| Khurshid Spinning Mills Limited |
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| Annual
Report 1999 |
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| Contents |
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| Company's Information |
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| Notice of Meeting |
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| Director's Report to the
Members |
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| Auditor's Report |
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| Balance Sheet |
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| Profit and Loss Accounts |
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| Statement of Changes in
Financial Position |
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| Notes to the Accounts |
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| Pattern of Shareholding |
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| COMPANY'S
INFORMATION |
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| BOARD
OF DIRECTORS |
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|
| Chairman |
|
Khawaja Khurshid Anwar |
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| Chief Executive |
|
Khawaja Amer Khurshid |
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| Directors |
|
Khawaja Asem Khurshid |
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|
Mrs. Sharmeen Asem |
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|
Miss Jabeen Khurshid |
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|
Mr. Zahid Sultan Sheikh |
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|
Khawaja Shahid Amin Sethi |
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| Secretary |
|
Mr. Ijaz Ahmed Faizi |
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| Auditors |
|
M. Hussain Chaudhury
& Co. |
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|
Chartered Accountants |
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| Bankers |
|
Habib Bank Limited |
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|
A1-Baraka Islamic
Investment Bank Ltd. |
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| Registered
Office |
|
69-G, Gulberg-Ill, |
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|
Lahore - (Pakistan) |
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| Head Office |
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Regency, The Mall, |
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|
Faisalabad. |
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| Factory |
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35th Kilometer, |
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Sheikhupura Road, |
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Faisalabad. |
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| NOTICE
OF MEETING |
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| Notice
is hereby given that the 14th Annual General Meeting of the shareholders of
Khurshid Spinning Mills Limited |
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| will
be held on Friday, the 31st March, 2000 at the REGISTERED OFFICE, SITUATED AT
69-G,GULBERG- |
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| III,
LAHORE AT 9:00 A.M. to transact the following business: |
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| ORDINARY
BUSINESS |
|
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| 1.
To confirm the minutes of the last shareholders meeting, |
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|
| 2.
To receive, consider and adopt the Audited Accounts of the company for the
year ended |
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| 30th
September, 1999 together with Directors and Audited reports thereon, |
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| 3.
To appoint Auditors and fix their remuneration, M/s. M. Hussain Chaudhury
& Company, Chartered |
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| Accountants,
the retiring auditor being eligible to offer themselves for re-appointment, |
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| To
transact any other ordinary business with the permission of the chair. |
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|
By Order Of the Board |
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| Lahore. |
|
IJAZ AHMED FAIZI |
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| Dated:
7th March, 2000 |
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Company Secretary |
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| NOTES: |
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| 1.
A member entitled to attend the meeting may appoint another member as his/her
proxy to attend and vote |
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| on
his/her behalf. Proxies to be effective must be received in company office
not less than 48 hours before |
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| the meeting. |
|
|
| 2.
Members are requested to notify immediately, if there is any change in their
addresses. |
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| 3.
The share transfer books of the company shall remain closed from 28th March,
2000 to 31st March, 2000 |
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| (both
days inclusive). |
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| DIRECTORS
REPORT TO THE MEMBERS |
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| The
Directors of the company have pleasure in presenting the 14th Annual Report
together with the auditor's report for the |
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| financial
year ended 30th September, 1999. |
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|
| MANAGEMENT
REVIEW |
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|
| The
financial results for the year are not favourable when compared with last
year. The operating results for the years are as under:- |
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|
|
1999 |
1998 |
|
|
(Rs. 000) |
(Rs. 000) |
|
|
|
|
| GROSS
PROF1T/(LOSS) |
|
(3,067) |
(1,931) |
|
| Operating
Expenses |
|
(9,646) |
(8,077) |
|
|
---------- |
---------- |
|
| OPERATING
PROFIT/(LOSS) |
|
(12,713) |
(10,008) |
|
| Financial
Charges |
|
(13,803) |
(4,659) |
|
|
---------- |
---------- |
|
| LOSS
FOR THE YEAR |
|
(26,516) |
(14,667) |
|
|
========== |
========== |
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|
|
|
| The
yarn market remain sluggish throughout the year 1998 - 1999 due to general
recession prevailing in the international market. |
|
| The
Spinning sector particularly in Textile suffering badly for the last eight
year. During the year the Company paid huge amount |
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| to
Banks. The sponsors also provided interest free loan for an amount Rs. 24
millions, this injection will be helpful for the |
|
| company
to give a financial boost and to slash back the financial cost. The
opproximity cost of sponsor's interest free loan |
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| approximately
Rs. 4.200 million per annum, which the sponsors have voluntarily surrendered
in the interest of the company. The |
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| Government
open policy for cotton injected fresh blood in textile especially in Spinning
Industry. The management is very |
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| optimistic
for bringing the unit in profit. We hope if current situation prevails the
company's result will be different in next year. |
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|
| TAXATION |
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| The
Company have provided the provision of Turnover tax section 80-D of Income
Tax Ordinance, 1979. The company has got |
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| its
assessment finalized upto assessment year 1999-2000 and no assessment or tax
(current/arrears) is pending against the company. |
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|
| FINANCIALS |
|
|
| By
grace of Almighty Allah the company has settled its liabilities on very
favourable terms. The company also settled its liability |
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| with
Bankers Equity Limited and got a compromise decree from Lahore High Court.
The company is regularly paying its installment |
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| to
all the creditors Banks in time according to repayment schedule. |
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|
| Y2K
COMPLIANCE |
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| We
are pleased to report that all the computer system of your company are fully
Y2K compliance. |
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|
| ISO 9000 |
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|
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| Your
company has taken step for the ISO 9002 certification. Hopefully in next AGM
your company will be a ISO 9002 certificate |
|
| holder. |
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|
| REPLY
TO AUDITORS OPINION |
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|
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| The
company has settled with all the Banks and now companies accounts are regular
with all the Banks. The company is regularly |
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| paying
its installments. At this stage company was in badly need of injection of
funds. The sponsors provided interest free loan. |
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| The
sponsors has decided to repay all the debts of the company as soon as
possible and trying to generate further interest free |
|
| loan.
In future this debt burden will reduce and company will be able to earn
profit. The management of the company are |
|
| optimistic
and the directors all endeavour for the betterment of company, so there is no
doubt for going concern. |
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|
| AUDITORS |
|
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| The
auditors M/s. M. Hussain Chaudhury & Co., Chartered Accountants, retire
and being eligible to offer themselves for reap- |
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| pointment. |
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|
| SHAREHOLDING |
|
|
| A
statement showing the pattern of share holding by the shareholders of
Khurshid Spinning Mills Limited as on 30th September, |
|
| 1999
is attached herewith. |
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|
| ACKNOWLEDGMENT |
|
|
| The
workers and management relations remained very cordial during the year. We
accord our sincere thanks to our employees and |
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| the
Bankers for their continued support and co-operating during the year under
review and hope the same to be continued in |
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| future. |
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|
For & on Behalf of
the Board |
|
|
| Lahore. |
|
KHAWAJA AMER KHURSHID |
|
| Dated:
7 March, 2000 |
|
Chief Executive |
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of Khurshid Spinning Mills limited as
at September 30, 1999 and |
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| the
related profit and loss account and statement of changes in financial
position (cash flow statement), together |
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| with
the notes forming part thereof, for the year then ended and we state that we
have obtained all the |
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| information
and explanations which to the best of our knowledge and belief were necessary
for the purposes |
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| 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 |
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| 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 |
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| 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 September 30, 1999 and of the loss 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. |
|
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| Without
qualifying our opinion we state that the company has incurred after tax loss
of |
|
| Rs.
26,814,278 for the year ended September 30, 1999 and has accumulated losses
of |
|
| Rs.
269,507,539 as at the balance sheet date. The company's current liabilities
exceeded its current |
|
| assets
by Rs. 29,328,347 and total liabilities exceeded total assets by Rs.
3,245,509 as at balance |
|
| sheet
date. This raises serious doubt about the company being a going concern and
this concept shall |
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| only
be valid if the lender support remains available and the management makes
improvement in the |
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| market
for the company's product in the foreseeable future, adequate enough to
generate funds for |
|
| repayment
of debts. |
|
|
| Lahore. |
|
(M. HUSSAIN CHAUDHURY
& CO.) |
|
| Dated:
7 March, 2000 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT SEPTEMBER 30, 1999 |
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|
|
|
1999 |
1998 |
|
|
Note |
Rupees |
Rupees |
|
|
|
|
| CAPITAL
AND LIABILITIES |
|
| Authorised
capital: |
|
| 17,000,000
Ordinary shares of Rs. 10 each |
|
170,000,000 |
170,000,000 |
|
|
========== |
========== |
|
| Issued,
subscribed and paid up capital |
|
3 |
131,748,000 |
131,748,000 |
|
|
|
|
| Accumulated
loss |
|
(269,507,539) |
(242,693,261) |
|
|
---------- |
---------- |
|
|
(137,759,539) |
(110,945,261) |
|
|
| SURPLUS
ON REVALUATION OF FIXED ASSETS |
4 |
134,514,030 |
134,514,030 |
|
|
|
|
|
|
| REDEEMABLE
CAPITAL- Secured |
|
5 |
26,882,882 |
35,029,012 |
|
|
|
|
|
|
| LONG
TERM LOANS - Secured |
|
6 |
126,950,000 |
111,696,000 |
|
|
|
| DEFERRED
LIABILITIES |
|
|
| Gratuity
Payable |
|
1,009,873 |
747,100 |
|
|
| CURRENT
LIABILITIES |
|
| Current
portion of secured redeemable |
|
| capital
and long term loans |
|
7 |
12,320,184 |
11,084,857 |
|
| Short
term borrowings |
|
8 |
21,883,105 |
10,571,478 |
|
| Creditors,
accrued and other liabilities |
|
9 |
33,528,855 |
21,888,725 |
|
| Provision
for taxation |
|
1,020,039 |
2,429,120 |
|
|
---------- |
---------- |
|
|
68,752,183 |
45,974,180 |
|
|
| CONTINGENCIES
AND COMMITMENTS |
|
10 |
-- |
-- |
|
|
---------- |
---------- |
|
|
220,349,429 |
217,015,061 |
|
|
========== |
========== |
|
|
| PROPERTY
AND ASSETS |
|
|
| FIXED
CAPITAL EXPENDITURE |
|
| Operating
fixed assets |
|
11 |
176,208,096 |
189,941,941 |
|
| Capital
work in progress |
|
12 |
2,606,753 |
2,545,053 |
|
|
---------- |
---------- |
|
|
178,814,849 |
192,486,994 |
|
|
| LONG
TERM DEPOSITS AND PREPAYMENTS |
|
13 |
2,110,744 |
2,259,024 |
|
|
| CURRENT
ASSETS |
|
|
| Stores
and spares |
|
14 |
2,017,427 |
819,689 |
|
| Stock in trade |
|
15 |
23,250,455 |
10,317,844 |
|
| Trade debts |
|
16 |
1,542,864 |
1,971,975 |
|
| Loans
and advances |
|
17 |
7,292,840 |
7,001,213 |
|
| Deposits,
prepayments and other receivables |
|
18 |
290,139 |
340,085 |
|
| Cash
and bank balances |
|
19 |
5,030,111 |
1,818,237 |
|
|
|
---------- |
---------- |
|
|
|
39,423,836 |
22,269,043 |
|
|
---------- |
---------- |
|
|
220,349,429 |
217,015,061 |
|
|
========== |
========== |
|
| The
annexed notes (1 to 34) form an integral part of these accounts. |
|
|
|
KHAWAJA AMER KHURSHID |
|
KHAWAJA ASEM KHURSHID |
|
|
Chief Executive |
|
Director |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| for
the Fear ended September 30, 1999 |
|
|
|
|
1999 |
1998 |
|
|
Note |
Rupees |
Rupees |
|
|
| SALES |
|
20 |
304,931,657 |
304,319,786 |
|
| Cost of sales |
|
21 |
307,998,660 |
306,250,713 |
|
|
---------- |
---------- |
|
| Gross Loss |
|
(3,067,003) |
(1,930,927) |
|
|
| Operating
expenses |
|
| Administrative |
|
22 |
8,475,848 |
6,842,594 |
|
| Selling
and distribution |
|
23 |
1,170,778 |
1,234,638 |
|
|
---------- |
---------- |
|
|
9,646,626 |
8,077,232 |
|
|
---------- |
---------- |
|
| Operating Loss |
|
(12,713,629) |
(10,008,159) |
|
|
| Other income |
|
24 |
24,000 |
528,233 |
|
|
|
|
| Financial
charges net of accruals |
|
25 |
13,803,679 |
4,658,878 |
|
|
---------- |
---------- |
|
| Loss
before Taxation |
|
(26,493,308) |
(14,138,804) |
|
|
| Taxation |
|
26 |
320,970 |
1,521,311 |
|
|
---------- |
---------- |
|
| Loss
after Taxation |
|
(26,814,278) |
(15,660,115) |
|
|
|
|
| Accumulated
loss brought forward |
|
(242,693,26I) |
(227,033,146) |
|
|
---------- |
---------- |
|
| Accumulated
Loss carried to Balance Sheet |
|
(269,507,539) |
(242,693,261) |
|
|
========== |
========== |
|
| The
annexed notes (1 to 34) form an integral part of these accounts. |
|
|
|
KHAWAJA AMER KHURSHID |
|
KHAWAJA ASEM KHURSHID |
|
|
Chief Executive |
|
Director |
|
|
|
|
|
|
|
|
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (Cash
Flow Statement) for the year ended September 30, I999 |
|
|
|
|
1999 |
1998 |
|
|
Rupees |
Rupees |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Loss
before taxation |
|
(26,493,308) |
(14,138,804) |
|
| Adjustment for: |
|
|
|
| Depreciation |
|
19,618,023 |
20,559,709 |
|
| Provision
for gratuity |
|
400,162 |
225,388 |
|
| Profit
on deposit |
|
-- |
(203,160) |
|
| Long
term deposits and prepayments written off |
|
188,280 |
202,401 |
|
| Retention
money and deposits written back |
|
-- |
(255,039) |
|
| Bad
debts written off |
|
-- |
144 |
|
| Financial
charges |
|
13,803,679 |
4,658,878 |
|
|
---------- |
---------- |
|
|
34,010,144 |
25,188,321 |
|
|
---------- |
---------- |
|
| Operating
profit before working capital changes |
|
7,516,836 |
11,049,517 |
|
| Decrease/(increase)
in current assets: |
|
|
|
| Stores
and spares |
|
(1,197,738) |
1,169,632 |
|
| Stock in trade |
|
(12,932,611) |
(682,010) |
|
| Trade debts |
|
1,971,975 |
4,006,607 |
|
| Loans
and advances |
|
(1,834,491) |
(994,033) |
|
| Deposits
prepayments and other receivables |
|
49,946 |
27,634 |
|
| (Decrease)/Increase
in current liabilities |
|
|
|
| Creditors,
accrued and other liabilities |
|
9,488,339 |
1,831,782 |
|
|
---------- |
---------- |
|
|
(4,454,580) |
5,359,612 |
|
|
---------- |
---------- |
|
| Cash
generated from operations |
|
3,062,256 |
16,409,129 |
|
| Income tax paid |
|
(1,730,051) |
(2,847,589) |
|
| Gratuity paid |
|
(137,389) |
(722,710) |
|
| Financial
charges paid |
|
(11,651,888) |
(3,816,671) |
|
|
---------- |
---------- |
|
| Net
cash (used in) / from operating activities |
|
(10,457,072) |
9,022,159 |
|
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
|
| Fixed
capital expenditures |
|
(5,945,878) |
(7,059,718) |
|
| Long
term deposits and prepayments |
|
(40,000) |
-- |
|
| Profit
on deposits received |
|
-- |
203,160 |
|
|
---------- |
---------- |
|
| Net
cash used in investing activities |
|
(5,985,878) |
(6,856,558) |
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
|
| Redeemable
capital - secured |
|
(7,458,803) |
(2,709,099) |
|
| Long
term loans -secured |
|
(8,248,000) |
(1,599,000) |
|
| Sponsors' Loan |
|
24,050,000 |
-- |
|
| Custom levies |
|
-- |
(334,248) |
|
| Short
term borrowings |
|
11,311,627 |
(2,341,955) |
|
|
---------- |
---------- |
|
| Net
cash from / (used in) financing activities |
|
19,654,824 |
(6,984,302) |
|
|
|
---------- |
---------- |
|
| Net
Increase / (Decrease) in cash and cash equivalents |
|
3,211,874 |
(4,818,701) |
|
| Cash
and cash equivalents at the beginning of year |
|
1,818,237 |
6,636,938 |
|
|
---------- |
---------- |
|
| Cash
and cash equivalents at the end of year |
|
5,030,111 |
1,818,327 |
|
|
========== |
========== |
|
|
|
|
|
KHAWAJA AMER KHURSHID |
|
KHAWAJA ASEM KHURSHID |
|
|
Chief Executive |
|
Director |
|
|
|
|
|
|
|
| Notes
to the Accounts |
|
| for
the year ended September 30, 1999 |
|
|
| 1.
STATUS AND ACTIVITIES |
|
|
| The
Company is limited by shares incorporated in Pakistan on February 27, 1986
and is listed at stock |
|
| exchanges
in Karachi & Lahore. The principal business of the Company is manufacture
and sale of yarn. |
|
| The
mill is located at Tehsil Jaranwala, District Faisalabad in the province of
Punjab. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
Accounting Convention |
|
|
| These
accounts have been prepared under the historical cost convention, except for
the revalued |
|
| assets,
without any adjustment for the effect of inflation or reference to current
values. |
|
|
| 2.2
Staff Retirement Benefits |
|
|
| The
Company operates an unfunded gratuity scheme covering all its employees.
Provision is |
|
| made
annually to cover the liability under the scheme. |
|
|
| 2.3 Taxation |
|
|
|
| Current |
|
| Provision
for current taxation is based on taxable income at current tax rate after
taking into |
|
| account
tax rebates and tax credits available, if any. |
|
|
| Deferred |
|
| The
company accounts for deferred taxation, using the liability method, on all
major timing |
|
| differences.
Deferred tax, however, is not provided, if it can be established with
reasonable |
|
| probability
that the timing differences will not reverse in the foreseeable future. |
|
|
| 2.4
Foreign Currency |
|
|
| Assets
and liabilities in foreign currency are stated in Pak rupees at the rates of
exchange ruling |
|
| on
the balance sheet date or rate of exchange fixed under contractual
agreements. All exchange |
|
| differences
are included in the profit and loss account. |
|
|
| 2.5
Fixed assets and depreciation |
|
|
| Fixed
assets are stated at cost less accumulated depreciation except freehold land
which is stated |
|
| at
cost. Building and plant and machinery are stated at revalued amounts less
accumulated |
|
| depreciation. |
|
|
| Depreciation
on fixed assets has been provided for on reducing balance method at the rates |
|
| specified
in Note 11. Full year's depreciation is charged on additions while no
depreciation is |
|
| charged
on the assets disposed off during the year. |
|
|
| Maintenance
and normal repairs are charged to income as and when incurred. Major renewals |
|
| and
improvements are capitalised. Gains or losses on disposal of fixed assets, if
any, are shown |
|
| in
profit and loss account. |
|
|
| 2.6 Investments |
|
|
| These
are stated at cost. |
|
|
| 2.7
Stores, spares and stock in trade |
|
|
| These
are valued as follows: |
|
|
| Stores |
|
At moving average cost. |
|
| Spares |
|
At moving average cost. |
|
| Raw materials |
|
At average cost. |
|
| Work
in process |
At estimated cost. |
|
| Finished goods |
|
At cost and net
realizable value whichever is lower. |
|
| Wastes |
|
At net realizable value. |
|
|
| Net
realizable value signifies the selling price at which goods in stock could be
currently sold less |
|
| any
further costs which would be incurred to complete the sale. |
|
|
| 2.8
Revenue recognition |
|
|
| -
Sales are recorded on despatch of goods to the customers. |
|
| -
Export sales are recorded on the receipt of bill of lading. |
|
|
|
1999 |
1998 |
|
|
Rupees |
Rupees |
|
| 3.
ISSUED, SUBSCRIBED AND PAID UP CAPITAL |
|
|
| No. of Shares |
|
| 1999 |
1998 |
|
|
| 13174800 |
13174800 |
Ordinary shares of Rs.
10/- |
|
|
each fully paid in cash |
|
131,748,000 |
131,748,000 |
|
|
========== |
========== |
|
| 4.
SURPLUS ON REVALUATION OF FIXED ASSETS |
|
|
| Buildings
on freehold land |
|
25,179,712 |
25,179,712 |
|
| Plant
and machinery |
|
