| Kashmir Edible Oils Limited |
|
|
|
|
|
|
|
|
|
|
|
| Annual
Report 1999 |
|
|
|
| CONTENTS |
|
|
| COMPANY
INFORMATION |
|
| NOTICE
OF MEETING |
|
| DIRECTORS'
REPORT |
|
| AUDITORS'
REPORT |
|
| BALANCE
SHEET |
|
| PROFIT
& LOSS ACCOUNT |
|
| CASH
FLOW STATEMENT |
|
| NOTES
TO THE ACCOUNTS |
|
| PATTERN
OF SHAREHOLDING |
|
|
|
| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
|
| Mian
Haroun Rashid |
Chief Executive |
|
| Mian Samiuddin |
|
| Mian
Muzaffar Rashid |
|
| Asif Hyat |
|
| M. Azam Saigol |
|
| Saadia S. Rashid |
|
| Safina
Samiuddin |
|
|
| COMPANY
SECRETARY |
|
| Mr.
Anjum Pervez |
|
|
| AUDITORS |
|
| Hameed
Chaudhri & Company |
|
| Chartered
Accountants |
|
|
| BANKERS |
|
| The
Bank of Punjab |
|
| Agricultural
Development Bank of Pakistan |
|
| Union
Bank Limited |
|
| Muslim
Commercial Bank Limited |
|
| Habib
Bank Limited |
|
|
| LEGAL
ADVISORS |
|
| Cornelius,
Lane & Mufti |
|
| Advocates
& Solicitors |
|
|
| REGISTERED
OFFICE |
|
| 165-
Shadman- II. |
|
| Lahore |
|
|
|
| NOTICE
OF MEETING |
|
|
| Notice
is hereby given that the 10th Annual General Meeting of KASHMIR EDIBLE OILS
LIMITED will be |
|
| held
on Tuesday 29th February, 2000 at the Registered Office, 165-Shadman-II,
Lahore, at 11.00 A.M. to |
|
| transact
the following business: |
|
|
| 1.
To confirm the minutes of the last meeting. |
|
|
|
|
|
|
| 2.
To receive and adopt the audited accounts of the company for the year ended
August 31, 1999 |
|
| along
with the Auditors' and Directors' Reports thereon. |
|
|
|
|
|
| 3.
To appoint Auditors for the year 1999-2000 and fix their remuneration. Messrs
Hameed Chaudhri |
|
| &
Co., Chartered Accountants, being eligible offer themselves for
re-appointment |
|
|
|
|
| 4.
To transact any other ordinary business with the permission of the Chairman. |
|
|
|
|
|
|
|
BY ORDER OF THE BOARD |
|
|
|
|
|
|
| Lahore: |
|
|
ANJUM PERVEZ |
|
| 07.02.2000 |
|
|
Corporate Secretary |
|
|
| NOTE: |
|
|
| 1.
The Share Transfer Books of the Company will remain closed from February 22,
2000 to |
|
| February
29, 2000 (both days inclusive). |
|
|
|
|
|
| 2.
A member entitled to attend and vote at the General Meeting is entitled to
appoint another |
|
| member
as his/her proxy. Proxies in order to be effective must be received at the
registered office |
|
| of
the Company, 165, Shadman-II, Lahore atleast 48 hours before time for the
meeting. |
|
|
|
|
| 3.
Shareholders are requested to promptly notify the Company of any change in
their postal |
|
| addresses. |
|
|
|
|
|
| DIRECTORS'
REPORT |
|
|
| The
Board of Directors is delighted to welcome you to the 10th Annual General
Meeting of the company to |
|
| review
and approve the Company's accounts for the year ended 31st August, 1999. |
|
|
| The
company's growth record over the last five years has been impressive as
illustrated by the following |
|
| figures:- |
|
|
|
1995 |
1996 |
1997 |
1998 |
1999 |
|
|
|
|
Rs. Million |
|
| Sales |
|
201.9 |
267.8 |
398.0 |
470.5 |
497.6 |
|
|
|
|
|
|
| Gross-Profit |
|
(7.4) |
7.7 |
24.9 |
37.2 |
24.3 |
|
| Admin
& Selling Expenses |
4.9 |
5.4 |
6.8 |
5.1 |
6.8 |
|
|
|
|
|
|
| Profit/(Loss)
before taxation |
|
|
|
| and
extraordinary item. |
(35.2) |
(22.1) |
(5.9) |
26.3 |
3.8 |
|
|
|
|
|
| Although
sales in the year under review, once again increased by some Rs. 27 Million,
the profit figures |
|
| were
a significant reduction compared to the previous year. As you may be aware,
1998/99 has been a |
|
| global
disaster for the edible oil industry. Over-production of oilseeds coupled
with reduced demand from |
|
| most
of the major consumer countries resulted in a price collapse in edible oil
and oilseeds. The low point |
|
| was
reached in about July, 1999 when prices hit a 30-year low. The company is
heavily dependent on |
|
| imported
raw material and there is normally a three month lead time between raw
material ordering and |
|
| crushing/sales.
Therefore, in a falling market scenario such as that prevailing during most
of last year, our |
|
| crushing
margins are exposed and this is evident in the results. Unfortunately, in the
absence of any long |
|
| term
market or commodity futures exchanges in Pakistan, it is impossible to
exercise any hedging |
|
| mechanisms
to guard against such adverse market movements. However, we are satisfied to
note that |
|
| the
company's prudent and conservative policies have enabled it to withstand the
turbulent markets and |
|
| still
turn in a profit, in sharp contrast to most of the edible oil industry. |
|
|
| Qualitative
improvements were made in technical operations enabling us to increase sales
despite lower |
|
| crushing
figures. The difficulties alluded to in our last Annual Report concerning raw
material procurement |
|
| and
price problems in the post-nuclear blast period in Pakistan, spilled over
into the first few months of |
|
| this
year and have also adversely affected the performance figures. The high
long-term debt of the |
|
| company
is a continuing burden on our performance. We are however glad to report that
ADBP is |
|
| considering
various relief measures for the solvent extraction industry and, if
implemented, would make a |
|
| significant
improvement to your company's finances. |
|
|
| Our
company continues to enjoy the highest reputation for quality, reliability
and integrity and these |
|
| attributes
form the core of our corporate culture. The first four months of operations
in 1999/2000 would |
|
| suggest
that edible oil prices have finally bottomed out which should augur well for
next year's results. |
|
|
| The
Board of Directors are grateful to the company's bankers and customers for
their continued support |
|
| and
confidence. Equally, they are cognizant of the interests of shareholders and
are hopeful that, in the |
|
| absence
of any material adverse developments, shareholders too will be rewarded in
the next financial |
|
| year. |
|
|
|
|
On behalf of the |
|
|
|
Board of Directors |
|
|
|
|
|
|
| Lahore: |
|
|
Mian Haroun Rashid |
|
| 24
January, 2000. |
|
Chief Executive |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed Balance Sheet of KASHMIR EDIBLE OILS LIMITED as at
31 August, 1999 |
|
| and
the related Profit and Loss Account and Cash Flow Statement, together with
the notes forming part |
|
| thereof,
for the year then ended and we state that, except for the contents of notes
4.6 and 4.7, 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 the 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 except for the reservations stated in the first
paragraph of this report, |
|
| respectively
give a true and fair view of the state of the Company's affairs as at 31
August, 1999 |
|
| and
of the profit and 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 |
|
|
HAMEED CHAUDHRI & CO. |
|
|
| 20 January, 2000 |
|
|
CHARTERED ACCOUNTANTS |
|
|
|
|
| BALANCE
SHEET AS AT 31 AUGUST, 1999 |
|
|
|
|
|
Note |
1999 |
1998 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| SHARE
CAPITAL |
|
|
|
| Authorised |
|
|
|
| 8,000,000
ordinary shares of Rs. 10 each |
|
80,000,000 |
80,000,000 |
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid up |
|
|
|
| 8,000,000
ordinary shares of Rs. 10 each |
|
|
| issued for cash |
|
|
|
80,000,000 |
80,000,000 |
|
|
|
|
|
| ACCUMULATED
LOSS |
|
|
(64,266,037) |
(66,119,962) |
|
|
|
|
------------------ |
------------------ |
|
|
|
15,733,963 |
13,880,038 |
|
| SURPLUS
ON REVALUATION OF |
|
|
| FIXED ASSETS |
|
|
3 |
52,233,851 |
52,233,851 |
|
|
|
|
|
|
| LONG
TERM LOAN |
|
4 |
169,926,321 |
203,911,585 |
|
| DEFERRED
LIABILITY FOR GRATUITY |
|
|
1,150,100 |
879,620 |
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
|
| Current
portion of long term loan |
|
4 |
33,985,264 |
-- |
|
| Short
term finances |
|
5 |
-- |
28,244,183 |
|
| Short
term loan from director |
|
6 |
5,000,000 |
10,000,000 |
|
| Creditors,
accruals and other payables |
|
7 |
158,165,922 |
196,703,593 |
|
| Provision
for taxation |
|
22.3 |
1,967,905 |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
199,119,091 |
234,947,776 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
8 |
|
|
|
|
------------------ |
------------------ |
|
|
|
438,163,326 |
505,852,870 |
|
|
|
========== |
========== |
|
|
|
|
|
|
|
| FIXED
CAPITAL EXPENDITURE |
|
|
|
|
| Operating
fixed assets |
|
9 |
225,124,653 |
229,155,401 |
|
| Capital
work-in-progress |
|
10 |
22,060 |
910,207 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
225,146,713 |
230,065,608 |
|
| LONG
TERM SECURITY DEPOSITS |
|
|
84,685 |
84,685 |
|
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores,
spares and tools |
|
11 |
4,742,200 |
5,039,563 |
|
| Stock-in-trade |
|
12 |
176,318,296 |
114,642,601 |
|
| Trade debtors |
|
13 |
2,343,744 |
2,058,694 |
|
| Advances,
deposits, prepayments |
|
|
|
| and
other receivables |
|
14 |
25,210,952 |
23,700,936 |
|
| Cash
and bank balances |
|
15 |
4,316,736 |
130,260,783 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
212,931,928 |
275,702,577 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
438,163,326 |
505,852,870 |
|
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
DIRECTOR |
|
CHIEF EXECUTIVE |
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED 31 AUGUST, 1999 |
|
|
|
|
1999 |
1998 |
|
|
|
Note |
Rupees |
Rupees |
|
|
|
|
| SALES - Net |
|
16 |
497,632,113 |
470,480,973 |
|
| COST
OF SALES |
|
17 |
473,284,962 |
433,257,170 |
|
|
|
|
------------------ |
------------------ |
|
| GROSS
PROFIT |
|
|
24,347,151 |
37,223,803 |
|
| ADMINISTRATIVE
AND SELLING EXPENSES |
|
18 |
6,799,987 |
5,074,667 |
|
|
|
|
------------------ |
------------------ |
|
| OPERATING
PROFIT |
|
|
17,547,164 |
32,149,136 |
|
| OTHER
INCOME |
|
19 |
918,527 |
95,745 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
18,465,691 |
32,244,881 |
|
| OTHER
CHARGES |
|
|
|
| Financial - Net |
|
20 |
14,202,778 |
4,177,517 |
|
| Miscellaneous |
|
21 |
441,083 |
1,763,673 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
14,643,861 |
5,941,190 |
|
|
|
|
------------------ |
------------------ |
|
| PROFIT
BEFORE TAXATION |
|
|
3,821,830 |
26,303,691 |
|
| PROVISION
FOR TAXATION |
|
22.3 |
1,967,905 |
-- |
|
|
|
|
------------------ |
------------------ |
|
| PROFIT
AFTER TAXATION |
|
|
1,853,925 |
26,303,691 |
|
| ACCUMULATED
LOSS - Brought forward |
|
|
(66,119,962) |
(92,423,653) |
|
| ACCUMULATED
LOSS |
|
|
------------------ |
------------------ |
|
| -
Carried to Balance Sheet |
|
|
(64,266,037) |
(66,119,962) |
|
|
|
|
========== |
========== |
|
| EARNINGS
PER SHARE |
|
23 |
0.23 |
3.29 |
|
|
|
|
========== |
========== |
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
DIRECTOR |
|
CHIEF EXECUTIVE |
|
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR,
THE YEAR ENDED 31 AUGUST, 1999 |
|
|
|
|
|
|
1999 |
1998 |
|
|
|
|
Rupees |
Rupees |
|
| CASH
(OUTFLOW)/INFLOW FROM |
|
|
| OPERATING
ACTIVITIES - (Note 'A') |
|
|
(81,775,280) |
29,553,816 |
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
|
|
| Fixed
capital expenditure |
|
(3,392,107) |
(3,139,524) |
|
| Sale
proceed of fixed assets |
|
883,000 |
32,100 |
|
|
|
------------------ |
------------------ |
|
| NET
CASH (OUTFLOW) FROM INVESTING ACTIVITIES |
|
(2,509,107) |
(3,107,424) |
|
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
| Long
term loan repaid |
|
|
-- |
(6,000,000) |
|
| Short
term finances - net |
|
(28,244,183) |
13,370,175 |
|
| Short
term loan from director repaid |
|
(5,000,000) |
(6,000,000) |
|
| Financial
charges paid |
|
(8,415,477) |
(5,715,149) |
|
|
|
------------------ |
------------------ |
|
| NET
CASH (OUTFLOW) FROM FINANCING ACTIVITIES |
|
(41,659,660) |
(4,344,974) |
|
|
|
|
|
| NET
(DECREASE)/INCREASE IN CASH AND |
|
|
| CASH
EQUIVALENTS |
|
|
|
(125,944,047) |
22,101,418 |
|
| CASH
AND CASH EQUIVALENTS |
|
|
|
|
| -- At the beginning of the year |
|
|
|
130,260,783 |
108,159,365 |
|
|
|
|
|
|
------------------ |
------------------ |
|
| CASH
AND CASH EQUIVALENTS |
|
|
| -- At the end of the year |
|
|
4,316,736 |
130,260,783 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
| The
annexed note 'A' forms an integral part of this Statement. |
|
|
|
|
| NOTE 'A' |
|
|
|
|
|
|
|
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| Profit
for the year - Before taxation |
|
|
3,821,830 |
26,303,691 |
|
| Adjustments
for: |
|
|
|
|
| Depreciation |
|
|
7,483,567 |
7,478,548 |
|
| Deferred
costs amortised |
|
|
|
-- |
588,578 |
|
| Provision
for gratuity - net |
|
|
270,480 |
42,945 |
|
| Gain
on sale of fixed assets - net |
|
|
(55,565) |
(13,487) |
|
| Financial
charges |
|
|
13,418,602 |
3,771,327 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
|
| CASH
INFLOW FROM OPERATING ACTIVITIES |
|
| -Before
working capital changes |
|
|
24,938,914 |
38,171,602 |
|
| (Increase)/Decrease
in current assets |
|
|
|
|
| Stores,
spares and tools |
|
|
297,363 |
(1,881,203) |
|
| Stock-in-trade |
|
|
|
(61,675,695) |
(96,665,903) |
|
| Trade debtors |
|
|
|
(285,050) |
145,579 |
|
| Advances,
deposits, prepayments and other |
|
|
|
|
| receivables
(excluding taxes paid) |
|
|
(641,564) |
2,306,093 |
|
| (Decrease)/Increase
in creditors, accruals and |
|
|
|
| other payable |
|
(43,540,796) |
87,880,647 |
|
|
|
|
------------------ |
------------------ |
|
|
|
(105,845,742) |
(8,214,787 |
|
| CASH
(OUTFLOW)/INFLOW FROM OPERATING |
|
| ACTIVITIES
- Before taxation |
|
(80,906,828) |
29,956,815 |
|
| Taxes paid |
|
|
(868,452) |
(402,999) |
|
| NET
CASH (OUTFLOW)/INFLOW FROM OPERATING |
|
------------------ |
------------------ |
|
| ACTIVITIES
- After taxation |
|
(81,775,280) |
29,553,816 |
|
|
|
|
========== |
========== |
|
|
|
|
|
DIRECTOR |
|
|
CHIEF EXECUTIVE |
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED 31 AUGUST, 1999 |
|
|
| 1.
THE COMPANY AND ITS OPERATIONS |
|
|
| The
Company was incorporated on 10 April, 1990 as a Public Company and its shares
are |
|
| quoted
on Karachi and Lahore Stock Exchanges. The Company is principally engaged in
sale of |
|
| edible
oil after extraction through 'the solvent extraction process. |
|
|
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
|
|
|
| 2.1
Accounting convention |
|
|
|
| These
accounts have been prepared under the historical cost convention except that |
|
| certain
fixed assets have been included at revaluation. |
|
|
| 2.2
Staff retirement benefits |
|
|
|
| The
Company operates an un-funded Gratuity Scheme for its employees. Provision is |
|
| made
annually to cover obligation under the Scheme. |
|
|
| 2.3
Fixed assets and depreciation |
|
|
|
| Freehold
land is stated at revalued amount. Buildings on freehold land, plant & |
|
| machinery,
generators and electric installations are stated at revalued amount less |
|
| accumulated
depreciation. Other operating fixed assets are stated at cost less |
|
| accumulated
depreciation. Capital work-in-Progress is stated at cost. |
|
|
| Depreciation
on operating fixed assets is charged to income applying reducing balance |
|
| method
to write-off the cost and revaluation adjustments over estimated remaining
useful |
|
| life
of assets. Rates of depreciation are stated in note 9. No depreciation is
provided on |
|
| assets
in the year of disposal whereas full year's depreciation is provided on
assets in the |
|
| year
of purchase. |
|
|
|
|
|
|
| Gains/losses
on disposal of fixed assets are taken to Profit and Loss Account. Normal |
|
| maintenance
and repairs are also taken to Profit and Loss Account as and when |
|
| incurred.
Major renewals and replacements are capitalised and assets replaced, if any, |
|
| other
than those kept as stand by, are retired. |
|
|
|
|
| 2.4
Deferred costs |
|
|
|
| Expenses,
the benefit of which is expected to spread over several years, are deferred |
|
| and
amortised over a period of not more than five years. |
|
|
|
|
|
| 2.5
Stores and spares |
|
|
|
| These
are valued at moving average cost except Gunny Bags which are written-off
over |
|
| a
period of four years on straight line method. |
|
|
|
|
| 2.6
Stock-in-trade |
|
|
|
| Basis
of valuation are as follows: |
|
|
|
|
| Particulars |
|
Mode of valuation |
|
|
| Raw materials |
|
- At annual average cost. |
|
| Work-in-process |
- At estimated cost. |
|
| Finished goods |
|
- At lower of cost and
net realisable value. |
|
| Waste/By-products |
- At net realisable
value. |
|
|
| Cost
in relation to finished goods represents annual average cost which includes |
|
| prime
cost and appropriate manufacturing overheads. |
|
|
| Net
realisable value signifies the selling price in the ordinary course of
business |
|
| less
cost of completion and cost necessary to be incurred to effect such sale. |
|
|
| 2.7
Revenue recognition |
|
|
| Sales
are recorded on despatch of goods to customers. |
|
|
|
|
| 3.
SURPLUS ON REVALUATION OF FIXED ASSETS |
|
| The
Company revalued freehold land, buildings on freehold land, plant &
machinery, generators |
|
| and
electric installations as at 31 August, 1996. The revaluation exercise was
carried-out by |
|
| Independent
Valuers - M/s. Hamid Mukhtar & Co., Valuation Consultants and Surveyors,
Lahore |
|
| to
replace the carrying values of assets with the market values / depreciated
market values. The |
|
| said
revaluation exercise resulted in a surplus of Rs. 52,233~851 which was
credited to this |
|
| account. |
|
|
| 4.
LONG TERM LOAN - Secured |
|
1999 |
1998 |
|
|
|
Rupees |
Rupees |
|
|
|
|
|
|
| Balance
as at 31 August |
|
203,911,585 |
203,911,585 |
|
| Less:
Current portion grouped under current liabilities |
|
33,985,264 |
-- |
|
|
|
------------------ |
------------------ |
|
|
|
|
169,926,321 |
203,911,585 |
|
|
|
|
|
|
========== |
========== |
|
|
| 4.1
This loan has been obtained from Agricultural Development Bank of Pakistan
(ADBP) |
|
| against
credit line of Rs. 117.230 million including Rs. 79.880 million for imported |
|
| machinery
(equivalent to U.S.$3.634 million). However, due to fluctuations in foreign |
|
| currency
rates, relative to different dates of disbursements, the liability against
the |
|
| imported
machinery loan has risen by Rs. 8.630 million. The loan carries interest @
14% |
|
| per annum. |
|
|
|
|
|
|
| 4.2
As per the original agreement terms, the loan was repayable in monthly
installments. First |
|
| installment
was due after a grace period of three years or after six months of |
|
| commencement
of commercial operations whichever was earlier. |
|
|
|
| However,
ADBP vide its letter No. PCD-2(941)/96/1178 DATED 15 July, 1996 approved |
|
