| Chakwal 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 |
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| DIRECTORS'
REPORT |
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| AUDITORS'
REPORT |
|
| BALANCE SHEET |
|
|
| PROFIT
AND LOSS ACCOUNT |
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| CASH
FLOW STATEMENT |
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| NOTES
TO THE ACCOUNTS |
|
| PATTERN
OF SHAREHOLDING |
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|
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| COMPANY
INFORMATION |
|
| BOARD
OF DIRECTORS |
|
Khawaja Mohammad Tanveer |
|
(Chief Executive) |
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|
|
Khawaja Mohammad Jawed |
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|
Khawaja Mohammad Kaleem |
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|
Khawaja Mohammad Jahangir |
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|
Khawaja Mohammad Nadeem |
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|
Khawaja Mohammad Naveed |
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|
|
Mst. Zubaida Khatoon |
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| CORPORATE
SECRETARY |
|
Mohammad Anwar Sheikh |
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|
M. Corn. FCMA. |
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| BANKERS |
|
Prime Commercial Bank
Limited |
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|
Metropolitan Bank Limited |
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|
Platinum Commercial Bank
Limited |
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|
Allied Bank of Pakistan
Limited |
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|
National Bank of Pakistan |
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|
Citi Bank N.A. |
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|
Muslim Commercial Bank
Limited |
|
|
| AUDITORS |
|
Hameed Khan & Co. |
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|
Chartered Accountants |
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|
19 - Miccop Centre, |
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|
3rd Floor, 1-Mozang Road,
Lahore |
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| CORPORATE
& SHARES |
|
31-F, Gulberg II |
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| DEPARTMENT |
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Lahore. |
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Tel: 5755774 Fax: 5755760 |
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| REGISTERED
OFFICE |
|
Kashana-e-Yousaf |
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|
Khawaja Street, Chakwal. |
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|
Tel: (0573) 50850 - 50950 |
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| MILLS |
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49 - Kilometer |
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|
Multan Road, Lahorei. |
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Tel: 0342 - 7353496 |
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| NOTICE
OF ANNUAL GENERAL MEETING |
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| Notice
is hereby given that the 12th Annual General Meeting of CHAKWAL SPINNING
MILLS LIMITED |
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| will
be held on Friday, March 31, 2000 at 11:00 a.m. at Aminabad, Chakwal to
transact the following |
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| business: |
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| 1.
To confirm the minutes of the 11TM Annual General Meeting held on March 31,
1999. |
|
|
| 2.
To receive, consider and adopt the audited accounts of the Company for the
year ended September |
|
| 30,
1999 together with the Directors' and Auditors' reports thereon. |
|
|
| 3.
To appoint auditors for the year ending September 30, 2000 and to fix their
remuneration. The retiring |
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| Auditors'
Messers. Hameed Khan & Co. Chartered Accountants being eligible offer
themselves for |
|
| reappointment. |
|
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| 4.
To transact any other business with the permission of the Chair |
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|
BY THE ORDER OF THE BOARD |
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| Chakwal: |
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(MUHAMMAD ANWAR SHEIKH) |
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| March 7, 2000. |
|
Corporate Secretary |
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| NOTES: |
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| The
share transfer books of the company shall remain closed from March 31, 2000
to April 7, 2000 |
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| (both
days inclusive). |
|
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| A
member entitled to attend and vote at the Annual General Meeting may appoint
another member as |
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| his/her
proxy to attend and vote on his/her behalf. Proxies in order to be effective
must be received by |
|
| the
company not less than 48 hours before the meeting. |
|
|
| Shareholders
are requested to notify the Company of any change in their address. |
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|
| DIRECTORS'
REPORT |
|
|
| The
Directors of the Company are pleased to place before you the annual report
alongwith the audited |
|
| financial
statements for the year ended September 30, 1999. |
|
|
| The
prices of Polyester fibre increased by Rs. 11.60 during the period October 98
to September 99 |
|
| without
significant increase in the yarn prices. Polyester staple fibre is the key
raw material for the |
|
| production
of man made yarn and increase in the prices directly effects the financial
results. In addition |
|
| The
Government introduced two tier sales tax rates one for the registered
consumer and the other for |
|
| the
unregistered one. Although theoretically the sales tax is borne by the end
consumer, in actual effect |
|
| the
prices are always quoted inclusive of sales tax. Since majority of the power
loom sector remains |
|
| outside
the ambit of sales tax or is still unregistered the ultimate effect has to be
borne by the company. |
|
|
| In
order to reduce the overhead cost the company had installed additional ring
spinning frames and |
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| auto
cone machines. The total spindles installed have now increased to 33,160. The
addition to the |
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| production
facility has mainly. been financed by internal cash generations and from
interest free loan |
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| from
directors. The full result of the expansion will be evident in the next
financial year. |
|
|
| During
the current year with bumper cotton crop and low cotton prices, the company
is certain to turn |
|
| around.
Your Directors expect that this year the spinning industry will revive and
shall make a positive |
|
| contribution
by way of export earning and profitability. The rescheduling with all the
major lender |
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| completed
and the company is discharging its liabilities with the lenders in accordance
with the |
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| repayment
schedule. The company expects significant savings in the financial expense
consequent to |
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| the
reduction in the markup rates by the lenders. |
|
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| We
are pleased to report that all computer systems of the company are fully 2000
compliant. |
|
|
| The
management is thankful and wish to place on record its deep appreciation for
the hard work and |
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| positive
efforts made by the workers and staff. The management would also like to
thank its customers, |
|
| bankers,
financial institutions and shareholders for their wholehearted support. |
|
|
|
On behalf of the Board |
|
|
| Lahore |
|
KHAWAJA MOHAMMAD TANVEER |
|
| March 07, 2000 |
|
CHIEF EXECUTIVE |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of CHAKWAL SPINNING MILLS LIMITED as |
|
| at
September 30, 1999 and the related profit and loss account and statement of
cash flow, 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; |
|
|
| b) in our opinion: |
|
|
| 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 |
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| agreement
with the books of account and are further in accordance with the |
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| 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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| iii)
the business conducted, investment 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 cash |
|
| flow,
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 and the |
|
| statement
of 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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| Lahore. |
|
Hameed Khan & Co. |
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| Dated:
March 7, 2000 |
|
Chartered Accountants |
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|
|
| BALANCE
SHEET AS AT SEPTEMBER 30, 1999 |
|
|
|
|
1999 |
1998 |
|
|
Note |
Rupees |
Rupees |
|
|
| CAPITAL
& RESERVES |
|
|
3 |
79,200,000 |
79,200,000 |
|
| Deposit for shares |
|
34,000,000 |
34,000,000 |
|
| Accumulated Loss |
|
(301,522,573) |
(291,217,984) |
|
|
----------- |
----------- |
|
|
(188,322,573) |
(178,017,984) |
|
| SURPLUS
ON REVALUATION OF |
|
| FIXED ASSETS |
|
4 |
205,410,930 |
205,410,930 |
|
|
| LONG
TERM LOANS |
|
5 |
143,921,277 |
200,495,609 |
|
| OBLIGATIONS
UNDER FINANCE LEASE |
|
6 |
687,454 |
1,870,049 |
|
| DEFERRED
LIABILITY - Gratuity |
|
|
3,726.50 |
3,399,258 |
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
|
7 |
26,433,409 |
41,787,641 |
|
|
| Due
to associated companies - |
|
| Unsecured |
|
93,785,346 |
107,030,006 |
|
|
|
8 |
4,533,427 |
5,358,827 |
|
|
| Current
portion of long term |
|
| liabilities |
|
9 |
88,424,893 |
54.806.703 |
|
|
|
|
| Creditors,
accrued & other |
|
|
|
| liabilities |
|
10 |
170,026.13 |
121,549.26 |
|
|
| Provision
for taxation |
|
28 |
3,713,722 |
2,344,445 |
|
|
|
|
---------- |
---------- |
|
|
386,916,927 |
332,876,884 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
11 |
-- |
-- |
|
|
---------- |
---------- |
|
|
552,340,516 |
566,034,746 |
|
|
|
|
|
========== |
========== |
|
|
|
|
| FIXED
CAPITAL EXPENDITURE |
|
|
|
| Operating
fixed assets |
|
12 |
472,478,484 |
479,823,729 |
|
| Assets
subject to finance lease |
|
13 |
2,933,125 |
3,087,500 |
|
| Capital
work-in-progress |
|
14 |
8,936,486 |
7,143,554 |
|
|
|
---------- |
---------- |
|
|
|
484,348,095 |
490,054,783 |
|
|
|
|
| EQUITY
INVESTMENTS |
|
15 |
723,500 |
723,500 |
|
|
|
|
|
|
| LONG
TERM DEPOSITS |
|
|
|
| Security deposits |
|
16 |
275,340 |
265,340 |
|
| CURRENT
ASSETS |
|
|
|
| Stores and spares |
|
17 |
4,032,762 |
4,845,305 |
|
| Stock in trade |
|
18 |
19,660,864 |
21,969,013 |
|
| Trade debts |
|
19 |
4,206,880 |
8,024,187 |
|
| Advances,
deposits, prepayments |
|
|
|
| &
other receivables |
|
20 |
37,156,375 |
39,841,584 |
|
|
|
|
|
| Cash
and bank balances |
|
21 |
1,936,700 |
311,034 |
|
|
|
---------- |
---------- |
|
|
|
66,993,581 |
74,991,123 |
|
|
|
---------- |
---------- |
|
|
|
552,340,516 |
566,034,746 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
| Lahore. |
|
(KHAWAJA MOHAMMAD TANVEER) |
|
(KHAWAJA MOHAMMAD KALEEM) |
|
| March 7, 2000 |
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1999 |
|
|
|
|
1999 |
1998 |
|
|
NOTE |
Rupees |
Rupees |
|
|
| SALES |
|
22 |
478,747,845 |
468,750,846 |
|
| COST
OF GOODS SOLD |
|
23 |
450,166,027 |
429,781,254 |
|
|
|
---------- |
---------- |
|
| GROSS PROFIT |
|
|
28,581,818 |
38,969,592 |
|
| OPERATING
EXPENSES |
|
|
|
|
|
|
|
|
| Administrative |
|
24 |
5,767,302 |
5,137,246 |
|
| Selling |
|
25 |
3,707,261 |
3,592,289 |
|
|
|
---------- |
---------- |
|
|
|
9,474,563 |
8,729,535 |
|
|
|
---------- |
---------- |
|
| OPERATING
PROFIT |
|
|
19,107,255 |
30,240,057 |
|
| OTHER INCOME |
|
26 |
604,416 |
389,152 |
|
|
|
|
---------- |
---------- |
|
|
|
|
19,711,671 |
30,629,209 |
|
| OTHER
CHARGES |
|
|
|
|
|
|
|
|
| Financial |
|
27 |
27,608,699 |
46,260,776 |
|
|
|
---------- |
---------- |
|
| LOSS
BEFORE TAXATION |
|
|
(7,897,028) |
(15,631,567) |
|
| TAXATION |
|
28 |
(2,407,561) |
(4,590,472) |
|
|
|
|
---------- |
---------- |
|
| LOSS
AFTER TAXATION |
|
|
(10,304,589) |
(20,222,039) |
|
| ACCUMULATED
LOSS BROUGHT FORWARD |
|
|
(291,217,984) |
(270,995,945) |
|
|
|
|
---------- |
---------- |
|
| ACCUMULATED
LOSS CARRIED FORWARD |
|
|
(301,522,573) |
(291,217,984) |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts, |
|
|
| Lahore. |
|
(KHAWAJA MOHAMMAD TANVEER) |
|
(KHAWAJA MOHAMMAD KALEEM) |
|
| March 7, 2000 |
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
|
|
|
|
| STATEMENT
OF CASH FLOW |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1999 |
|
|
|
1999 |
1998 |
|
|
Rupees |
Rupees |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| Loss
for the year before taxation |
|
(7,897,028) |
(15,631,567) |
|
|
|
|
| Adjustment
of items not involving |
|
|
|
| movement of cash- |
|
|
|
|
|
|
| Depreciation/amortization
n |
|
28,867,784 |
29,551,426 |
|
| Gratuity
- Net of payments |
|
327,243 |
613,005 |
|
| Profit
on sale of fixed assets |
|
(364,101) |
(162,500) |
|
| Dividend income |
|
(240,000) |
-- |
|
| Financial expenses |
|
27,608,699 |
46,260,776 |
|
|
---------- |
---------- |
|
| OPERATING
PROFIT BEFORE CHANGES |
|
48,302,597 |
60,631,140 |
|
| IN
WORKING CAPITAL |
|
---------- |
---------- |
|
|
| (Increase)decrease
in current assets |
|
|
| Stores & spares |
|
812,543 |
358,178 |
|
| Stock in trade |
|
2,308,149 |
12,526,289 |
|
| Trade debts |
|
3,817,307 |
(3,276,438) |
|
| Advances,
deposits, prepayments |
|
|
|
| and
other receivables |
|
1,021,418 |
3,052,141 |
|
|
|
|
| Increase
in current liabilities |
|
|
|
| Creditors,
accrued & other liabilities |
|
44,830,865 |
10,402,508 |
|
|
---------- |
---------- |
|
|
52,790,282 |
23,062,678 |
|
|
---------- |
---------- |
|
| CASH
GENERATED FROM OPERATIONS |
|
101,092,879 |
83,693,818 |
|
| Financial
charges paid |
|
(23,962,696) |
(93,496,951) |
|
| Income tax paid |
|
(1,088,284) |
(2,246,027) |
|
|
---------- |
---------- |
|
| NET
CASH INFLOW(OUTFLOW) FROM OPERATIONS |
|
76,041,899 |
(12,049,160) |
|
|
---------- |
---------- |
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
| Fixed
capital expenditure |
|
(23,246,996) |
(9,578,492) |
|
| Long
term deposits |
|
(10,000) |
-- |
|
| Dividend received |
|
240,000 |
-- |
|
| Sale
proceeds of fixed assets |
|
450,000 |
3,250,000 |
|
|
---------- |
---------- |
|
| NET
CASH OUTFLOW FROM INVESTING ACTIVITIES |
|
(22,566,996) |
(6,328,492) |
|
|
|
---------- |
---------- |
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
| Long term loans |
|
(23,634,531) |
131,757,204 |
|
| Obligations
under finance lease |
|
(504,205) |
3,116,553 |
|
| Short
term borrowing |
|
(15,354,232) |
(103,988,049) |
|
| Associated
companies |
|
(11,530,869) |
(19,581,672) |
|
| Borrowing/(payment)
from/to directors |
|
(825,400) |
5,358,827 |
|
|
---------- |
---------- |
|
| NET
CASH (OUTFLOW)/INFLOW FROM FINANCING |
|
|
|
| ACTIVITIES |
|
(51,849,237) |
16,662,863 |
|
|
|
---------- |
---------- |
|
| NET
DECREASE IN CASH AND CASH |
|
|
|
| EQUIVALENTS |
|
1,625,666 |
(1,714,789) |
|
|
| CASH
AND CASH EQUIVALENTS AT THE |
|
| BEGINNING
OF YEAR |
|
311,034 |
2,025,823 |
|
|
---------- |
---------- |
|
| CASH
AND CASH EQUIVALENTS AT THE |
|
| END OF YEAR |
|
1,936,700 |
311,034 |
|
|
========== |
========== |
|
|
|
|
|
(KHAWAJA MOHAMMAD TANVEER) |
|
(KHAWAJA MOHAMMAD KALEEM) |
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED SEPTEMBER 30~ 1999 |
|
|
| 1.
THE COMPANY AND ITS OPERATIONS |
|
|
| Chakwal
Spinning Mills Limited was incorporated on January 31, 1988 as a public
limited |
|
| company
in Pakistan under the Companies Ordinance, 1984 and is quoted on Karachi and
Lahore |
|
| stock
exchanges. The company is engaged in the business of textile spinning. |
|
|
| SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1 Accounting Convention |
|
|
| These
accounts have been prepared under the historical cost convention without any
adjustment for |
|
| the
effects of inflation or current values but as modified by capitalisation of
certain exchange |
|
| differences,
as referred to in note 2.4. |
|
|
| 2.2
Staff Retirement Benefits |
|
|
| The
company operates an un-funded gratuity scheme for its employees in accordance
with the |
|
| West
Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance,
1968. The |
|
| liability
is calculated with reference to the last pay drawn and length of service of
the employee. |
|
|
| 2.3 Taxation |
|
|
| Charge
for current taxation is based on taxable income at current tax rates after
taking into account |
|
| all
tax credits and rebates available, if any. Deferred taxation is accounted for
by using the |
|
| liability
method on all major timing differences to the extent that liability can be
estimated |
|
| for
the foreseeable future. |
|
|
| 2.4 Foreign Currency Translations |
|
|
| Assets
and liabilities in foreign currencies are translated into Pak Rupees at the
rate of exchange |
|
| approximating
to those ruling on the balance sheet date or rates fixed under the Exchange
Rate |
|
| Absorption
Scheme of State Bank of Pakistan or forward exchange rate booking. Exchange
gain |
|
| or
loss on translation of foreign currency loans is adjusted against the cost of
respective assets |
|
| acquired
from the proceeds of such loans. Exchange gain or loss on translation of
foreign bills |
|
| under
collection at the year end is charged to current year's income. |
|
|
| 2.5
Fixed Capital Expenditure and Depreciation |
|
|
| Operating
fixed assets are stated at cost or revalued amounts less accumulated
depreciation |
|
| except
freehold land and capital work in progress which are stated at cost. Cost of
operating |
|
| fixed
assets consists of historical cost, applicable exchange differences,
borrowing cost |
|
| pertaining
to the construction and erection period and directly attributable cost of
bringing the |
|
| assets
to working condition. |
|
|
| Depreciation
is charged to income applying the reducing balance method to write off the
cost of |
|
| operating
fixed assets including the exchange differences over their expected useful
life. Full |
|
| year's
depreciation is charged on additions except major additions or extensions to |
|
| production
facilities which are depreciated on pro-rata basis for the period of
commercial use |
|
| during
the year. No depreciation is charged on assets deleted during the year. |
|
|
| Maintenance
and normal repairs are charged to income as and when incurred. Major renewals
and |
|
| improvements
are capitalised. Gain or loss, if any, on disposal of operating assets is
included in |
|
| current
year's income. |
|
|
| 2.6
Assets Subject to Finance Lease |
|
|
| Assets
subject to finance lease are stated at the lower of present value of minimum
lease |
|
| payments
under the lease agreements and the fair value of such assets or revalued
amounts. The |
|
| related
obligations under the leases are accounted for at net present value of
liabilities. The assets |
|
| so
acquired are amortised over their expected useful life. Full year's
amortisation is charged on |
|
| additions
except major additions or extensions to production facilities which are
amortised on |
|
| pro-rata
basis for the period of commercial use during 'the year. |
|
|
| 2.7 Equity Investments |
|
|
| Long
term investments are stated at cost and provision for diminution in value is
made, if |
|
| considered
permanent. |
|
|
| 2.8 Stores and Spares |
|
|
| Stores
and spares are valued at cost, applying moving average method. |
|
|
| 2.9 Stock in Trade |
|
|
| Stock
of raw materials, work in process and finished goods .are valued at the lower
of average |
|
| cost
and net realisable value, except waste stock which is valued at the net
realisable value. |
|
| Average
cost signifies, in relation to raw material annual average cost, for work in
process |
|
| and
finished goods average manufacturing cost including a proportion of related
overheads. Net |
|
| realisable
value signifies the prevailing market prices in the ordinary course of
business less |
|
| selling
expenses incidental to sales. |
|
|
| 2.10
Revenue recognition |
|
|
| Revenue
from sales is recognized on despatch of goods to customers. Dividend income
on equity |
|
| investment
is accounted for on receipt basis. |
|
|
|
1999 |
1998 |
|
|
Rupees |
Rupees |
|
|
| 3.
SHARE CAPITAL |
|
| Authorised: |
|
| 20,000,000
Ordinary |
|
| Shares
of Rupees 10 each |
|
200,000,000 |
200,000,000 |
|
|
========== |
========== |
|
| Issued,
subscribed and paid up: |
|
|
| 7,920,000
ordinary shares of |
|
| Rupees
10 ea |
