| Dhan Fibre Limited |
|
|
|
|
|
|
|
|
|
| Annual
Report 1999 |
|
|
| Contents |
|
|
| Company
Information |
|
| Notice
of Annual General Meeting |
|
| Financial
Highlights |
|
| Directors'
Report to the Shareholders |
|
| Auditors'
Report to the Members |
|
| Balance Sheet |
|
| Profit
and Loss Account |
|
| Statement
of Changes in Financial Position |
|
| Notes
to the Accounts |
|
| Pattern
of Shareholdings |
|
|
|
| Company
Information |
|
|
| Khawaja
Mohammad Jawed |
|
| Chairman
& Chief Executive |
|
| Khawaja
Mohammad Jahangir |
|
| Khawaja
Mohammad Tanveer |
|
| Khawaja
Mohammad Kaleem |
|
| Khawaja
Mohammad Nadeem |
|
| Khawaja
Mohammad Naveed |
|
| Mst.
Zubaida Khatoon |
|
|
| Corporate
Secretary |
|
| Muhammad
Anwar Sheikh |
|
|
| Legal
Advisors |
|
| Cornelius
Lane & Mufti |
|
| Advocates
and Solicitors |
|
|
| Auditors |
|
| M.
Hussain Chaudhury & Co. |
|
| Chartered
Accountants |
|
|
| Bankers |
|
| Allied
Bank of Pakistan Limited |
|
| Askari
Commercial Bank Limited |
|
| Citibank N.A. |
|
| Emirates
Bank International |
|
| Faysal
Bank Limited |
|
| Habib
Bank AG Zurich |
|
| Muslim
Commercial Bank Limited |
|
| National
Bank of Pakistan |
|
| Platinum
Commercial Bank Limited |
|
| Prime
Commercial Bank Limited |
|
| Standard
Chartered Bank |
|
|
| Registered
Office |
|
| 7/1,
E-3, Main Boulevard, Gulberg-III, |
|
| Lahore,
Pakistan. |
|
| Tel
# (92-042) 575-7108 |
|
|
| Corporate
and Share Department |
|
| 31-F,
Main Market, Gulberg II, |
|
| Lahore,
Pakistan. |
|
| Tel#
(92-042) 575-5774 |
|
|
| Factory |
|
| Hattar,
District Haripur, |
|
| Pakistan. |
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|
|
| Notice of |
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| Annual
General Meeting |
|
|
| Notice
is hereby given that 6th Annual General Meeting of the Shareholders of Dhan
Fibres Limited will be held on |
|
| Thursday
December 30, 1999 at 10.00 a.m. at 07-Happy Homes, 38-A, Main Gulberg, Lahore
to transact the following |
|
| business: |
|
|
| To
confirm the minutes of 5th Annual General Meeting held on December 31,1998. |
|
|
| 2.
To receive and adopt the audited accounts together with Directors' and
Auditors' reports for the year ended |
|
| June 30, 1999. |
|
|
| 3.
To appoint auditors for the year ending June 30, 2000 and fix their
remuneration. The retiring auditors Messrs. |
|
| M.
Hussain Chaudhury & Co., Chartered Accountants, being eligible, offer
themselves for re-appointment. |
|
|
| 4.
To transact any other business with the permission of the Chair. |
|
|
|
By order of the Board |
|
|
| Lahore: |
|
(Muhammad Anwar Sheikh) |
|
| December
07. 1999 |
|
Corporate Secretary |
|
|
| Notes: |
|
|
| A
member entitled to attend and vote |
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| at
the meeting may appoint another |
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| member
as his/her proxy to attend and |
|
| vote
instead of him/her at the meeting. |
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| Proxies
must be deposited at the Company's |
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| Registered
Office not less than 48 hours before |
|
| the
time of holding the meeting. |
|
|
| Members
are requested to immediately notify the |
|
| change
of their address, if any. |
|
|
| 3.
Share Transfer Books of the Company shall remain closed |
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| from
December 29 1999 to January 05 2000 |
|
| (both
days inclusive). |
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|
|
| Financial
Highlights |
|
|
|
1999 |
1998 |
1997 |
|
|
|
|
| Sales
net - rupees in thousand |
|
3,674,218 |
3,277,960 |
2,080,663 |
|
| Gross
profit - rupees in thousand |
|
318,004 |
142,288 |
150,123 |
|
| Profit
before tax - rupees in thousand |
|
183,988 |
43,932 |
105,549 |
|
| Profit
after tax - rupees in thousand |
|
165,616 |
27,542 |
95,145 |
|
| Earning
per share - rupees |
|
0.56 |
0.09 |
0.32 |
|
| Break-up
value per share - rupees |
|
10.97 |
10.41 |
10.32 |
|
| Shareholders
equity - rupee in thousand |
|
3,255,978 |
3,090,361 |
3,062,819 |
|
| Total
assets - rupees in thousand |
|
4,388,633 |
4,583,124 |
4,627,649 |
|
| Number
of shareholders |
|
67,228 |
84,993 |
85,801 |
|
| Number
of shares |
|
296,767,400 |
296,767,400 |
296,767,400 |
|
| Polyester
staple fibre - produced (M.T) |
|
84,166 |
66,018 |
34,708 |
|
| Polyester
chips - produced (M.T) |
|
668 |
12 |
838 |
|
| Number
of employees |
|
903 |
927 |
828 |
|
| Gross
profit to sales - %age |
|
8.66% |
4.34% |
7.22% |
|
| Net
profit to sales - %age |
|
4.51% |
0.84% |
4.57% |
|
| Current ratio |
|
1.68:1 |
1.28:1 |
0.84:1 |
|
| Debt to equity |
|
06:94 |
10:90 |
0:100 |
|
|
|
| Directors'
Report to the Shareholders |
|
|
| The
Directors of your company feel great |
|
| pleasure
to present before you their report |
|
| together
with Audited Accounts for the year |
|
| ended
June 30, 1999. |
|
|
| Overview |
|
|
| Inspite
of slight growth in demand during the year under |
|
| review,
the Polyester Staple Fibre industry has remained |
|
| under
pressure and uncertainty due to the un-competitive |
|
| price
offered by the Far Eastern suppliers and non-availability |
|
| of
anti dumping legislation in the country which is a strong |
|
| demand
of the industry since long. By accepting the |
|
| unwarranted
demand of APTMA to boost the export of textile |
|
| products,
the Government has allowed the import of PSF |
|
| under
NO DUTY NO DRAW BACK regime. In the absence of |
|
| antidumping
legislation and non-existence of any checks on |
|
| misuse
of NDND scheme by non-real exporters, the situation |
|
| will
further aggravate. The industry which is already in |
|
| oversupply
situation will be marred further if no antidumping |
|
| duty
is imposed by the Government. After availing the benefit |
|
| of
NDND, the APTMA is looking forward for zero duty or |
|
| reduced
duty on imported PSF in the name to boost the |
|
| export.
This plea is baseless and unjustified and if accepted, |
|
| will
further imperil the industry. The Government should not |
|
| take
any step to make the whole Polyester industry sick, |
|
| which
deposits billion of Rupees in Government exchequer |
|
| in
terms of taxes and duties. |
|
|
| In
order to protect the local PSF industry the import of PTA |
|
| and
MEG should be allowed at Zero rate in the same manner |
|
| as
the local PTA manufacturer has been allowed. If the |
|
| Government
provides certain export incentives, the local PSF |
|
| industry
can match the economies of scale of the Far East |
|
| players. |
|
|
| Performance
of the |
|
| Company |
|
|
| The
results for the year under review have shown tremendous achievement over |
|
| last
year. The gross sale was Rs. 4,219 million against Rs. 3,700 million of the |
|
| last
year which exhibits an increase of 14% over the last year. The company has |
|
| been
able to maintain its .share of market ranging from 20% to 23% despite the |
|
| competitive
environment. The gross profit was 8.66% of sales as compared to |
|
| previous
year of 4.34%. The increase is attributed to excessive capacity utilization |
|
| and
increased sale valume. The cost of basic raw materials i.e. PTA and MEG |
|
| is
the major cost component in the production of PSF, any change in the price |
|
| of
these materials affects the profitability of the company. The cost of raw
material |
|
| decreased
by 16.7% as compared to the last year which ultimately improved |
|
| the
margin. The management of the company realizes the economies of scale |
|
| production
and achieved the production capacity of 84,834 tons with an increase |
|
| of
28.47% over the last year. Due to the effective cost control and continued |
|
| efforts
of the management, the production overhead remained within norms. |
|
| The
company earned a pre tax profit of Rs. 183.988 million and after providing |
|
| the
provision for turnover tax the net profit was Rs. 165.616 million as compared |
|
| to
the previous year of Rs. 27.542 million. The marginal increase in the |
|
| operational
expenses was due to the inflationary trends. The increase |
|
| in
financial cost was 9.35% as compared to 1.he previous year, the |
|
| increase
was due to long term financial arrangements, availed |
|
| by
the company. The company contributed towards national |
|
| exchequer
on account of duties, income tax, sales tax and |
|
| other
levies about Rs. 720 million. |
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|
| Future
Outlook |
|
| The
post nuclear economic slump is still marked and the |
|
| economy
is yet to be back on the track of recovery. The |
|
| momentum
has hampered by frequent sanctions, restriction |
|
| on
imports and uncertain economic environment. During the |
|
| year
under review the PSF industry absorbed in house excessive |
|
| capacity
by meeting the growing demand showing a growth |
|
| of
7.5% against the previous year. Owing to shortage of cotton, |
|
| the
spinners was dependent on easily available PSF. This year |
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| cotton
crop is in abundant and is available at the lowest price. |
|
| The
availability of cheap cotton have led the spinners toward |
|
| 100%
export oriented cotton yearn and change in blending |
|
| ratios
which will ultimately slow down the demand. The overall |
|
| impact
of this shift is estimated to affect 10% to 15% to the |
|
| local
PSF industry which is already in oversupply situation and |
|
| facing
continued threat of imports. The sale volume may be |
|
| affected
in the forthcoming period due to the slow down of the |
|
| demand
which ultimately will shrink the revenue and margins. |
|
| However
the management of your company believes that with |
|
| strenuous
marketing efforts it will improve its overall share in |
|
| the
market. The prices of PTA and MEG which were low, have |
|
| also
started to increase considerably. If the prices of these |
|
| materials
continue to increase without any corresponding |
|
| increase
in the price of PSF, the profitability is likely to |
|
| shrink.
We hope and anticipate that slow down in the |
|
| PSF
market will be temporary and view the future |
|
| with
cautious optimism. |
|
|
| Registration
Number 9907682 |
|
|
| ISO 9OO2 |
|
| Certification |
|
|
| The
company has achieved the milestone of ISO 9002 |
|
| Certification
and is the first in polyester staple fibre industry with |
|
| this
distinguish land mark. Our philosophy on ISO 9002 certification |
|
| is
to operate as a profitable commercial venture in the best interest |
|
| of
its customers, shareholders, employees and contribute to the economic |
|
| development
and welfare of the society. |
|
|
| Year 2000 |
|
| Compliance |
|
|
| All
computer hardware and software |
|
| packages
are Y2K compliant. |
|
|
| Board
of Directors |
|
|
| There
was no change in composition of the |
|
| board
of Directors during the year under review. |
|
| The
terms of office of the present board expires |
|
| in
December 2000. |
|
|
| Auditors |
|
|
| The
auditors M/S M. Hussain Chaudhury & Co. Chartered |
|
| Accountants
retire and being eligible, offer themselves for re- |
|
| appointment. |
|
|
| Pattern
of Shareholding |
|
|
| The
pattern of shareholding as on June 30, 1999 is annexed. |
|
|
| Acknowledgement |
|
|
| The
relations between the management and the workers remain |
|
| cordial
throughout the year. The Directors are pleased to place |
|
| their
appreciation for the continued zeal, efforts, valuable services |
|
| and
loyalty rendered by the executive, staff members and workers |
|
| of
the company. We also put on record our gratitude to our |
|
| valuable
customers, bankers and Government functionaries for |
|
| their
co-operation and continued support. |
|
|
|
On behalf of the Board |
|
|
| Lahore |
|
(Khawaja Mohammad Jawed) |
|
| December
06, 1999 |
Chairman & Chief
Executive |
|
|
|
| Auditors'
Report |
|
| to
the Members |
|
|
|
| We
have audited the annexed balance sheet of "Dhan Fibres Limited" as
at June 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 purposes 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 the 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 June 30, 1999 and of the profit and the changes in financial position
(cash flows) for |
|
| the
year then ended; and |
|
|
| (d)
in our opinion no Zakat was deductible at source under the Zakat and Ushr |
|
| Ordinance,
1980, |
|
|
| Lahore: |
|
(M. Hussain Chaudhury
& Co.) |
|
| December 06, 1999 |
Chartered Accountants |
|
|
|
| Balance
Sheet |
|
| as
at June 30, 1999 |
|
|
|
1999 |
1998 |
|
|
Note |
Rupees |
Rupees |
|
|
| CAPITAL
AND LIABILITIES |
|
|
|
| Share
capital and reserves |
|
| Authorized
capital: |
|
| 301
million (1998:301 million) ordinary |
|
| shares
of Rs 10 each |
|
3,010,000,000 |
3,010,000,000 |
|
|
----------- |
----------- |
|
| Issued
subscribed and paid up capital |
|
3 |
2,967,674,000 |
2,967,674,000 |
|
| Unappropriated
profit |
|
|
288,303,516 |
122,687,100 |
|
|
|
3,255,977,516 |
3,090,361,100 |
|
|
|
----------- |
----------- |
|
| Long
term loans - secured |
|
4 |
190,466,814 |
325,255,139 |
|
| Deferred
liability |
|
|
|
| Gratuity
payable |
|
|
7,733,988 |
2,702,481 |
|
|
|
|
| Current
maturity of long term loans |
|
|
144,500,556 |
178,178,500 |
|
| Short
term running finance utilized under |
|
|
|
| mark
arrangements |
|
5 |
42,735,608 |
75,304,260 |
|
| Creditors,
accrued and other liabilities |
|
6 |
747,218,861 |
911,323,010 |
|
|
----------- |
----------- |
|
|
934,455,025 |
1,164,805,770 |
|
| Contingencies
and commitment. |
|
7 |
-- |
-- |
|
|
|
----------- |
----------- |
|
|
4,388,633,343 |
4,583,124,490 |
|
|
========== |
========== |
|
| PROPERTY
AND ASSETS |
|
|
| Fixed assets |
|
| Operating
fixed assets |
|
8 |
2,759,299,855 |
3,028.168,997 |
|
| Capital
work in progress |
|
9 |
12,683,072 |
3,521,732 |
|
|
----------- |
----------- |
|
|
2,771,982,927 |
3,031,690,729 |
|
| Long
term loans to employees |
|
10 |
6,822,760 |
7,179,651 |
|
| Deferred
costs |
|
11 |
39,877,268 |
57,600,499 |
|
|
| Current assets |
|
| Stores,
spares and loose tools |
|
12 |
197,800,264 |
151,355,360 |
|
| Stock in trade |
|
13 |
538,171,914 |
551,269,703 |
|
| Trade debtors |
|
14 |
242,331,522 |
200,432,836 |
|
| Advances,
deposits, prepayments |
|
| and
other receivables |
|
15 |
396,822,330 |
422,149,197 |
|
| Cash
and bank balances |
|
16 |
194,824,358 |
161,446,515 |
|
|
----------- |
----------- |
|
|
1,569,950,388 |
1,486,653,611 |
|
|
|
|
|
----------- |
----------- |
|
|
4,388,633,343 |
4,583,124,490 |
|
|
========== |
========== |
|
| Note:
The annexed notes from 1 to 27 form an integral part of these accounts. |
|
|
| (Khawaja
Mohammad Kaleem) |
|
(Khawaia Mohammad Jawed |
|
| Director |
|
Chief Executive |
|
|
|
| Profit
and Loss Account |
|
| for
the year ended June 30, 1 999 |
|
|
|
1999 |
1998 |
|
|
Note |
Rupees |
Rupees |
|
|
| Sales - Net |
|
17 |
3,674,218,480 |
3,277,959,986 |
|
| Cost of sales |
|
18 |
3,356,214,079 |
3,135,672,108 |
|
|
|
---------- |
---------- |
|
| Gross profit |
|
|
318,004,401 |
142,287,878 |
|
| Administrative,
selling and general expenses |
|
19 |
71,572,668 |
66,317,701 |
|
|
|
---------- |
---------- |
|
| Operating
profit |
|
|
246,431,733 |
75,970,177 |
|
| Other income |
|
20 |
49,284,048 |
63,588,230 |
|
|
---------- |
---------- |
|
|
295,715,781 |
139,558,407 |
|
| Financial
and other charges |
|
21 |
102,044,720 |
9,331,470 |
|
| Workers'
(Profit) Participation Fund |
|
9,683,553 |
23,121,851 |
|
|
---------- |
---------- |
|
|
111,728,273 |
95,626,893 |
|
|
---------- |
---------- |
|
| Profit
before tax |
|
183,987,508 |
43,931,514 |
|
| Provision
for taxation |
|
18,371,092 |
16,389,800 |
|
|
---------- |
---------- |
|
| Profit after tax |
|
165,616,416 |
27,541,714 |
|
| Unappropriated
profit brought forward |
|
122,687,100 |
95,145,386 |
|
|
---------- |
---------- |
|
| Unappropriated
profit carried forward |
|
288,303,516 |
122,687,100 |
|
|
========== |
========== |
|
| Note:
The annexed notes from 1 to 27 form an integral part of these accounts. |
|
|
| (Khawaia
Mohammad Jawed) |
|
(Khawaja Mohammad Kaleem) |
|
| Chief
Executive |
|
Director |
|
|
|
| Statement
of Changes in Financial Position |
|
| (Cash
Flow Statement) for the year ended June 30, 1 999 |
|
|
1999 |
1998 |
|
|
|
Rupees |
Rupees |
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Profit
(loss) for the year before tax |
|
183,987,508 |
43,931,514 |
|
| Adjustment
for: |
|
|
| Depreciation |
|
286,829,164 |
315,546,006 |
|
| Amortization
of deferred costs |
|
17,723,231 |
17,723,232 |
|
| Provision
for gratuity |
|
5,110,562 |
2,529,421 |
|
| (Gain)/Loss
on disposal of fixed assets |
|
138,457 |
(192,106) |
|
| Interest
income |
|
(37,609,264) |
(40,161,824) |
|
| Financial
charges |
|
102,044,720 |
93,308,494 |
|
|
----------- |
----------- |
|
|
374,236,870 |
388,753,223 |
|
|
----------- |
----------- |
|
| Operating
profit before working capital changes |
|
558,224,378 |
432,684,737 |
|
|
| (Increase)/
decrease in current assets |
|
| Stores
spares and loose tools |
|
(46,444,904) |
(22,223,682) |
|
| Stock in trade |
|
13,097,789 |
85,395,625 |
|
| Trade debtors |
|
(41,898,686) |
(97,319,676) |
|
| Advances,
deposits, prepayments and other receivables |
|
18,465,794 |
(60,502,756) |
|
|
| Increase
/ (decrease) in current liabilities |
|
| Creditors.
accrued and other liabilities |
|
(164,183,991) |
(538,938,760) |
|
|
----------- |
----------- |
|
|
(220,963,998) |
(633,589,249) |
|
|
----------- |
----------- |
|
| Cash
from/(used in) operating activities |
|
337,260,380 |
(200,904,512) |
|
|
| Gratuity paid |
|
(79,055) |
(224,843) |
|
| Financial
charges paid |
|
(103,946,170) |
(94,100,425) |
|
| Income
tax paid |
|
(14,679,001) |
(22,003,409) |
|
|
----------- |
----------- |
|
| Cash
from/(used in) operating activities |
|
218,556,154 |
(317,233,189) |
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
| Additions
in operating fixed assets |
|
(18,098,479) |
(118,095,811) |
|
| Capital
work in progress |
|
(9,161,340) |
3,281,986 |
|
| Interest
/ mark-up received |
|
43,692,053 |
17,675,996 |
|
| Proceeds
from sale of fixed assets |
|
-- |
1,424,920 |
|
|
----------- |
----------- |
|
| Net
cash from/(used in) investing activities |
|
16,432,234 |
(95,712,909) |
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Long
term loans |
|
(168,466,269) |
503,433,639 |
|
| Long
term loans to employees |
|
(575,624) |
(1,680,932) |
|
| Short
term running finance utilized under |
|
|
|
| markup
arrangements |
|
(32,568,652) |
(13,439,266) |
|
|
----------- |
----------- |
|
| Net
cash (used n)/from, financing activities |
|
(201,610,545) |
488,313,441 |
|
|
----------- |
----------- |
|
| Net
increase,(decrease) in cash and cash equivalents |
|
33,377,843 |
75,367,343 |
|
| Cash
and cash equivalents at the beginning of year |
|
161,446,515 |
86,079,172 |
|
|
----------- |
