |
|
| For
the year ended June 30, 1999 |
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
| The
company was incorporated in Pakistan on June 21, 1988 as a private limited
company |
|
| and
subsequently converted into a public limited company on November 01, 1989. It
is listed |
|
| on
the Karachi and Lahore Stock Exchanges. The principal activities of the
company are the |
|
| manufacture
and sale of sugar confectionery items. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
ACCOUNTING CONVENTION |
|
| These
financial statements have been prepared under the 'historical cost
convention'. |
|
|
|
| 2.2
STAFF RETIREMENT GRATUITY |
|
| The
company operates an unfunded gratuity scheme for all its employees eligible
under |
|
| the
scheme. Provision for gratuity is calculated based on the entitlement of
employees |
|
| under
the scheme and is charged to profit and loss account. |
|
|
| 2.3 TAXATION |
|
|
| Provision
for current taxation is based on taxable income at current rates of taxation
after |
|
| taking
into account tax credits, rebates and exemptions available, if any. The
company |
|
| accounts
for deferred tax in respect of all major timing differences, which are
expected to |
|
| reverse
in the foreseeable future using the liability method. The company does not
ac- |
|
| count
for net deferred tax debits. |
|
|
| 2.4
TANGIBLE FIXED ASSETS |
|
| These
are stated at cost less accumulated depreciation except leasehold land and
capital |
|
| work-in-progress
which are stated at cost. Cost of tangible fixed assets comprises of the |
|
| acquisition
cost and directly attributable cost of bringing the assets to the working
condi- |
|
| tion.
Borrowing cost including the exchange risk fee pertaining to the
construction/erec- |
|
| tion
.period is also capitalized as part of historical cost, whereas the exchange
risk fee |
|
| arising
on account of forward exchange contracts is charged to profit and loss
account. |
|
|
| Depreciation
is charged to income on reducing balance method. Full year's depreciation |
|
| is
charged on additions while no depreciation is charged on assets deleted
during the |
|
| year. |
|
|
|
|
|
| Maintenance
and normal repairs are charged to income as and when incurred. Major re- |
|
| newals
and improvements are capitalized. Gain or loss, if any, on disposal of assets
taken |
|
| to
income currently. |
|
|
|
|
| 2.5
STORES AND SPARES |
|
| These
are valued at moving weighted average cost except stores-m-transit which are |
|
| stated
at invoice value plus other charges paid thereon upto the balance sheet date. |
|
|
|
|
| 2.6
STOCK-IN-TRADE |
|
| Stock-in-trade
is valued at lower of average cost and net realizable value except stock-in- |
|
| transit
which is valued at cost. Average cost and net realizable value are defined as
under: |
|
|
|
|
| Average cost: |
|
|
|
| For
raw material and |
|
| finished goods |
|
Weighted average cost. |
|
|
|
|
|
|
| For
work-in-process |
Average manufacturing
cost including a |
|
|
|
proportion of production
overheads. |
|
|
|
|
|
|
| Net
realisable value: |
Estimated selling prices
less estimated costs of |
|
|
|
completion and the
estimated costs necessary |
|
|
|
to make the sale. |
|
|
|
| 2.7
FOREIGN CURRENCIES |
|
| Foreign
currency monetary items are converted into Pak. Rupees at the rates of
exchange |
|
| prevailing
on the balance sheet date except those covered under forward exchange con- |
|
| tracts
which are converted at the contract rates. Exchange gains and losses are
included |
|
| in
income currently. Foreign currency transactions during the year are converted
at the |
|
| rates
prevailing as of the date of the transaction. |
|
|
| 2.8
DEFERRED COSTS |
|
| These
are amortized over a period not exceeding five years. |
|
|
| 2.9
REVENUE RECOGNITION |
|
| Revenues
from sale and processing of customers' products are recognised on delivery of |
|
| goods
to the customers. Revenue from fixed term deposit is recognised on actual
basis. |
|
|
| 2.10
FINANCIAL INSTRUMENTS |
|
| The
company's principal financial assets are cash and bank balances, trade debts,
depos- |
|
| its
and other receivables which are stated at cost. |
|
|
|
|
| Financial
liabilities are classified according to the substance of the contractual
arrange- |
|
| ments
entered into. Financial liabilities include interest/markup bearing bank
loans/fi- |
|
| nances,
loans from directors, finance lease obligations and other payables. |
|
|
|
|
| Interest/mark
up bearing bank finance loans are recorded at gross amounts. Finance |
|
| charges
are accounted for on an accrual basis. |
|
|
|
|
| The
accounting policy adopted for finance/lease obligations is outlined above. |
|
|
|
|
| Trade
and other payables are stated at their nominal value. |
|
|
|
|
|
|
|
|
|
1999 |
1998 |
|
|
|
Rupees |
Rupees |
|
|
|
|
|
|
| 3.
LONG-TERM FINANCES AND LOANS |
|
|
| Secured |
|
|
|
| Habib
Bank Limited (note 3.1) |
|
|
55,517,449 |
63,365,449 |
|
| Bank
A1-Habib Limited (note 3.2) |
|
|
48,888,889 |
-- |
|
| Unsecured |
|
|
|
|
| Long-term
loan from directors (note 3.3) |
|
|
35,000,000 |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
139,406,338 |
63,365,449 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
| 3.1
Habib Bank Limited |
|
|
|
| Long-term
finance (note 3.1.1) |
|
|
26,450,141 |
29,999,141 |
|
| Less:
Current maturity |
|
|
(3,276,000) |
(3,549,000) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
23,174,141 |
26,450,141 |
|
|
|
|
------------------ |
------------------ |
|
| Frozen
mark-up account (note 3.1.2) |
|
|
36,915,308 |
41,868,308 |
|
| Less:
Current maturity |
|
|
(4,572,000) |
(4,953,000) |
|
|
|
|
------------------ |
------------------ |
|
|
|
32,343,308 |
36,915,308 |
|
|
|
------------------ |
------------------ |
|
|
|
55,517,449 |
63,365,449 |
|
|
|
|
========== |
========== |
|
|
| 3.1.1
This finance is secured against equitable mortgage of fixed assets of the
company rank- |
|
| ing
pari-passu with the charge created in respect of other secured creditors and
per- |
|
| sonal
guarantees of all directors. The credit ceiling for this finance is Rupees |
|
| 37,833,000
(1998: Rupees 37,833,000). It is repayable in 120 monthly installments |
|
| and
carries mark-up at the rate of paisas 39 per Rupees one thousand per day. |
|
|
| 3.1.2
Frozen mark-up account represents accumulated mark-up charged by the bank
upto |
|
| April
21, 1996 on running finance utilized and is repayable in 120 equal monthly
install- |
|
| ments.
No further mark-up is charged on frozen mark-up account. It is secured in the |
|
| same
manner as stated in note 3.1.1. |
|
|
|
|
|
1999 |
1998 |
|
|
|
|
Rupees |
Rupees |
|
| 3.2
Bank A1 Habib Limited |
|
|
|
| Term
finance account |
|
|
55,000,000 |
-- |
|
| Less:
Current maturity |
|
|
(6,111,111) |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
48,888,889 |
-- |
|
|
|
|
========== |
========== |
|
|
|
|
| This
finance is secured against equitable mortgage of fixed assets of the company
rank- |
|
| ing
pari passu with the charge created in respect of other secured creditors and
per- |
|
| sonal
guarantees of the directors. The credit ceiling for this finance is Rupees
55,000,000 |
|
| (1998:
Nil). It is repayable in 18 quarterly installments and carries mark-up at the
rate of |
|
| 1.75%
above STFB rate subject to a minimum of 16% and maximum of 19%. |
|
|
| 3.3
This represents unsecured interest free loan given by the directors of the
company. No |
|
| repayment
terms have been agreed with the directors. |
|
|
| 4.
OBLIGATIONS UNDER FINANCE LEASE |
|
| The
lease rentals under the agreement aggregating Rs. 241,822 are payable in 36
equal |
|
| monthly
installments. Taxes, repairs, replacement and insurance costs, if any, are to
be borne |
|
| by
the company. The financing carries a rate of 23% per annum which has been
used as a |
|
| discounting
factor. |
|
|
| The
minimum lease payments for which the company has committed to pay in future
under |
|
| the
lease agreement are due as follows: |
|
|
|
|
1999 |
1998 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
|
|
|
| Year
ended June 30, |
2000 |
|
116,100 |
-- |
|
|
|
|
2001 |
|
116,100 |
-- |
|
|
|
|
2002 |
|
9,622 |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
241,822 |
-- |
|
|
| Less:
Financial charges allocated to future periods |
|
(51,103) |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
190,719 |
-- |
|
|
| Less:
Current maturity of obligations under finance lease |
|
(80,359) |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
110,360 |
-- |
|
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
|
| 5.
DEFERRED LIABILITIES |
|
|
|
|
|
| Deferred
taxation (note 5.1) |
|
|
3,008,081 |
3,008,081 |
|
|
| Staff
retirement gratuity |
|
|
3,394,821 |
2,263,903 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
6,402,902 |
5,271,984 |
|
|
|
|
|
========== |
========== |
|
|
|
| 5.1
The net deferred tax debit of Rs. 6,257,010 (1998: Rs. 5,040,211) arising
principally on ac- |
|
| count
of tax losses has not been accounted for in these financial statements. |
|
|
|
| 6.
SHORT-TERM FINANCES - Secured |
|
| These
represent credit facilities for export refinances from commercial banks
aggregating |
|
| to
Rs. 49,000,000 (1998: Rs. 24,000,000). These are secured against
hypothecation of stocks, lien |
|
| on
export letters of credit contracts and personal guarantees from directors,
and carry mark |
|
| up
at the rate of paisas 21 per Rupees one thousand per day. |
|
|
| 7.
RUNNING FINANCES UNDER MARK-UP ARRANGEMENTS - Secured |
|
| Credit
facilities for running finances from banks under mark-up arrangements is
available to |
|
| the
company aggregating to Rs. 62,500,000 (1998: Rs. 62,500,000) These are
secured against |
|
| hypothecation
of stocks, receivables and personal guarantees of the directors and carry
mark- |
|
| up
at the rate of paisas 48 (1998: paisas 48) per Rupees one thousand per day. |
|
|
|
|
|
1999 |
1998 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
|
| 8.
CURRENT MATURITY OF LONG-TERM FINANCES |
|
| Long-term
finances |
|
|
|
| Current (note 3) |
|
9,387,111 |
3,276,000 |
|
| Overdue |
|
|
-- |
273,000 |
|
|
|
------------------ |
------------------ |
|
|
|
9,387,111 |
3,549,000 |
|
|
|
|
|
| Frozen
mark-up account |
|
|
|
| Current (note 3) |
|
4,572,000 |
4,572,000 |
|
| Overdue |
|
|
-- |
381,000 |
|
|
|
------------------ |
------------------ |
|
|
|
4,572,000 |
4,953,000 |
|
|
|
------------------ |
------------------ |
|
|
|
13,959,111 |
8,502,000 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| 9.
CREDITORS, ACCRUED |
|
|
|
| AND
OTHER LIABILITIES |
|
|
|
| Creditors |
|
68,584,621 |
39,408,448 |
|
| Accrued
expenses |
|
2,321,332 |
1,675,089 |
|
| Salaries payable |
|
987,569 |
125,282 |
|
| Accrued
mark-up on term finance |
|
2,192,515 |
-- |
|
| Accrued
mark-up on export refinances |
|
816,795 |
610,823 |
|
| Accrued
mark-up on running finances |
|
1,934,987 |
731,680 |
|
| Workers'
profit participation fund (note 9.1) |
|
1,328,775 |
1,026,829 |
|
| Workers'
welfare fund |
|
599,764 |
260,987 |
|
| Unclaimed
dividend |
|
149,456 |
103,326 |
|
| Other liabilities |
|
67,621 |
30,790 |
|
|
|
------------------ |
------------------ |
|
|
|
78,983,435 |
43,973,254 |
|
|
|
|
|
========== |
========== |
|
|
|
|
| 9.1
Workers' Profit Participation Fund |
|
|
| Balance
as on July 1 |
|
1,026,829 |
593,131 |
|
| Add: Interest |
|
|
100,336 |
83,038 |
|
| Provision
made during the year |
|
846,943 |
494,244 |
|
|
|
------------------ |
------------------ |
|
|
|
1,974,108 |
1,170,413 |
|
| Less:
Amount paid during the year |
|
(645,333) |
(143,584) |
|
|
|
------------------ |
------------------ |
|
| Balance
as on June 30 |
|
1,328,775 |
1,026,829 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
1999 |
1998 |
|
|
|
|
|
Rupees |
Rupees |
|
|
|
|
|
| 10.
CONTINGENCIES AND COMMITMENTS |
|
|
|
| Outstanding
letters of credits |
|
|
|
14,230,000 |
68,488,117 |
|
| Outstanding
letters of guarantees |
|
|
|
2,768,099 |
1,300,060 |
|
| Commitments
for capital expenditure |
|
|
40,000,000 |
100,000,000 |
|
|
| 11.
TANGIBLE FIXED ASSETS |
|
|
|
COST |
|
DEPRECIATION |
|
|
|
Written |
|
|
|
Additions/ |
|
down |
Depreciation |
|
|
As at |
(Deletions) |
As at |
For the |
As at |
value as at |
rate per |
| PARTICULARS |
July 1, |
during the |
June 30, |
year |
June 30, |
June 30, |
annum |
|
|
1998 |
year |
1999 |
|
1999 |
1999 |
% |
|
|
|
|
|
Rupees |
|
| Owned Assets |
|
| Leasehold land |
|
2,773,321 |
-- |
2,773,321 |
-- |
-- |
2,773,321 |
-- |
| Building
on leasehold land |
19,640,694 |
14,411,795 |
34,052,489 |
2,408,921 |
12,372,196 |
21,680,293 |
10 |
| Plant
and machinery-imported |
146,744,064 |
53,615,796 |
200,359,860 |
12,007,960 |
92,288,213 |
108,071,647 |
10 |
| Plant
and machinery-local |
37,951,805 |
15,161,985 |
53,113,790 |
4,032,208 |
16,823,922 |
36,289,868 |
10 |
| Furniture
and fixture |
1,030,474 |
264,583 |
1,295,057 |
81,361 |
562,809 |
732,248 |
10 |
| Equipments |
|
1,729,650 |
931,257 |
2,660,907 |
196,832 |
889,416 |
1,771,491 |
10 |
| Computers |
|
742,050 |
438,425 |
1,180,475 |
192,423 |
410,785 |
769,690 |
20 |
| Electric
installation |
5,309,147 |
4,385,127 |
9,694,274 |
$95,610 |
4,619,153 |
5,075,121 |
15 |
| Vehicles |
|
7,055,110 |
734,756 |
7,789,866 |
1,008,286 |
3,756,722 |
4,033,144 |
20 |
| Asset
under Finance Lease |
|
|
| Vehicle |
|
-- |
283,000 |
283,000 |
56,600 |
56,600 |
226,400 |
20 |
|
|
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
| TOTAL 1999 |
|
222,976,315 |
90,226,724 |
313,203,039 |
20,880,201 |
131,779,816 |
181,423,223 |
|
|
|
========== |
========== |
========== |
========== |
========== |
========== |
========== |
| TOTAL 1998 |
|
212,722,482 |
11,641,819 |
222,976,315 |
12,919,338 |
110,899,615 |
112,076,700 |
|
|
|
|
(1,387,986) |
|
|
========== |
========== |
========== |
========== |
========== |
========== |
========== |
|
|
|
|
1999 |
1998 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
|
| 11.1
DEPRECIATION ALLOCATED TO: |
|
|
| Cost
of goods sold |
|
|
19,714,235 |
11,930,122 |
|
| Administrative
expenses |
|
|
743,518 |
494,608 |
|
| Selling expenses |
|
|
422,448 |
494,608 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
20,880,201 |
12,919,338 |
|
|
|
|
|
========== |
========== |
|
|
| 12.
CAPITAL WORK-IN-PROGRESS |
|
|
| Plant
and machinery |
|
|
37,434,095 |
603,396 |
|
| Civil work |
|
|
1,165,658 |
6,714,612 |
|
| Electric
installation |
|
|
-- |
73,679 |
|
|
|
|
------------------ |
------------------ |
|
|
|
38,599,753 |
7,391,687 |
|
|
|
|
|
|
========== |
========== |
|
|
|
|
| 13.
LONG-TERM DEPOSITS AND DEFERRED COSTS |
|
| Security
deposits |
|
631,746 |
252,746 |
|
| Deferred
costs - Advertisement |
|
2,543,776 |
2,543,776 |
|
| Less:
Amortization todate |
|
2,543,776 |
1,695,850 |
|
|
|
------------------ |
------------------ |
|
|
|
-- |
847,926 |
|
|
|
------------------ |
------------------ |
|
|
|
631,746 |
1,100,672 |
|
|
|
|
|
|
========== |
========== |
|
|
|
|
|
| 14.
STOCK-IN-TRADE |
|
|
|
| Raw materials |
|
|
18,396,563 |
18,982,031 |
|
| Packing
materials |
|
28,470,117 |
29,459,452 |
|
| Work-in-process |
|
9,110,540 |
7,902,471 |
|
| Finished goods |
|
|
18,521,277 |
16,980,221 |
|
| Stock-in-transit |
|
|
3,305,970 |
4,444,806 |
|
|
|
------------------ |
------------------ |
|
|
|
77,804,467 |
77,768,981 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| 15.
ADVANCES, DEPOSITS, PREPAYMENTS AND |
|
| OTHER
RECEIVABLES |
|
|
|
| Loans
and advances to staff - considered good |
|
2,460,754 |
1,947,677 |
|
| Advances
to suppliers |
|
1,748,324 |
1,288,483 |
|
| Advance
income tax (note 15.1) |
|
5,483,722 |
5,011,567 |
|
| Other advances |
|
779,813 |
828,982 |
|
| Deposits |
|
|
|
| Margin
against letters of credits |
|
46,431 |
46,431 |
|
| Margin
against bank guarantee |
|
148,000 |
148,000 |
|
| Shipping agents |
|
40,157 |
75,157 |
|
| Prepayments |
|
1,085,313 |
653,763 |
|
| Octroi
refund receivable |
|
1,838,697 |
1,036,548 |
|
| Export
rebate receivable |
|
2,967,830 |
17,996,971 |
|
| Insurance
claims receivable |
|
74,868 |
648,331 |
|
| Profit
receivable on deposit under debt |
|
|
|
| retirement
scheme |
|
-- |
181,571 |
|
| Other
receivables |
|
586,845 |
236,412 |
|
|
|
------------------ |
------------------ |
|
|
|
17,260,754 |
30,099,893 |
|
|
|
|
========== |
========== |
|
|
| 15.1
Advance Income Tax |
|
|
|
| Balance
as on July I |
|
|
5,011,567 |
4,127,687 |
|
| Tax
paid during the year |
|
|
3,146,910 |
3,768,515 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
8,158,477 |
7,896,202 |
|
| Less:
Provision made during the year |
|
|
(2,674,755) |
(2,884,635) |
|
|
|
|
------------------ |
------------------ |
|
| Balance
as on June 30 |
|
|
5,483,722 |
5,011,567 |
|
|
|
|
========== |
========== |
|
|
|
|
| The
income tax assessments of the company stand finalized up to the assessment
year |
|
| 1998-99.
A sum of Rs. 3,763,358 has been determined to be refundable up to the assess- |
|
| ment
year 1997-98. Further claim for refund amounting to Rs. 1,775,793 for the
assess- |
|
| ment
year 1998-99 is pending with the income tax department. |
|
|
|
|
| 16.
DEPOSIT UNDER THE DEBT RETIREMENT SCHEME |
|
| This
represents fixed term deposit investment having face value of U.S. Dollar
500,000 in |
|
| "Prime
Minister's Debt Retirement Scheme" maturing after 24 months and carrying
interest |
|
| rate
of 7.5% per annum. |
|
|
|
|
|
|
|
|
|
1999 |
1998 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
|
| 17.
CASH AND BANK BALANCES |
|
|
| Cash in hand |
|
|
50,778 |
151,106 |
|
| Cash
with banks in current accounts |
|
|
4,537,101 |
3,188,481 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
4,587,879 |
3,339,587 |
|
|
|
|
========== |
========== |
|
|
|
|
|
| 18. NET SALES |
|
|
|
|
| Local sales |
|
|
395,571,867 |
281,192,094 |
|
| Export
sales less commission and discounts of |
|
|
|
|
| Rs.
96,799 (1998: Rs. 7,926) |
|
|
124,424,445 |
101,055,589 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
519,996,312 |
382,247,683 |
|
| Less: Sales tax |
|
|
(51,506,039) |
(34,131,112) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
468,490,273 |
348,116,571 |
|
|
|
|
========== |
========== |
|
|
|
| 19.
COST OF GOODS SOLD |
|
|
|
| Raw
materials consumed (note 19.1) |
|
|
188,489,718 |
145,835,966 |
|
| Packing
materials consumed (note 19.2) |
|
|
142,987,999 |
104,567,986 |
|
| Salaries,
wages and other benefits |
|
|
17,800,745 |
11,905,400 |
|
| Stores
and spares consumed (note 19.3) |
|
|
4,113,047 |
2,827,182 |
|
| Electricity,
gas, fuel and lubricants |
|
|
15,117,019 |
11,849,598 |
|
| Repairs
and maintenance |
|
|
1,547,024 |
788,820 |
|
| Printing
and stationery |
|
|
187,026 |
104,151 |
|
| Insurance |
|
|
872,158 |
703,075 |
|
| Rent,
rates and taxes |
|
|
224,331 |
161,131 |
|
| Water charges |
|
|
723,179 |
188,300 |
|
| Postage
and telephone |
|
|
338,589 |
270,201 |
|
| Cartage,
octroi and taxes |
|
|
463,598 |
543,308 |
|
| Travelling
and conveyance |
|
|
477,927 |
302,634 |
|
| Vehicle
running and maintenance |
|
|
611,361 |
364,599 |
|
| Depreciation
(note 11.1) |
|
|
19,714,235 |
11,930,122 |
|
| Laboratory
expenses |
|
|
52,550 |
7,200 |
|
| Fees
and subscription |
|
|
8,643 |
50,000 |
|
| Legal
and professional charges |
|
|
42,000 |
-- |
|
| Other
manufacturing expenses |
|
|
102,895 |
72,428 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
393,874,044 |
292,472,101 |
|
|
|
|
------------------ |
------------------ |
|
| Opening
stock of work-in-process |
|
|
7,902,471 |
5,619,573 |
|
| Closing
stock of work-in-process |
|
|
(9,110,540) |
(7,902,471) |
|
|
|
|
------------------ |
------------------ |
|
|
|
(1,208,069) |
(2,282,898) |
|
|
|
------------------ |
------------------ |
|
| Cost
of goods manufactured |
|
|
392,665,975 |
290,189,203 |
|
|
|
|
------------------ |
------------------ |
|
| Opening
stock of finished good |
|
|
16,980,221 |
14,466,278 |
|
| Closing
stock of finished goods |
|
|
(18,521,277) |
(16,980,221) |
|
|
|
|
------------------ |
------------------ |
|
|
|
(1,541,056) |
(2,513,943) |
|
|
|
------------------ |
------------------ |
|
|
|
391,124,919 |
287,675,260 |
|
|
|
========== |
========== |
|
|
|
|
|
| 19.1
Raw Materials Consumed |
|
|
|
| Opening
stock of raw materials |
|
|
18,982,031 |
18,189,504 |
|
| Purchases |
|
|
207,030,477 |
169,300,817 |
|
|
|
|
------------------ |
------------------ |
|
|
|
226,012,508 |
187,490,321 |
|
| Less:
Custom rebate and duty draw-back (note 19.1.1) |
|
(19,126,227) |
(22,672,324) |
|
|
|
------------------ |
------------------ |
|
|
|
206,886,281 |
164,817,997 |
|
| Closing
stock of raw materials |
|
(18,396,563) |
(18,982,031) |
|
|
|
------------------ |
------------------ |
|
|
|
188,489,718 |
145,835,966 |
|
|
|
|
========== |
========== |
|
|
|
|
| 19.1.1
Custom duty draw-back and octroi refund claimed in the year has been credited |
|
| to
raw materials consumption. |
|
|
|
1999 |
1998 |
|
|
|
Rupees |
Rupees |
|
| 19.2
Packing Materials Consumed |
|
|
| Opening
stock of packing materials |
|
29,459,452 |
35,320,767 |
|
| Purchases |
|
141,998,664 |
98,706,671 |
|
|
|
------------------ |
------------------ |
|
|
|
171,458,116 |
134,027,438 |
|
| Closing
stock of packing materials |
|
{28,470,117) |
(29,459,452) |
|
|
|
------------------ |
------------------ |
|
|
|
142,987,999 |
104,567,986 |
|
|
|
|
========== |
========== |
|
|
|
|
|
| 19.3
Stores and Spares Consumed |
|
|
| Opening
stock of stores and spares |
|
707,529 |
654,970 |
|
| Purchases |
|
|
4,190,393 |
2,879,741 |
|
|
|
------------------ |
------------------ |
|
|
|
4,897,922 |
3,534,711 |
|
| Closing
stock of stores and spares |
|
(784,875) |
(707,529) |
|
|
|
------------------ |
------------------ |
|
|
|
4,113,047 |
2,827,182 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
| 20.
ADMINISTRATIVE EXPENSES |
|
|
| Salaries
and other benefits including |
|
|
| directors'
remuneration (note 20.1) |
|
|
4,151,965 |
2,950,240 |
|
| Conveyance
and travelling |
|
|
156,355 |
211,525 |
|
| Postage
and telephone |
|
|
539,705 |
435,201 |
|
| Printing
and stationery |
|
|
168,997 |
166,126 |
|
| Repairs
and maintenance |
|
|
40,052 |
6,408 |
|
| Electricity
and utilities |
|
|
214,481 |
179,115 |
|
| Insurance |
|
|
15,854 |
14,139 |
|
| Entertainment |
|
|
15,654 |
17,935 |
|
| Vehicle
running and maintenance |
|
|
440,140 |
230,233 |
|
| Books
and periodicals |
|
|
21,623 |
31,888 |
|
| Rent,
rates and taxes |
|
|
145,266 |
101,757 |
|
| Fee
and subscription |
|
|
140,516 |
91,220 |
|
| Legal
and professional charges |
|
|
550,120 |
94,150 |
|
| Depreciation
(note 11.1) |
|
|
743,518 |
494,608 |
|
| Auditors'
remuneration |
|
|
|
| Audit fee |
|
|
|
75,000 |
65,000 |
|
| Shares
registrar services |
|
|
60,000 |
60,000 |
|
| Out-of-pocket
expenses |
|
|
19,732 |
24,922 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
154,732 |
149,922 |
|
| Donation
(note 20.2) |
|
|
15,000 |
72,000 |
|
| Meeting
expenses |
|
|
26,960 |
26,935 |
|
| Income
tax penalty |
|
|
2,400 |
-- |
|
|
|
------------------ |
------------------ |
|
|
|
7,543,338 |
5,273,402 |
|
|
|
|
|
========== |
========== |
|
|
| 20.1.
REMUNERATION OF THE CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES |
|
|
|
1999 |
|
1998 |
|
|
Chief |
|
Chief |
|
|
|
Executive |
Directors |
Executives |
Executive |
Directors |
Executives |
|
|
| Managerial
remuneration |
240,000 |
540,000 |
3,128,745 |
240,000 |
540,000 |
1,597,644 |
|
| Reimbursement
of expenses |
|
|
| Electricity
and gas |
138,807 |
160,395 |
-- |
83,333 |
45,359 |
-- |
|
| Telephone |
|
163,219 |
325,762 |
-- |
174,536 |
224,804 |
-- |
|
|
|
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
|
|
|
542,026 |
1,026,157 |
3,128,745 |
497,869 |
810,163 |
1,597,644 |
|
|
|
========== |
========== |
========== |
========== |
========== |
========== |
|
| No. of persons |
|
1 |
3 |
20 |
1 |
3 |
14 |
|
|
========== |
========== |
========== |
========== |
========== |
========== |
|
|
| In
addition to the above, company maintained cars are provided to the Chief
Executive, |
|
| Directors
and six Executives. |
|
|
| 20.2
None of the directors or their spouses had any interest in the donees. |
|
|
|
|
|
1999 |
1998 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
|
| 20.3
The above expense are classified as follows: |
|
|
| Directly
identifiable expenses: |
|
|
|
| Export sales |
|
189,886 |
183,352 |
|
| Local sales |
|
3,371,965 |
2,170,240 |
|
| Common
expenses |
|
3,981,487 |
2,919,810 |
|
|
|
------------------ |
------------------ |
|
|
|
7,543,338 |
5,273,402 |
|
|
|
========== |
========== |
|
|
|
|
|
|
| 21.
SELLING EXPENSES |
|
|
|
| Salaries
and other benefits |
|
|
4,243,630 |
2,829,363 |
|
| Cartage
and octroi |
|
|
9,661,440 |
4,553,332 |
|
| Export expenses |
|
|
6,170,869 |
5,622,382 |
|
| Advertisements |
|
|
13,395,934 |
15,521,558 |
|
| Sales promotion |
|
|
2,735,587 |
1,874,341 |
|
| Amortization
of deferred costs |
|
|
847,926 |
847,925 |
|
| Entertainment |
|
|
47,980 |
46,050 |
|
| Vehicle
running and maintenance |
|
|
300,808 |
300,707 |
|
| Printing
and stationery |
|
|
171,979 |
76,188 |
|
| Postage
and telephone |
|
|
1,131,481 |
770,578 |
|
| Conveyance
and travelling |
|
|
1,197,626 |
322,762 |
|
| Samples |
|
|
-- |
20,531 |
|
| Utilities |
|
|
271,108 |
206,869 |
|
| Repairs
and maintenance |
|
|
171,061 |
18,138 |
|
| Rent |
|
|
304,120 |
124,360 |
|
| Depreciation
(note 11.1) |
|
|
422,448 |
494,608 |
|
| Insurance
on suppliers' stock |
|
|
92,146 |
83,544 |
|
| Saler tax penalty |
|
|
360,538 |
-- |
|
| Miscellaneous |
|
|
152,044 |
91,988 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
41,678,725 |
33,805,224 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
1999 |
1998 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
|
|
| 21.1
The above expenses are classified as follows: |
|
|
| Directly
identifiable expenses: |
|
|
|
| Export sales |
|
7,067,739 |
6,038,380 |
|
| Local sales |
|
31,434,689 |
25,616,827 |
|
| Common
expenses |
|
|
3,176,297 |
2,150,017 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
41,678,725 |
33,805,224 |
|
|
|
========== |
========== |
|
|
|
|
|
| 22.
FINANCIAL CHARGES |
|
|
|
| Mark-up
on long-term finances |
|
|
2,352,000 |
2,946,427 |
|
| Mark-up
on export refinances |
|
|
4,404,971 |
2,957,026 |
|
| Mark-up
on running finances |
|
|
8,854,738 |
8,931,194 |
|
| Finance
charge on lease |
|
|
42,444 |
-- |
|
| Bank
guarantee charges |
|
|
54,832 |
15,505 |
|
| Bank charges |
|
|
|
507,727 |
310,371 |
|
| Interest
on workers' profit participation fund |
|
100,336 |
83,038 |
|
| Excise charges |
|
|
|
-- |
1,801 |
|
| Zakat |
|
|
|
7,767 |
1,242 |
|
| Bills
Discounting charges |
|
|
(843,011) |
510,640 |
|
| Penalty |
|
|
|
(28,812) |
332,749 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
15,452,992 |
16,089,993 |
|
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
| 22.1
The above expenses are classified as follows: |
|
|
| Directly
identifiable expenses: |
|
|
| Export sales |
|
427,363 |
1,083,861 |
|
| Local sales |
|
8,832,129 |
9,002,984 |
|
| Common
expenses |
|
6,193,500 |
6,003,148 |
|
|
|
------------------ |
------------------ |
|
|
|
15,452,992 |
16,089,993 |
|
|
|
========== |
========== |
|
|
|
|
|
| 23.
OTHER INCOME |
|
|
|
| Gain
on disposal of fixed assets |
|
|
-- |
178,158 |
|
| Profit
on deposit under the debt retirement scheme |
|
1,420,327 |
1,852,280 |
|
| Profit
on investments |
|
|
-- |
42,908 |
|
| Exchange
difference |
|
2,790,736 |
2,225,000 |
|
| Scrap sales |
|
|
|
37,500 |
140,540 |
|
| Bad
debts recovered |
|
|
-- |
173,306 |
|
|
|
------------------ |
------------------ |
|
|
|
4,248,563 |
4,612,192 |
|
|
|
|
========== |
========== |
|
|
|
| 24.
DIVIDEND REVERSED |
|
| This
represents reversal of proposed dividend of last year as some shareholders
waived their |
|
| right
to dividend. |
|
|
|
|
|
|
1999 |
1998 |
|
|
|
|
| 25.
EARNINGS PER SHARE |
|
|
|
| Profit
after taxation (Rupees) |
|
13,078,387 |
6,308,307 |
|
|
|
========== |
========== |
|
| Number
of ordinary shares issued |
|
7,260,000 |
7,260,000 |
|
|
|
========== |
========== |
|
| Earnings
per share (Rupees) |
|
1.80 |
0.87 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
|
|
1999 |
1998 |
|
|
|
Rupees |
Rupees |
|
|
|
|
|
|
| 26.
DECREASE IN WORKING CAPITAL |
|
|
| (Increase)/decrease
in current assets |
|
|
| Stores
and spares |
|
|
(77,346) |
(52,559) |
|
| Stock-in-trade |
|
|
|
(35,486) |
1,389,655 |
|
| Trade debts |
|
|
|
(62,645,053) |
6,436,651 |
|
| Advances,
deposits, prepayments |
|
|
|
|
| and
others receivables |
|
13,311,294 |
(488,276) |
|
| Short-term
deposit |
|
|
23,000,000 |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(26,446,591) |
7,285,471 |
|
|
|
|
|
| Increase
/ (decrease) in current liabilities |
|
|
| Short-term
finances |
|
25,000,000 |
(1,000,000) |
|
| Running
finances under mark-up arrangements |
|
(26,962,304) |
2,676,533 |
|
| Creditors,
accrued and other liabilities |
|
31,362,257 |
2,615,744 |
|
|
|
|
------------------ |
------------------ |
|
|
|
29,399,953 |
4,292,277 |
|
|
|
------------------ |
------------------ |
|
|
|
2,953,362 |
11,577,748 |
|
|
|
|
========== |
========== |
|
|
|
|
| 27.
FINANCIAL INSTRUMENTS AND |
|
| RELATED
DISCLOSURES |
|
|
| 27.1
Interest Rate Risk Exposure |
|
| The
company's exposure to interest risk and the effective rates on the financial
assets and |
|
| liabilities
as of June 30, 1999 are summarized as follows: |
|
|
|
|
|
|
|
|
Interest
bearing |
Non |
Total |
|
|
|
|
Less than |
Over |
interest |
|
|
|
|
one year |
one year |
bearing |
|
|
|
|
|
|
|
|
Rupees |
|
| Financial assets |
|
|
|
|
|
| Cash
and bank balances |
|
-- |
-- |
4,587,879 |
4,587,879 |
|
|
| Trade debts |
|
|
-- |
-- |
71,350,559 |
71,350,559 |
|
|
| Deposits |
|
|
-- |
-- |
631,746 |
631,746 |
|
|
| Other
receivables |
|
-- |
-- |
5,468,241 |
5,468,241 |
|
|
|
|
------------------ |
------------------ |
------------------ |
------------------ |
|
|
|
|
-- |
-- |
82,038,425 |
82,038,425 |
|
|
|
|
========== |
========== |
========== |
========== |
|
|
|
|
|
|
Interest
bearing |
Non |
Total |
|
|
|
|
Less than |
Over |
interest |
|
|
|
|
one year |
one year |
bearing |
|
|
|
|
|
|
|
|
Rupees |
|
|
| Financial
liabilities |
|
| Long-term
finance |
|
13,959,111 |
104,406,338 |
35,000,000 |
153,365,449 |
|
| Obligation
under finance lease |
|
80,359 |
110,360 |
-- |
190,719 |
|
| Short-term
finances |
|
49,000,000 |
-- |
-- |
49,000,000 |
|
| Running
finances |
|
|
|
| under
mark-up arrangements |
|
37,059,497 |
-- |
-- |
37,059,497 |
|
| Creditors,
accrued and other |
|
|
|
| liabilities |
|
-- |
-- |
78,983,435 |
78,983,435 |
|
| Proposed
dividend |
|
-- |
-- |
954,625 |
954,625 |
|
|
|
------------------ |
------------------ |
------------------ |
------------------ |
|
|
|
100,098,967 |
104,516,698 |
114,938,060 |
319,553,725 |
|
|
|
========== |
========== |
========== |
========== |
|
|
| Effective
interest/mark-up rate (weighted average) is 11.6%. The management antici- |
|
| pates
that this rate will continue to prevail in the ensuing period as well. |
|
|
| 27.2
Credit Risk and Concentration of Credit Risk |
|
| Credit
risk is the risk that one party to a financial instrument will fail to
discharge an ob- |
|
| ligation
and cause to other party to incur a financial loss. The company attempts to
con- |
|
| trol
credit risk by monitoring credit exposures limiting transactions with
specific parties |
|
| continually
assessing the credit worthiness of counter parties. |
|
|
| 27.3
Fair Value of Financial Instruments |
|
| Fair
value is the amount at which an asset could be exchanged or liability settled
be- |
|
| tween
knowledgeable willing parties in an arms length transaction. Whereas the com- |
|
| pany
prepares its financial statements under the historical cost convention, the
estimated |
|
| fair
value of all financial instruments are not significantly different from their
book val- |
|
| ues
on June 30, 1999. |
|
|
| 28.
CHANGES IN SHAREHOLDERS' EQUITY |
|
|
|
|
Share |
Accumulated |
Total |
|
|
|
capital |
loss |
|
|
|
|
|
Rupees |
|
|
|
|
|
| Balance
as at July 01, 1997 |
|
72,600,000 |
(24,166,762) |
48,333,238 |
|
| Profit
for the year 1997-98 |
|
-- |
6,308,307 |
6,308,307 |
|
| Proposed
dividend |
|
-- |
(914,400) |
(914,400) |
|
| Dividend
reversed |
|
-- |
314,522 |
314,522 |
|
|
|
------------------ |
------------------ |
------------------ |
|
| Balance
as at June 30, 1998 |
|
72,600,000 |
(18,458,333) |
54,041,667 |
|
| Profit
for the year 1998-99 |
|
-- |
13,078,387 |
13,078,387 |
|
| Proposed
dividend |
|
-- |
(954,625) |
(954,625) |
|
| Dividend
reversed |
|
-- |
221,200 |
221,200 |
|
|
|
------------------ |
------------------ |
------------------ |
|
| Balance
as at June 30, 1999 |
|
72,600,000 |
(6,113,371) |
66,386,629 |
|
|
|
========== |
========== |
========== |
|
|
|
|
| 29.
NUMBER OF EMPLOYEES |
|
| The
average number of employees during the year were 305 (1998: 219) |
|
|
|
|
|
1999 |
1998 |
|
|
|
|
M. Tons |
M. Tons |
|
|
|
|
|
| 30.
PLANT CAPACITY AND PRODUCTION |
|
|
| Rated capacity |
|
9,200 |
7,200 |
|
| Actual
production |
|
7,829 |
6,150 |
|
|
|
|
| The
shortfall in capacity utilization is on account of changes in production mix. |
|
|
| 31. GENERAL |
|
| Previous
year's figures have been reclassified and re-arranged wherever necessary to
facilitate |
|
| comparison. |
|
|
|
|
MUHAMMAD M. ISMAIL |
|
MAQSOOD ISMAIL |
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
| PATTERN
OF HOLDING OF SHARES HELD BY THE SHAREHOLDERS |
|
| as
at June 30, 1999 |
|
|
| NUMBER OF |
|
SHARE HOLDING |
|
TOTAL |
|
| SHARE |
|
SHARES HELD |
|
| HOLDERS |
FROM |
|
TO |
|
|
|
| 127 |
1 |
-- |
100 |
12,700 |
|
| 168 |
101 |
-- |
500 |
67,600 |
|
| 68 |
501 |
-- |
1000 |
64,700 |
|
| 60 |
1001 |
-- |
5000 |
142,700 |
|
| 8 |
5001 |
-- |
10000 |
65,700 |
|
| 2 |
10001 |
-- |
15000 |
24,600 |
|
| 1 |
20001 |
-- |
25000 |
25,000 |
|
| 2 |
30001 |
-- |
35000 |
65,400 |
|
| 1 |
35001 |
-- |
40000 |
37,500 |
|
| 1 |
60001 |
-- |
65000 |
61,600 |
|
| 1 |
295001 |
-- |
300000 |
298,500 |
|
| 4 |
315001 |
-- |
320000 |
1,270,480 |
|
| 1 |
495001 |
-- |
500000 |
499,900 |
|
| 2 |
635001 |
-- |
640000 |
1,270,500 |
|
| 1 |
690001 |
-- |
695000 |
694,750 |
|
| 1 |
705001 |
-- |
710000 |
708,200 |
|
| 1 |
730001 |
-- |
735000 |
730,400 |
|
| 1 |
1215001 |
-- |
1220000 |
1,219,770 |
|
| ------------------ |
|
------------------ |
|
| 450 |
|
7,260,000 |
|
| ========== |
|
========== |
|
|
|
| S. |
CATEGORIES OF |
|
NUMBER |
SHARES |
PERCENTAGE |
|
| No. |
SHAREHOLDERS |
|
|
HELD |
|
|
|
|
|
| 1. |
JOINT STOCK COMPANIES |
|
4 |
310,100 |
4.27 |
|
| 2. |
FINANCIAL INSTITUTIONS |
|
2 |
71,400 |
0.98 |
|
| 3. |
INSURANCE COMPANIES |
|
1 |
61,600 |
0.85 |
|
| 4. |
INVESTMENT COMPANIES |
|
1 |
9,400 |
0.13 |
|
| 5. |
INDIVIDUALS |
|
|
442 |
6,807,500 |
93.77 |
|
|
|
|
|
------------------ |
------------------ |
------------------ |
|
|
|
TOTALS |
450 |
7,260,000 |
100.00 |
|
|
|
|
========== |
========== |
========== |
|
|
|
|
|
|
|
|
|
|
