| S.G. Fibre Limited |
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| Annual
Report 1999 |
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| CONTENTS |
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|
| Company
information |
|
| Notice
of annual general meeting |
|
| Directors' report |
|
| Auditors'
report to the members |
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| Balance sheet |
|
| Profit
& loss account |
|
| Cash
.flow statement |
|
| Statement
of changes in Equity |
|
| Notes
to the accounts |
|
| Pattern
of shareholding |
|
|
|
| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS: |
|
| Mr.
S. M. Ahmed |
|
Chairman |
|
| Mr.
Sohail Ahmed |
|
Chief Executive |
|
| Mst.
Zubaida Khatoon |
|
Director |
|
| Mr.
Asim Ahmed |
|
Director |
|
| Mrs. Tania Asim |
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|
Director |
|
| Mr.
Nausherwan Adil |
|
Nominee Director of
N.B.P. |
|
| Mr.
Asif A. Brohi |
|
Nominee Director of
N.B.P. |
|
|
| COMPANY
SECRETARY: |
|
| Mr.
Muneer Ahmed |
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| AUDITORS: |
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| M/s.
Muniff Ziauddin & Co. |
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| Chartered
Accountants. |
|
|
| BANKERS: |
|
| Allied
Bank of Pakistan Limited |
|
| Habib
Bank Limited |
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| Muslim
Commercial Bank Limited |
|
| ABN
Amro Bank |
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| Habib
Bank A. G. Zurich |
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| REGISTERED
OFFICE: |
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| B
- 40, S. I. T. E., Karachi. |
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| NOTICE
OF ANNUAL GENERAL MEETING |
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| Notice
is hereby given that the 31st Annual General Meeting of the Shareholders of
S. G. Fibre Limited will be held |
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| on
Tuesday, the December 28,1999 at 5:00 p.m. at the registered office of the
Company at B - 40, S. I. T. E., Karachi |
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| to
transact the following business: |
|
|
| 1.
To confirm the minutes of the last Annual General Meeting held on February 6,
1999. |
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|
|
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| 2.
To receive consider and adopt the Audited Accounts of the Company for the
year ended June 30, 1999 together |
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| with
the Auditors' and Directors' report thereon. |
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|
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| 3.
To appoint the Auditors of the Company for the year 1999-2000 and to fix
their remuneration. |
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| 5:
To transact such other business with the permission of the Chair. |
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By order of the Board |
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|
Mr. Muneer Ahmed |
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|
Company Secretary |
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| NOTES: |
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| 1.
The share transfer books of the company shall remain close from December 22,
1999 to December 28, 1999 |
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| (both
days inclusive) |
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|
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| 2.
Transfer received at the registered office of the Company at B-40, S. I. T.
E., Karachi, at the close of business |
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| on
December 21, 1999 will be treated in time. |
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|
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|
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| 3.
A member of the company entitled to attend and vote may appoint another
member as his/her proxy to attend |
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| &
vote instead of him/her. Proxies in order must be received at the registered
office of the Company not less |
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| than
48 hours before the time of holding of Annual General Meeting. |
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| 4.
The members are requested to communicate to the Company of any change in
their addresses. |
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| Karachi: |
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| December
02, 1999 |
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| DIRECTORS'
REPORT |
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|
| During
the year under review your company sustained a loss of Rs. 89.663 million
before tax as against the last year's |
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| profit
before tax of Rs. 50.491 million. The financial results are compared as
under: |
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|
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|
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|
(Rupees in million) |
|
|
|
1999 |
1998 |
Variance |
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|
|
|
|
| Gross profit |
|
93,645 |
110,213 |
16,568 |
|
| Administrative
& Selling Expenses |
|
19,726 |
19,108 |
(0,618) |
|
| Amortization
of deferred cost |
|
3,553 |
3,553 |
-- |
|
| Depreciation |
|
93,170 |
52,549 |
(40,621) |
|
|
|
------------------ |
------------------ |
------------------ |
|
|
|
116,449 |
75,210 |
(41,239) |
|
| Operating
(loss) / profit |
|
(22,804) |
35,003 |
57,807 |
|
| Other Income |
|
8,925 |
65,066 |
(56,141) |
|
|
|
------------------ |
------------------ |
------------------ |
|
|
|
(13,879) |
100,069 |
113,948 |
|
| Financial
& other charges |
|
(75,784) |
(49,578) |
(26,206) |
|
|
|
------------------ |
------------------ |
------------------ |
|
| (Loss)/profit
before taxation |
|
(89,663) |
50,491 |
(140,154) |
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|
========== |
========== |
========== |
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| The
above figures indicate that main factors contributing towards loss of Rs.
89,663 as against last year's profit of: |
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| Rs.
50.491 which are as follows: |
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|
| FACTORS |
|
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|
(Rupees in million) |
|
|
|
|
|
|
| (i)
Decrease in Gross Profit |
|
|
16,568 |
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| (ii)
Increase in Administrative expenses |
|
618 |
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| (iii)
Increase in Depreciation |
|
|
40,621 |
|
| (iv)
Decrease in other income |
|
|
56,141 |
|
| (v)
Increase in financial charges |
|
|
26,206 |
|
|
|
|
------------------ |
|
|
|
|
140,154 |
|
|
|
|
========== |
|
|
|
|
|
|
| Loss
before taxation for 1998 - 99 |
|
|
89,663 |
|
| Profit
before taxation for 1997 - 98 |
|
|
50,491 |
|
|
|
|
------------------ |
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| Total decrease |
|
|
|
140,154 |
|
|
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|
========== |
|
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|
|
| Reason
for above variation may be explained as under: |
|
| (i)
Decline in Gross Profit |
|
| A
comparison of production and sales is given below: |
|
|
|
1998-99 |
1997-98 |
|
|
|
|
|
| Sales
(Rupees in million) |
|
720 |
781 |
|
| Production
(in metric tons) |
|
7,722 |
7,337 |
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|
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| The
above analysis shows an increase in volume of production coupled with
decrease in sale value which can be |
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| attributed to. |
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|
|
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| a)
Fall in yarn prices due to recession in international market. |
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|
|
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| b)
Rise in prices of polyester chips in the last quarter of the financial year
1998-99. |
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|
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| c)
Charge of depreciation on new plant which was under trial production and full
production did not start till |
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| 30 June, 1999. |
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|
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| d)
The plant could not be operated at full capacity due to various factors Viz., |
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|
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| There
was dumping of polyester filament yarn from the Far East in Pakistani markets
which effected local polyester |
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| filament
yarn industry in two ways: |
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|
|
| 1.
Prices of yarn had to be drastically reduced. |
|
|
| 2.
Share of local production in the market had to be curtailed due to the
availability of imported yarn in lower price. |
|
|
| Dumping
of yarn from the Far East resulted in production cut resulting in closure of
a number of units producing |
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| polyester
filament yarn in Pakistan either completely or operating at very low
production levels which was the result |
|
| of
worst economic situation in Far Eastern countries. |
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|
|
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| Unfortunately
your company became victim of labour problem causing adversely to its
performance. This problem |
|
| has
not yet been fully resolved. Dispute is also persisting with K.E.S.C. who
have been issuing excessive/provisional |
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| bills
since 1988. The Company has filed a number of cases against KESC at different
stages before various authorities, |
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| which
are still pending. On 27th July 1998, a KESC team headed by a Brigadier
raided the company and shut down |
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| the
generators of our sister concern M/s. S. G. Power Limited resulting in
stoppage of our entire plant. "Our production |
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| process
being a continuous process caused heavy loss to the Company". The matter
has been explained to Karachi |
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| Stock
Exchange in detail. Industries in Karachi faced another problem in February
1999 when as a matter of policy |
|
| Sui
Southern Gas Company disconnected gas connection without prior notice which
resulted in total shut down of the |
|
| Company
as S. G. Power Limited is the sole source of supply of electricity to S. G.
Fibre Limited. |
|
|
| (ii)
Increase in Administrative Expenses |
|
|
| There
is a nominal increase in administrative & selling expenses which is
mainly attributed to increase in printing & |
|
| stationery
expenses and vehicle running expenses. While all other expenses were
effectively controlled by the |
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| management. |
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|
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|
|
| (iii)
Depreciation |
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|
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| Increase
in depreciation is related with increase in fixed capital expenditure by Rs.
458.359 million. This represents |
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| investment
in new MPC plant. However as full production could not be started till 30
June 1999, additional burden |
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| of
depreciation of Rs. 40.621 million could not be absorbed. |
|
|
|
|
| (iv)
Decrease in other income |
|
|
|
| Decrease
in other income is attributed to decline in interest income and capital gain
on Foreign Currency Deposit as |
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| a
result of freezing of foreign currency accounts by the Government |
|
|
| (v)
Increase in Financial Charges. |
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|
| Increase
in financial cost is mainly attributed to increase in bank borrowings
utilized for heavy expansion of MPC plant. |
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|
| CHIEF
EXECUTIVE |
|
| Mr.
Sohail Ahmed was appointed Chief Executive of the Company in place of Mr. S.
M. Ahmed |
|
| w.e.f.
16- 8 - 1999 |
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|
|
|
| YEAR
2000 COMPLIANT |
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| We
are pleased to inform the shareholders that your company has become year 2000
compliant. |
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|
| AUDITORS: |
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| The
present auditors M/s. Muniff Ziauddin & Co. Chartered Accountants retire
and being eligible offer their services |
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| for
the year 1999-2000. |
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|
| FUTURE
OUT LOOK: |
|
| As
you are aware new plant came into operation in September 19998. After
removing some technical problems in |
|
| trial
operation its is now fully operational since September 1999. The positive
results are expected to be reflected in |
|
| year
1999-:2000 and production is estimated to increase by about 3,000 M. Tons per
annum. We will also start selling |
|
| Micro
Filament yarn on Beams shortly. |
|
|
| The
Management endeavoured its utmost to achieve best possible results but due to
various internal & external factors |
|
| beyond
the control of management the expected result could not be achieved. Your
Company enjoys the reputation |
|
| of
being market leaders in introducing new products which are technologically
superior than products off erred by |
|
| other
competitors could not attract higher price. The management has now decided to
focus on production of value |
|
| added
yarn. Value added products are the latest development in the international
market which has less dependency |
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| on
raw material cost, |
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|
| Some
of the products which are currently under developing stage are :- |
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|
| 1.
Finer Denier Peach Skin Yarn. |
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| 2.
Micro Filament Flat Yarn on Beams. |
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| 2.
Spun Peach Yarn. |
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| 4.
Texturized Peach Yarn. |
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|
| The
company has also sold locally and exported various trial lots which mainly
consist of Peach Skin Yarn and Twisted |
|
| Yarn
and hope to get favourable results in the ensuing year. Building a name in
the export market has always been a |
|
| slow
process but the management is hopeful that once the initial teething problems
are over the Company can establish |
|
| a
good name in the international market. |
|
|
| Our
valued shareholders are already aware that when the new Plant & Machinery
consisting of Micro Draw. (R) |
|
| Polyester
Spinning Draw Winding Sizing Beam Plant was installed the Government of
Pakistan issued a special SRO |
|
| for
import of this plant, but unfortunately, the German Engineering Company which
developed the know how went |
|
| into
bankruptcy and there were some problems in full filling their guarantee but
by the Grace of Almighty Allah the |
|
| plant
was fully handed over to us and we hope to get full result of productivity
and results will be reflected in the |
|
| coming
financial year. |
|
|
| ACKNOWLEDGMENT |
|
| The
directors of the company wish to place on record their appreciation for
devoted and hardwork of the Company's |
|
| staff
which enabled the smooth and successful operation of the company. |
|
|
|
|
For and on behalf of the Board of Directors |
|
|
|
|
|
|
| Karachi |
|
|
S. M. AHMED |
|
| December
02, 1999 |
|
(Chairman) |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of S. G. Fibre Limited, as at June 30,
1999 and the related profit and loss |
|
| account,
statement of changes in equity and 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 |
|
| and
profit and loss account, statement of changes in equity and 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 |
|
| loss,
changes in equity and the cash flows for the year than ended; and |
|
|
|
|
| d)
In our opinion Zakat deductible at source under the Zakat and Ushr Ordinance,
1980 was deducted by the |
|
| Company
and deposited in the Central Zakat Fund established under Section 7 of that
Ordinance. |
|
|
| Karachi: |
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|
Muniff Ziauddin & Co. |
|
| December
03, 1999 |
|
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1999 |
|
|
|
|
1999 |
1998 |
|
|
|
Notes |
Rupees |
Rupees |
|
|
|
|
| CAPITAL
AND RESERVES |
|
|
|
| Authorised
Capital |
|
|
|
| 15,000,000
Ordinary |
|
|
|
| shares
of Rs. 10/- each |
|
|
150,000,000 |
150,000,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed & paid-up capital |
|
3 |
150,000,000 |
150,000,000 |
|
| Share premium |
|
|
337,400,000 |
337,400,000 |
|
| Unappropriated
(Loss)/Profit |
|
|
(2,931,931) |
94,675,232 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
484,468,069 |
582,075,232 |
|
|
|
|
|
|
| LONG
TERM LOANS |
|
4 |
134,200,000 |
48,650,615 |
|
| DEFERRED
LIABILITIES |
|
5 |
12,130,921 |
12,403,326 |
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
|
| Current
portion of long term loans |
|
|
124,450,650 |
8,901,570 |
|
| Short
term running finance |
|
6 |
95,367,179 |
44,025,050 |
|
| Creditors,
accrued & other liabilities |
|
7 |
310,694,747 |
570,701,101 |
|
| Provision
for taxation |
|
|
3,645,620 |
4,178,509 |
|
| Dividend |
|
|
8 |
-- |
24,000,000 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
534,158,196 |
651,806,230 |
|
|
|
|
|
|
| Contingencies
& Commitments |
|
9 |
-- |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
1,164,957,186 |
1,294,935,403 |
|
|
|
|
========== |
========== |
|
|
| TANGIBLE
FIXED ASSETS |
|
|
|
| Operating
fixed assets |
|
10 |
905,881,518 |
540,744,388 |
|
| Capital
work in progress |
|
11 |
9,753,070 |
9,753,070 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
915,634,588 |
550,497,458 |
|
|
|
|
|
| LONG
TERM DEPOSITS |
|
12 |
1,979,807 |
1,586,444 |
|
| DEFERRED
COST |
|
13 |
3,553,296 |
7,106,597 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores
and spares |
|
14 |
52,976,758 |
49,670,621 |
|
| Stock-in-trade |
|
15 |
173,139,215 |
193,979,421 |
|
| Trade debts |
|
|
-- |
608,355 |
|
| Loans,
advances, deposits, |
|
|
|
|
| prepayments
and other receivables, |
|
16 |
17,510,705 |
491,334,627 |
|
| Cash
& bank balances |
|
17 |
162,817 |
151,880 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
243,789,495 |
735,744,904 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
1,164,957,186 |
1,294,935,403 |
|
|
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
1999 |
1998 |
|
|
Notes |
Rupees |
Rupees |
|
|
|
|
| Sales |
|
18 |
720,181,090 |
781,704,637 |
|
| Cost of Sales |
|
19 |
626,535,910 |
671,491,222 |
|
|
|
|
------------------ |
------------------ |
|
| Gross Profit |
|
|
93,645,180 |
110,213,415 |
|
|
|
|
|
|
| Administrative
& selling expenses |
|
20 |
19,726,237 |
19,107,834 |
|
| Amortization |
|
|
3,553,301 |
3,553,299 |
|
| Depreciation |
|
|
93,170,464 |
52,549,137 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
116,450,002 |
75,210,270 |
|
|
|
|
------------------ |
------------------ |
|
| Operating
(Loss) / Profit |
|
|
(22,804,822) |
35,003,145 |
|
| Other Income |
|
21 |
8,925,906 |
65,065,921 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(13,878,916) |
100,069,066 |
|
|
|
|
|
|
|
| Financial
charges |
|
22 |
75,784,080 |
48,736,957 |
|
| Other charges |
|
|
-- |
841,131 |
|
|
|
|
------------------ |
------------------ |
|
|
|
75,784,080 |
49,578,088 |
|
|
|
------------------ |
------------------ |
|
| (Loss)
/ Profit before taxation |
|
(89,662,996) |
50,490,978 |
|
|
|
|
| Provision
for taxation |
|
|
|
|
- Current |
|
3,645,620 |
3,908,523 |
|
|
- Prior |
|
4,298,547 |
-- |
|
|
|
------------------ |
------------------ |
|
|
|
7,944,167 |
3,908,523 |
|
|
|
------------------ |
------------------ |
|
| (Loss)
/ Profit after taxation |
|
(97,607,163) |
46,582,455 |
|
| Unappropriated
profit brought forward |
|
94,675,232 |
72,092,777 |
|
|
|
------------------ |
------------------ |
|
| (Loss)
/ Profit available for appropriation |
|
(2,931,931) |
118,675,232 |
|
| Dividend
- 1999 Nil (1998 16%) |
|
-- |
24,000,000 |
|
|
|
------------------ |
------------------ |
|
| Unappropriated
(Loss) / Profit carried forward |
|
(2,931,931) |
94,675,232 |
|
|
|
|
========== |
========== |
|
| Basic
earnings per share |
|
|
(6.50) |
3.10 |
|
|
|
|
|
|
|
| The
annexed notes form an Integral part of these accounts. |
|
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
|
1999 |
1998 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| Net
(Loss)/Profit before taxation |
|
(89,662,996) |
50,490,978 |
|
| Adjustment
of items not involving movement of funds |
|
| Depreciation |
|
93,170,464 |
52,549,137 |
|
| Amortization
of deferred cost |
|
3,553,301 |
3,553,299 |
|
| (Gain)
on sale of fixed assets |
|
(228,169) |
(726,574) |
|
| Provision
for gratuity |
|
1,218,622 |
1,907,101 |
|
|
|
------------------ |
------------------ |
|
|
|
97,714,218 |
57,282,963 |
|
|
|
------------------ |
------------------ |
|
|
|
8,051,222 |
107,773,941 |
|
| (Increase)/Decrease
in current assets |
|
|
|
| Stores
and spares |
|
(3,306,136) |
(7,118,121) |
|
| Stock-in-trade |
|
20,840,206 |
129,413,601 |
|
| Trade debts |
|
608,355 |
(608,355) |
|
| Advances,
deposits, prepayments and other |
|
473,823,922 |
(318,443,091) |
|
| receivables |
|
------------------ |
------------------ |
|
|
|
491,966,347 |
(196,755,966) |
|
|
|
------------------ |
------------------ |
|
|
|
500,017,569 |
(88,982,025) |
|
| (Decrease)
/ Increase in current liabilities |
|
|
| Creditors,
accrued and other liabilities |
|
(258,522,490) |
221,782,796 |
|
|
|
------------------ |
------------------ |
|
| Net
cash from operating activities before Tax |
|
241,495,079 |
132,800,771 |
|
|
|
|
|
| Tax paid |
|
|
(5,510,134) |
(1,610,490) |
|
| Gratuity paid |
|
|
(1,491,027) |
(644,440) |
|
|
|
------------------ |
------------------ |
|
|
|
(7,001,161) |
(2,254,930) |
|
|
|
------------------ |
------------------ |
|
| Net
cash from operating activities |
|
234,493,918 |
130,545,841 |
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
| Addition
to fixed assets including CWIP |
|
|
(458,359,013) |
(91,173,660) |
|
| Proceeds
from disposal of fixed assets |
|
|
279,586 |
1,570,000 |
|
| Long
term deposits and deferred cost |
|
|
(393,363) |
13,000 |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash from investing activities |
|
|
(458,472,790) |
(89,590,660) |
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
| Repayment
of long term loans |
|
|
(43,352,320) |
(219,578,324) |
|
| Long
term loans acquired |
|
|
240,000,000 |
-- |
|
| Short
term running f |
