| Dar Es Salaam Textile Mills Limited |
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| Annual
Report 1999 |
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| CONTENTS |
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| Company
Information |
|
|
| Notice
of Meeting |
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|
| Directors'
Report |
|
|
| Auditors'
Rep ,ort |
|
|
| Balance
Sheet |
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| Profit
and Loss Account |
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|
| Statement
of Changes |
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| in
Financial Position |
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|
| Notes
to the Accounts |
|
| Pattern
of Holding of Shares |
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| COMPANY
INFORMATION |
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|
|
| Board
of Directors |
Ch. Shahid Hussain |
|
|
Chairman |
|
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|
Mr. Arif Saeed |
|
|
Chief Executive |
|
|
| Directors |
|
Ch. Ahmed Jared |
|
|
Ch. Zahid Hussain |
|
|
Mr. Omar Saeed |
|
|
Mr. Shahid H. Kardar |
|
|
Mr. Zulfiqar Ahmad Malik |
|
|
Mr. H. A. Naqvi |
(N.I.T. Nominee) |
|
|
| Secretary |
|
Mr. Yaqoob Masih |
|
|
| Auditors |
|
S.M. Masood & Co. |
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|
Chartered Accountants |
|
|
| Bankers |
|
Habib Bank Limited |
|
|
Prime Commercial Bank
Limited |
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|
United Bank Limited |
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| Registered
Office |
Servis House, |
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|
2 Main Gulberg, |
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|
Lahore 54662 |
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| Factory |
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l0th km
Muridke-Sheikhupura Road, Muridke. |
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|
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| NOTICE
OF ANNUAL GENERAL MEETING |
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| Notice
is hereby given that the Annual General Meeting of the shareholders of Dar Es
Salaam |
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| Textile
Mills Limited will be held on Friday the 31st March, 2000 at 11:00 a.m. at
the registered |
|
| office
of the Company, Servis House, 2 Main Gulberg, Lahore, to transact the
following business: |
|
|
| 1.
To confirm the minutes of the last General Meeting held on 31-03-1999. |
|
|
| 2.
To receive, consider and adopt the Profit and Loss Account and Balance Sheet
for the |
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| year
ended 30-09-1999 and the Directors' and Auditors' Reports thereon. |
|
|
| 3.
To elect Seven Directors, as fixed by the Board of Directors, in accordance
with the |
|
| provisions
of Section 178 of the Companies Ordinance, 1984 for a term of three years |
|
| commencing
01-04-2000 in place of the following Directors retiring on 31-03-2000. |
|
|
| i)
Mr. Ahmed Jared |
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| ii)
Ch. Shahid Hussain |
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| iii)
Ch. Zahid Hussain |
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| iv)
Mr. Arif Saeed |
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| v)
Mr. Omar Saeed |
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| vi)
Mr. Zulfiqar Ahmed |
|
| vii)
Mr. Shahid H. Kardar |
|
| viii)
Mr. H. A. Naqvi |
(NIT Nominee) |
|
|
| 4.
To appoint auditors and to fix their remuneration. |
|
|
| 5.
To transact any other business with the permission of the chair. |
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|
|
BY ORDER OF THE BOARD |
|
|
| Place
: Lahore |
|
(Yaqoob Masih) |
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| Dated
: February 24, 2000. |
|
Secretary |
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|
| NOTES: |
|
|
| 1.
The share transfer books of the Company will remain closed from 24-03-2000 to
31-03-2000 |
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| (both
days inclusive.) |
|
|
| 2.
Nomination from members for the office of Directors should be received at
least 14 days |
|
| before
the meeting at the registered office of the Company in accordance with
Section 178(3) |
|
| of
the Companies Ordinance, 1984. |
|
|
| 3.
A member entitled to vote at the meeting may appoint any other member as
his/her proxy. |
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| Proxies,
in order to be effective, must be received at the registered office of the
Company |
|
| duly
stamped, signed and witnessed not later than 48 hours before the meeting. |
|
|
| 4.
Shareholders are requested to promptly notify the change of Address, if any,
to our Registrar: |
|
| M/s.
Soft Link (Pvt) Limited, Wings Arcade, 1-K (Commercial), Model Town, Lahore. |
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|
|
| DIRECTORS'
REPORT |
|
|
| The
Directors are pleased to present the Annual Report of the Company and the
audited Financial |
|
| Statements
for the year 1998-99. |
|
|
| We
are pleased to report a pretax profit of Rs. 16.024 million (last year · Rs.
7.898 million), on sales |
|
| which
increased 7% from Rs. 433.152 million to Rs. 463.804 million. Operating costs
declined for |
|
| the
second year running, from 4.9% to 4.3% of sales; while financial expenses
were also controlled |
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| at
5.3% of sales; down from 6.32% last year. |
|
|
| Exports
registered a decrease to Rs. 186.226 million (last year · Rs. 227.805
million) due to the |
|
| slump
in our traditional market viz, the Far East. |
|
|
| Gross
profit rates, which were reported in the half-yearly accounts as having
declined due to the |
|
| appreciation
of the Rupee, were restored in the second half of the year, and eventually
registered |
|
| at
13.11%, only a slight decline from the previous year. |
|
|
| The
cotton crop shortage we mentioned in the half-yearly report saw cotton prices
rising well |
|
| above
import substitution and the industry had to rely on imports of Central Asian
and Australian |
|
| cotton,
for the most part, to meet its consumption requirements. However, this
temporary setback |
|
| enabled
us to develop new lines of contamination-free cotton yarn that we hope to
market in |
|
| coming
years. |
|
|
| We
have also embarked upon a programme to modernize and replace some of our
machinery, |
|
| which
will be followed by a rationalization of our capacity. In this connection, we
have already |
|
| added
state-of-the-art blowroom machinery and draw frames with auto-levellers. This
will ensure |
|
| greater
control over quality and also increase the consistency of our yarn results. |
|
|
| Earning
per share has increased to Rs. 1.70 (1998 · Rs. 0.71). |
|
|
| We
are pleased to report that our production and efficiency indicators continue
to improve year- |
|
| on-year
and gratefully acknowledge the contribution of our staff and workers in this
regard. |
|
|
|
For and on behalf of the
Board |
|
|
| Place:
Lahore |
|
ARIF SAEED |
|
| Date: February 17, 2000. |
|
Chief Executive |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed Balance Sheet of DAR ES SALAAM TEXTILE MILLS LIMITED
as at |
|
| September
30, 1999 and the related Profit and Loss Account and Statement of Changes in |
|
| Financial
Position (Cash Flow Statement), together with the Notes forming part thereof,
for the year |
|
| then
ended, and we state that we have obtained all the information and
explanations which to the |
|
| best
of our knowledge and belief were necessary for the purposes of our audit and,
after due |
|
| verification
thereof, we report that :- |
|
|
| (a)
in our opinion, proper books of account have been kept by the Company as
required by |
|
| the
Companies Ordinance, 1984; |
|
|
| (b)
in our opinion: |
|
|
| (i)
the Balance Sheet and Profit and Loss Account together with the Notes thereon |
|
| have
been drawn up in conformity with the Companies Ordinance, 1984, and are |
|
| in
agreement with the books of account and are further in accordance with |
|
| accounting
policies consistently applied. |
|
|
| (ii)
the expenditure incurred during the year was for the purpose of the Company's |
|
| business;
and |
|
|
| (iii)
the business conducted, investments made and the expenditure incurred during |
|
| the
year were in accordance with the objects of the Company; |
|
|
| (c)
in our opinion and to the best of our information and according to the
explanations |
|
| given
to us, the Balance Sheet, Profit and Loss Account and Statement of Changes in |
|
| Financial
Position (Cash Flow Statement), 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 profit and the changes in financial position
for the |
|
| year
then ended; and |
|
|
| (d)
in our opinion no Zakat was deductible at source under the Zakat and Ushr
Ordinance, |
|
| 1980. |
|
|
| Place
· LAHORE |
|
S.M. MASOOD & CO. |
|
| Date
· February 17, 2000. |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT SEPTEMBER 30, 1999 |
|
|
|
|
1999 |
1998 |
|
|
Note |
(Rupees) |
(Rupees) |
|
| CAPITAL
& LIABILITIES |
|
|
| SHARE
CAPITAL |
|
80,000,000 |
80,000,000 |
|
| ACCUMULATED
LOSS |
|
(54,201,954) |
(67,793,909) |
|
|
---------- |
---------- |
|
|
25,798,046 |
12,206,091 |
|
|
| LONG
TERM LIABILITIES |
|
| Long
Term Loan |
|
4 |
6,666,667 |
20,000,000 |
|
| Liabilities
Against Assets |
|
|
|
| Subject
to Finance Lease |
|
5 |
8,567,344 |
9,180,904 |
|
| Custom
Duty |
|
6 |
412,130 |
824,258 |
|
|
|
15,646,141 |
30,005,162 |
|
| DEFERRED
LIABILITIES |
|
|
|
| Staff
Gratuity |
|
|
338,966 |
243,703 |
|
|
|
|
| OTHER
LOANS & ADVANCES |
|
7 |
94,059,522 |
95,166,095 |
|
|
| CURRENT
LIABILITIES |
|
| Short
Term Running Finances |
|
8 |
128,660,941 |
76,523,132 |
|
| Current
Portion of: |
|
|
|
|
| Long
Term Loans |
|
4 |
16,099,667 |
17,500,000 |
|
| Liabilities
Against Assets |
|
|
|
|
| Subject
to Finance Lease |
|
5 |
2,312,228 |
1,984,264 |
|
| Custom
Duty |
|
6 |
412,127 |
412,128 |
|
| Creditors,
Accrued Expenses & |
|
|
|
|
| Other
Liabilities |
|
9 |
27,519,865 |
28,611,981 |
|
|
|
---------- |
---------- |
|
|
|
175,004,828 |
125,031,505 |
|
| CONTINGENCIES
AND COMMITMENTS |
10 |
-- |
-- |
|
|
---------- |
---------- |
|
|
310,847,503 |
262,652,556 |
|
|
========== |
========== |
|
| PROPERTY
& ASSETS |
|
|
| TANGIBLE
FIXED ASSETS |
|
| Operating
Fixed Assets |
|
11 |
107,499,279 |
113,903,020 |
|
| Assets
Subject to Finance Lease |
|
12 |
7,641,736 |
9,773,982 |
|
| Capital
Work in Progress |
|
13 |
4,452,234 |
65,326 |
|
|
|
---------- |
---------- |
|
|
|
119,593,249 |
123,742,328 |
|
| LONG
TERM DEPOSITS |
|
14 |
1,083,620 |
2,650,544 |
|
| CURRENT
ASSETS |
|
|
|
| Stores
and Spares |
|
15 |
4,844,281 |
3,921,190 |
|
| Stock
in Trade |
|
16 |
36,700,106 |
26,965,204 |
|
| Trade
Debtors |
|
17 |
103,901,485 |
73,369,371 |
|
| Advances,
Deposits, Prepayments |
|
|
|
| &
Other Receivables |
|
18 |
41,821,358 |
26,046,342 |
|
| Cash
& Bank Balances |
|
19 |
2,903,404 |
5,957,577 |
|
|
---------- |
---------- |
|
|
190,170,634 |
136,259,684 |
|
|
|
---------- |
---------- |
|
|
310,847,503 |
262,652,556 |
|
|
========== |
========== |
|
|
|
|
| The
annexed notes from 1 to 33 form an integral part of these accounts. |
|
|
| Place
: Lahore: |
AUDITORS' REPORT |
SHAHID AMIN |
ARIF SAEED |
ZAHID HUSSAIN |
|
| Date
: February 17, 2000. |
(As per annexed) |
Chief Accountant |
Chief Executive |
Director |
|
|
|
| PROFIT
& LOSS ACCOUNT FOR THE |
|
| YEAR
ENDED SEPTEMBER 30, 1999 |
|
|
|
|
1999 |
1998 |
|
|
Note |
(Rupees) |
(Rupees) |
|
|
| SALES |
|
20 |
463,804,605 |
433,151,889 |
|
| COST
OF SALES |
|
21 |
402,990,169 |
375,867,966 |
|
|
|
---------- |
---------- |
|
| GROSS
PROFIT |
|
|
60,814,436 |
57,283,923 |
|
| OPERATING
EXPENSES |
|
|
|
|
| Administrative |
|
22 |
11,595,088 |
10,971,169 |
|
| Selling
& Distribution |
|
23 |
8,397,763 |
10,463,956 |
|
|
|
---------- |
---------- |
|
|
|
19,992,851 |
21,435,125 |
|
|
|
---------- |
---------- |
|
| OPERATING
PROFIT |
|
|
40,821,585 |
35,848,798 |
|
| FINANCIAL
EXPENSES |
|
24 |
24,653,725 |
27,418,832 |
|
| PROFIT
AFTER OPERATING |
|
|
---------- |
---------- |
|
| &
FINANCIAL EXPENSES |
|
|
16,167,860 |
8,429,966 |
|
|
|
|
|
| OTHER
INCOME |
|
25 |
1,187,692 |
62,811 |
|
| PRIOR
YEARS' ADJUSTMENT |
|
26 |
(125,042) |
-- |
|
|
|
---------- |
---------- |
|
|
|
17,230,510 |
8,492,777 |
|
|
|
|
|
| WORKERS'
(PROFIT) PARTICIPATION FUND |
|
861,525 |
424,639 |
|
| ·
WORKERS' WELFARE FUND |
|
344,610 |
169,856 |
|
|
|
---------- |
---------- |
|
|
|
1,206,135 |
594,495 |
|
|
|
---------- |
---------- |
|
| PROFIT
BEFORE TAXATION |
|
|
16,024,375 |
7,898,282 |
|
| TAXATION: |
|
27 |
|
|
| - CURRENT |
|
|
(2,346,802) |
(2,197,843) |
|
| -
PRIOR YEARS' ADJUSTMENT |
|
|
(85,618) |
-- |
|
|
|
---------- |
---------- |
|
|
|
(2,432,420) |
(2,197,843) |
|
|
|
---------- |
---------- |
|
| PROFIT
AFTER TAXATION |
|
|
13,591,955 |
5,700,439 |
|
| LOSS
BROUGHT FORWARD |
|
|
(67,793,909) |
(73,494,348) |
|
|
|
---------- |
---------- |
|
| LOSS
CARRIED FORWARD |
|
|
(54,201,954) |
(67,793,909) |
|
|
|
========== |
========== |
|
| EARNING
PER SHARE |
|
28 |
1.70 |
0.71 |
|
|
| The
annexed notes from 1 to 33 form an integral part of these accounts. |
|
|
|
SHAHID AMIN |
|
ARIF SAEED |
|
ZAHID HUSSAIN |
|
|
Chief Accountant |
|
Chief Executive |
|
Director |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1999 |
|
|
| CASH
FLOW STATEMENT |
|
1999 |
1998 |
|
|
(Rupees) |
(Rupees) |
|
| Cash
Flow From Operating Activities |
|
| Net
profit Before Taxation |
|
16,024,375 |
7,898,282 |
|
| Adjustments
For: |
|
|
|
| Depreciation |
|
11,916,197 |
12,472,786 |
|
| Amortization |
|
954,184 |
1,380,995 |
|
| Interest
Expenses |
|
24,389,161 |
27,418,832 |
|
| Profit
on Sale of Fixed Assets |
|
(1,633) |
0 |
|
| Gratuity,
WPPF, & WWF |
|
1,301,398 |
670,718 |
|
|
---------- |
---------- |
|
|
38,559,307 |
41,943,331 |
|
|
---------- |
---------- |
|
| Operating
Profit Before Working Capital Changes |
|
54,583,682 |
49,841,613 |
|
| (Increase)
/Decrease in Stores, Spares and Packing Material |
(923,091) |
(646,906) |
|
| (Increase)/Decrease
in Stock in Trade |
|
(9,734,902) |
(1,651,312) |
|
| (Increase)/Decrease
in Trade Debts |
|
(30,532,114) |
(8,390,808) |
|
| (Increase)
/Decrease in Advances, Deposits, |
|
|
|
| Prepayments
& Other Receivables |
|
(18,277,737) |
(6,233,740) |
|
| Increase/(Decrease)
in Creditors, Accrued Expenses and |
|
|
| Other
Liabilities |
|
1,144,107 |
4,543,499 |
|
| Gratuity,
WPPF & WWF Paid |
|
0 |
(6,281) |
|
|
---------- |
---------- |
|
|
(58,323,737) |
(12,385,548) |
|
|
---------- |
---------- |
|
|
(3,740,055) |
37,456,065 |
|
| Cash
Generated from Operations |
|
|
|
|
| Interest Paid |
|
(23,871,694) |
(29,409,021) |
|
| Tax Paid |
|
(3,889,524) |
0 |
|
|
---------- |
---------- |
|
|
(27,761,218) |
(29,409,021) |
|
|
---------- |
---------- |
|
| Net
Cash from/(Used in) Operating Activities |
|
(31,501,273) |
8,047,044 |
|
| Cash
Flow From Investing Activities |
|
|
|
| Addition
to Fixed Assets |
|
(8,751,997) |
(3,999,041) |
|
| (Increase)/Decrease
in Long Term Security Deposits |
|
1,566,924 |
(425,000) |
|
| Sale
Proceeds on Disposal of Fixed Assets |
|
32,327 |
0 |
|
|
---------- |
---------- |
|
|
(7,152,746) |
(4,424,041) |
|
|
---------- |
---------- |
|
| Net
Cash Used in Investing Activities |
|
(38,654,019) |
3,623,003 |
|
|
---------- |
---------- |
|
| Cash
Flow From Financing Activities |
|
| Increase/(Decrease)
in Long Term Loan |
|
(14,733,666) |
37,500,000 |
|
| Increase/(Decrease)
in Other Loan |
|
(1,106,573) |
(33,168,272) |
|
| Lease
Finance |
|
3,680,000 |
0 |
|
| Increase/(Decrease)
in Lease Liabilities |
|
(3,965,596) |
(2,043,289) |
|
| Increase/(Decrease)
in Custom Duty |
|
(412,128) |
(412,129) |
|
| Increase/(Decrease)
in Running Finances |
|
52,137,809 |
(1,012,873) |
|
|
---------- |
---------- |
|
| Net
Cash From Financing Activities |
|
35,599,846 |
863,437 |
|
|
---------- |
---------- |
|
| Net
Increase/(Decrease) in Cash & Cash Equivalents |
|
(3,054,173) |
4,486,440 |
|
| Cash
& Cash Equivalents at Beginning of the Period |
|
5,957,577 |
1,471,137 |
|
|
---------- |
---------- |
|
| Cash
& Cash Equivalents at Close of the Period |
|
2,903,404 |
5,957,577 |
|
|
========== |
========== |
|
|
|
|
|
SHAHID AMIN |
|
ARIF SAEED |
|
ZAHID HUSSAIN |
|
|
Chief Accountant |
|
Chief Executive |
|
Director |
|
|
|
| NOTES
TO THE ACCOUNTS FOR THE |
|
| YEAR
ENDED SEPTEMBER 30, 1999 |
|
|
| 1.
STATUS & NATURE OF BUSINESS |
|
|
| Dar
Es Salaam Textile Mills Limited is a Public Limited Company incorporated in
Pakistan and |
|
| listed
on the Karachi and Lahore Stock Exchanges. |
|
|
| The
principal activity of the Company is the manufacture and sale of yarn. |
|
|
| 2.
PRINCIPAL ACCOUNTING POLICIES |
|
| The
following accounting policies have been adopted in accounting for
transactions which |
|
| are
considered material in relation to the Company's accounts: |
|
|
| --
Basis of Accounting: |
|
| These accounts have been prepared under the
historical cost convention. |
|
| --
Contingencies & Commitments: |
|
| These are accounted for when they become
due. |
|
| --
Tangible Fixed Assets and Depreciation: |
|
|
| Land
and capital work in progress are stated at cost. All other operational assets
are |
|
| stated
at cost less depreciation. Depreciation has been calculated at the rates
specified |
|
| in
Note no. 11 to the accounts. Full year's depreciation is provided for all
additions in |
|
| the
year of acquisition whereas no depreciation is provided in the year of
disposal of the |
|
| assets. |
|
|
| Cost
includes purchase price and other incidental expenses incurred upto the date
of |
|
| operation. |
|
|
| Maintenance
and normal repairs are charged to income as and when incurred while |
|
| major
repairs and improvements are capitalized. |
|
|
| Gain
or loss on disposal of assets is included in income in the year the asset is |
|
| disposed off. |
|
|
| --
Assets Subject to Finance Lease: |
|
|
| Assets
under finance lease are stated at the fair value of the assets. The aggregate |
|
| amount
of obligations relating to assets subject to finance lease are accounted for
at |
|
| net
present value of the commitments. The assets so acquired are amortized over
their |
|
| useful lives. |
|
|
| The
finance charge is allocated to periods during the lease term so as to produce
a |
|
| constant
periodic rate of interest on the remaining balance of the liability for each |
|
| period. |
|
|
| -- Stores and Spares: |
|
|
|
| These
are valued at lower of average cost or net realisable value. |
|
|
| -- Stocks in Trade: |
|
|
| These
are valued at lower of cost or net realisable value. The cost is determined
as |
|
| follows:- |
|
|
| Stores
& Spares |
|
- At moving average cost |
|
| Raw Material |
|
- At yearly average cost. |
|
| Work
in Process & Finished Goods |
- On actual cost basis and
includes |
|
|
cost of direct material
and appropriate |
|
|
conversion cost. |
|
|
| Waste |
|
- At selling price. |
|
|
| Net
realisable value signifies the estimated selling price in the ordinary course
of the |
|
| business
less cost necessary to be incurred in order to make the sale. |
|
|
| --
Taxation: |
|
|
|
| The
charge for the current taxation for the year is based on taxable income at
the |
|
| current
rate of taxation after taking into account tax credits, tax rebates and other |
|
| allowances
available for set off, if any. |
|
|
| The
Company accounts for deferred taxation, using the liability method, on all
major |
|
| timing
differences excluding tax effects on those timing differences which are not
likely |
|
| to
reverse in the foreseeable future. |
|
|
| -- Foreign Currencies: |
|
|
| Export
sales are translated into Rupees at estimated rates. Differences arising on
the |
|
| subsequent
realization are adjusted against sales. |
|
|
| -- Staff Retirement Benefits: |
|
|
| The
Company abolished its gratuity scheme for workers w.e.f. 01-10-1992 and |
|
| introduced
an approved contributory Provident Fund Scheme for its employees. |
|
| However,
gratuity scheme is still applicable to the executives. |
|
|
| -- Revenue: |
|
|
| This
is recognised on the despatch of goods. |
|
|
| --
Figures: |
|
|
|
|
|
|
|
| These
are rounded off to the nearest rupee. |
|
|
1999 |
1998 |
|
| 3.
SHARE CAPITAL |
|
(Rupees) |
(Rupees) |
|
| Authorised: |
|
| 15,000,000
Ordinary Shares |
|
| of
Rs. 10/- each |
