| Kohinoor Weaving Mills Limited |
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| Annual
Report 1999 |
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| CONTENTS |
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| Company
Information |
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| Notice
of Meeting |
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| Directors'
Report to the Shareholders |
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| Pattern
of Shareholding |
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| Auditors'
Report to the Members |
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| Annual
Accounts |
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| Balance Sheet |
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| Profit
& Loss Account |
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| Statement
of Changes in Financial Position |
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| Notes
to the Accounts |
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| Company
Profile |
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| THEN
AND NOW |
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| Kohinoor
Weaving Mills Limited was incorporated |
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| as
a Public Limited Company on December 21, |
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| 1987
and is located on Manga Raiwind Road, |
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| District
Kasur. The Company manufactures cloth |
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| from
cotton, blended and synthetic yarns. The |
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| Company
commenced commercial production in |
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| 1990
with 48 Sulzer shuttle-less looms from |
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| Switzerland
along with modern ancillary machinery |
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| to
produce high quality cloth for export markets. |
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| Further
expansion saw the installation of an |
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| additional
96 Tsudakoma air jet weaving machines |
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| from
Japan in 1993 and 84 Picanol Omni air-jet |
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| weaving
machines from Belgium in 1998-99. Today, |
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| Kohinoor
Weaving Mills Limited is the largest air- |
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| jet
weaving facility in Pakistan and one o the most |
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| modern
and technologically advanced greige |
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| weaving
plants in the world. |
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| GROUP
INTEGRATION |
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| As
a Company of the Kohinoor Maple Leaf Group, |
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| integration
allows Kohinoor Weaving Mills Limited |
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| the
flexibility to source yarn from its sister |
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| companies
100% cotton and blended spun yarns |
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| from
domestic and imported fibres. This synergy |
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| further
benefits the Company as it is able to offer |
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| customers,
dyed and printed, finished fabrics for |
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| apparel
and home furnishings. Kohinoor Genertek |
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| Limited
provides reliable and uninterrupted power |
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| supply
to our manufacturing facility. |
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| Kohinoor
Weaving Mills Limited has been included |
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| amongst
the "Top Twenty Five" companies listed |
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| on
the Karachi Stock Exchange. |
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| COMPANY
INFORMATION |
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| BOARD
OF DIRECTORS |
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| Tariq
Sayeed Saigol |
Chairman |
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| Aamir
Fayyaz Sheikh |
Chief Executive |
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| All
Fayyaz Sheikh |
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| Rana
Muhammad Hanif |
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| Zamiruddin
Azar |
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| Nasim Beg |
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NIT Nominee |
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| Gul Nawaz |
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NIT Nominee |
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| COMPANY
SECRETARY |
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| G. M. Bhatti |
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| AUDITORS |
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| Riaz
Ahmad & Company. |
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| Chartered
Accountants. |
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| BANKERS |
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| American
Express Bank Limited |
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| Faysal
Bank Limited |
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| Gulf
Commercial Bank Limited |
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| Habib
Bank Limited |
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| Muslim
Commercial Bank Limited |
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| Prime
Commercial Bank Limited |
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| REGISTERED
OFFICE & |
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| SHARES
DEPARTMENT |
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| 42
Lawrence Road, Lahore, Pakistan |
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| Tel:
(92-42) 6302261, 6302262, |
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| Fax:
(92-42) 6368721 |
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| MILLS |
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| 8th
Kilometre, Manga Raiwind Road, |
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| Distt. Kasur. |
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| Tel:
(92-4951) 391941, (92-42) 6310101 |
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| Fax:
(92-4951) 391946 |
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| e-mail:
kwml@brain.net.pk |
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| web
site: www.kmlg.com |
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| NOTICE
OF ANNUAL GENERAL MEETING |
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| Notice
is hereby given that the 12th Annual General Meeting of the members of |
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| Kohinoor
Weaving Mills Limited will be held on Thursday, March 30, 2000 at |
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| 03.00
p.m. at its Registered Office, 42-Lawrence Road, Lahore, to transact the
following |
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| business:- |
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| ORDINARY
BUSINESS: |
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| 1.
To confirm the minutes of the 11th Annual General Meeting held on |
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| March 26, 1999. |
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| 2.
To receive, consider and adopt the audited accounts of the Company for the
year |
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| ended
September 30, 1999 together with the Directors' and Auditors' Reports |
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| thereon. |
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| 3.
To approve the payment of final cash dividend @ Rs.9.75 per share of Rs. 10/-
each |
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| (97.5%),
for the year ended September 30, 1999, as recommended by the Directors. |
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| 4.
To appoint Auditors for the year ending September 30, 2000 and fix their |
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| remuneration.
M/s Riaz Ahmad & Company, Chartered Accountants, the retiring |
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| auditors,
being eligible offer themselves for re-appointment. |
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| 5.
To transact any other business with the permission of the Chair. |
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| SHARE
TRANSFER BOOKS |
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| The
share transfer books of the Company shall remain closed from March 21, 2000
to |
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| March
30, 2000 (both days inclusive) and no transfer will be accepted during this |
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| period.
The members whose names appear in the register of members as at the close |
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| of
business on March 20, 2000 will qualify for the payment of cash dividend. |
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| SPECIAL
BUSINESS: |
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| (A)
To consider and pass the following Special Resolution for increase in |
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| Authorized
Capital and to make consequent amendments in the Memorandum |
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| &
Articles of Association of the Company: |
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| SPECIAL
RESOLUTION |
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| "RESOLVED
that the Authorized Capital of the Company be increased from |
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| Rs.150,000,000/-
(One hundred and fifty million) divided into 15,000,000 (Fifteen |
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| million)
Ordinary Shares of Rs.10/- each, to Rs.300,000,000/- (Three hundred |
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| million)
divided into 30,000,000 (Thirty million) Ordinary Shares of Rs.10/- |
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| each. |
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| RESOLVED
that Clause V of the Memorandum of Association be and is hereby |
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| substituted
by the following clause:- |
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| V
The Share Capital of the Company is Rs.300,000,000/- divided into 30,000,000 |
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| Ordinary
Shares of Rs. 10/- each with power to increase or reduce the capital and |
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| to
divide the shares of the capital for the time being into several classes and
attach |
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| thereto
respectively such ordinary rights, privileges and conditions in such manner |
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| as
for the time being be provided by the regulations of the Company, subject to
the |
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| provision
of Sub-Section 2 of Section 90 of the Companies Ordinance, 1984. |
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| RESOLVED
that Clause 6 of the Articles of Association be and is hereby substituted |
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| by
the following clause:- |
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| 6.
The Authorized Capital of the Company is Rs.300,000,000/- (Rupees three
hundred |
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| million)
divided into 30,000,000 (Thirty million) Ordinary Shares of Rs.10/-each. |
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| The
Company may from time to time increase, consolidate, subdivide, reduce or |
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| otherwise
reorganize the Share Capital subject to the provisions of the Companies |
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| Ordinance,
1984." |
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| (B)
To consider and if thought fit, pass with or without 'modification the
following |
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| Resolution
as Special Resolution for equity investment in associated Company. |
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| SPECIAL
RE SOLUTION |
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| "Resolved
that consent and approval of the Company be and is hereby accorded under |
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| Section
208 of the Companies Ordinance, 1984 for investment in the shares of Maple |
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| Leaf
Cement Factory Limited (MLCFL), an associated Company upto an amount of Rs. |
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| 50,000,000/-
to subscribe Right Shares at Rs. 8/- per share, the price at which the |
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| MLCFL
has been allowed by the Securities and Exchange Commission of Pakistan, |
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| for
further issue of share capital at a discount of Rs. 2/. It is further
Resolved that the |
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| Chief
Executive of the Company be and is hereby authorised to negotiate and to take |
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| any
and all actions on behalf of the Company as may be deemed necessary to invest |
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| /
disinvest the above mentioned shares". |
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BY ORDER OF THE BOARD, |
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(G.M. BHATTI) |
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| Lahore:
March 06, 2000. |
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Company Secretary |
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| STATEMENT
UNDER SECTION 160 (1) (b) OF THE COMPANIES ORDINANCE, 1984 |
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| The
Directors have recommended increase in the Authorized Capital as above
through |
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| amendments
in the relevant Clauses of the Memorandum and Articles of Association |
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| of
the Company in order to facilitate the issue of further capital as may be
necessary |
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| from
time to time. |
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| Maple
Leaf Cement Factory Limited (MLCFL) is a Public Limited Company listed on |
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| the
Karachi, Lahore and Islamabad Stock Exchanges. Its Authorised capital is Rs.
2,000 |
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| million
(Rupees two billion) with subscribed and paid up capital of Rs. 1,302.293
million. |
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| The
production facilities of the Company are located at Iskanderabad Distt.
Mianwali |
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| and
its Registered Office is situated at 42-Lawrence Road, Lahore. MLCFL is
engaged |
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| in
the manufacturing and sale of cement. The expansion project of 3300 Metric
Tonnes |
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| per
day clinker capacity based on most modern dry process has started commercial |
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| production
since April, 1998. |
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| The
Company intends to make investment upto Rs. 50,000,000/- in the unsubscribed |
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| portion
of Right Shares of Rs. 10/ each of MLCFL at price of Rs. 8/- per share. |
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| M/s.
Tariq Sayeed Saigol and Aamir Fayyaz Sheikh are the common Directors on the |
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| Board
of both the Companies. The Directors of the Company have no other interest |
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| except
that they are shareholders / common Directors. Internal cash generations from |
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| the
profitable operations of the Company are very encouraging and funds will be |
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| available
with the Company to finance the proposed investment. |
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| As
per balance-sheet for the year ended June 30, 1999, the break-up value per
share |
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| of
Rs. 10/- each of MLCFL is Rs. 19.50 and keeping in view the bullish tendency
of the |
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| stock
market and relatively efficient operations of the Company, there is
considerable |
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| room
for reasonable capital gain at subscription rate of Rs. 8/- per share.
Furthermore, |
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| at
present, price of cement has improved and stabilised as compared to the
depressed |
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| selling
rates of the previous year, resulting in an improved gross margin. Growing |
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| supply-demand
imbalance is also reducing slowly and capacity utilization has been |
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| improved
accordingly. Negotiations with the present Government for re-consideration |
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| of
slashing of taxes, duties and other innovative levies are under way. The
Government |
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| has
taken stock of the adverse state of affairs beyond the control of the
producers and |
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| other
anomalies for proper redress. Government's recent decision of reducing the |
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| funding
cost would also lessen the ever increasing financial charges of the large
size |
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| capital
out lay of the MLCFL. The present scenario is notably better than the bleak |
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| review
expressed in the Directors' report annexed to the accounts of MLCFL for the |
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| year
ended June 30, 1999. Muslim Commercial Bank and the Bank of Punjab have |
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| already
rescheduled their long term loans & IFC restructuring is under way which |
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| would
strengthen the financial health of MLCFL. The present right issue would
inject |
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| liquidity
in the MLCFL thus enabling this associated Company to complete the |
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| rescheduling
program. |
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| In
light of the above facts, the Company expects substantial capital gain from
this |
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| investment
in the years ahead. The copy of Memorandum and Articles of Association |
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| of
MLCFL has been kept at the Registered Office of the Company which can be |
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| inspected
from 09.00 a.m. to 11.00 a.m. upto March 20, 2000. |
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| NOTES: |
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| 1.
A member entitled to vote at this meeting is entitled to appoint another
member |
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| as
proxy. Proxies in order to be effective must be received at 42-Lawrence Road, |
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| Lahore,
the Registered Office of the Company not less than 48 hours before the |
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| meeting
and must be duly stamped, signed and witnessed. |
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| 2.
Any individual Beneficial Owner of CDC, entitled to attend and vote at this
meeting, |
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| must
bring his/her NIC or Passport to prove his/her identity, and in case of Proxy |
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| .must
enclose an attested copy of his/her NIC or Passport. Representatives of |
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| corporate
members should bring the usual documents required for such purpose. |
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| 3.
Shareholders are requested to promptly notify the Company of any change in
their |
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| addresses. |
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| DIRECTORS'
REPORT TO THE SHAREHOLDERS |
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| Your
Directors take pleasure in |
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| presenting
their Annual Report |
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| along
with the audited accounts |
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| of
the Company for the year |
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| ended
September 30, 1999. |
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| OPERATING
& FINANCIAL RESULTS |
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| Your
Company has shown |
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| remarkable
performance during |
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| the
year. It earned a pre-tax profit |
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| of
Rs. 346.016 million on sales of |
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| Rs.
2,014.905 million for the |
|
|
| period
under review against a |
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| pre-tax
profit of Rs. 166.016 |
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| million
on last year's sales of |
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|
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| Rs.
1,271.419 million. While sales |
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| have
increased by 58.48%, pre- |
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|
|
| tax
profit of the Company |
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| enhanced
by an impressive |
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| 108.42%
over last year. |
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| SALES |
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| The
cost of sales, administration, |
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| selling
and general expenses have |
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| increased
in line with the |
|
| inflation
in Pakistan's economy. |
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| The
Company has been |
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| vigorously
pursuing since last |
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| year
a cost reduction and |
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| rationalization
program which is |
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| expected
to sustain profitability. |
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| The
Company has maintained a |
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| healthy
trend of increasing sales |
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| volume
and profitability over the |
|
| past
years. The Company was |
|
|
| able
to significantly improve its |
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| profitability
on the basis of a |
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| comprehensive
marketing and |
|
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| step-wise
capacity expansion |
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| program
implemented over the |
|
|
| last year. |
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| The
Company produced 46.335 |
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| million
square meters of cloth |
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| based
on 60 picks of different |
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| widths
as compared to 30.927 |
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| million
square meters on 60 picks |
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| produced
during the last year, |
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| showing
an increase of 49.82%. |
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| Consequently,
the financial |
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| expenses
as a percentage of Sales |
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| has
gradually reduced over the years. |
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| The
Company has prudently |
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| utilized
its enhanced profitability |
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| and
internal cash-flow generation |
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| to
reduce its long-term liabilities. |
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| The
debt equity ratio has |
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| consistently
improved reflecting |
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| the
financial health of the |
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| Company. |
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| DIVIDEND |
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| Your
Directors have always |
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| endeavoured
to increase the |
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| shareholders
return and are |
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| pleased
to recommend a |
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| record
cash dividend |
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| @
97.50% for the period |
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| under
review as compared |
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| to
a cash dividend @ 42.00% |
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| for
the preceding year. |
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| APPROPRIATIONS |
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| Your
Directors recommend the appropriation of profit as under |
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|
Rupees |
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| Profit
for the year before taxation |
|
346,016,327 |
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| Provision
for taxation |
|
15,000,000 |
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|
------------------ |
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| Profit
after taxation |
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331,016,327 |
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| Un-appropriated
profit brought forward |
|
5,759,517 |
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|
------------------ |
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| Available
surplus |
|
336,775,844 |
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|
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| Appropriations: |
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| Proposed-dividend
@ 97.50% |
|
136,500,000 |
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| Transfer
to general reserve |
|
195,300,000 |
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|
------------------ |
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|
331,800,000 |
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|
------------------ |
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| Un-appropriated
profit carried forward |
|
4,975,844 |
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|
========== |
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| Y2K
COMPLIANCE |
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| As
part of the Company's ongoing commitment to |
|
| its
customers and stakeholders Kohinoor Weaving |
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| Mills
Limited implemented a program to ensure |
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| compliance
to Y2K. This program involved the |
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| cooperation
of all departments. All hardware and |
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| software
was checked and verified for compliance |
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| and
where necessary replaced or upgraded. Local |
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| and
overseas machinery suppliers were contacted |
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| and
requested to provide evidence of Y2K |
|
| compliance.
Modifications and upgradation was |
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| done
in collaboration with the suppliers where |
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| machinery
was thought to be non-compliant. |
|
|
| Management
can now report as a result of our |
|
| preparations,
an uneventful changeover occurred |
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| with
not one problem being reported from any of |
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| the
departments. |
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|
| MANAGEMENT
SYSTEMS |
|
| Management
saw ISO9001 "Quality Management Systems" as a guide to implementing
'common- |
|
| sense'
management practices and began documenting all of its systems and processes
which |
|
| led
to the Company being the first weaving mill in Pakistan attaining
certification through Lloyds |
|
| Register
Quality Assurance, UK in December 1997. Your management is acutely aware that |
|
| unless
policies and procedures are rigorously enforced, reduction in costs,
improvements in |
|
| productivity
and heightened customer satisfaction will not be fully realized. |
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| Conforming
to the company's Quality |
|
| Management
System, product quality is |
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| consistently
maintained and monitored at |
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| every
stage of processing from warping |
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| through
to sizing, weaving and inspection |
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| through
an on-line computer integrated |
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| manufacturing
(CIM) system from BARCO. |
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|
| Yarn
and fabric is tested in what is now |
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| possibly
the most modern textile-testing |
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| laboratory
in the country. This laboratory |
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| is
equipped with the latest Uster and |
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| Zweigle
testing equipment and is |
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| environmentally
controlled to the most |
|
| stringent
of international standards |
|
|
| Recognizing
its obligation to the community and the environment, the Company plans to
invest |
|
| in
pollution control and recycling equipment leading towards ISO 14000
"Environmental |
|
| Management
Systems" certification. |
|
|
| INFORMATION
TECHNOLOGY |
|
| The
Company recently signed a contract with |
|
| OracleŽ
to upgrade all of its management |
|
| information
systems over the next two years. This |
|
| system
will integrate financial, cost and |
|
| management
accounting, production, marketing |
|
| and
human resource functions. During this period |
|
| we
shall be progressively moving from a |
|
| traditional
paper based management system to |
|
| an
electronic system. Information can be sourced |
|
| through
the use of touch-screen computer |
|
| monitors
and has been designed for non-computer |
|
| minded
employees. |
|
|
| In
the near future, through our Extranet, customers |
|
| will
be able to access information through an on-line |
|
| facility.
Information such as order status, shipping |
|
| schedules,
quality and inspection records will be |
|
| available.
Our aim is to improve the transfer of |
|
| information
conveniently, quickly and cost effectively |
|
| to
customers working in different time zones. |
|
|
| SOCIAL
COMPLIANCE AND HUMAN RESOURCE |
|
| A
major factor in your company's success is its highly skilled and motivated
workforce. Our |
|
| strength
comes from our people. We can rightly take pride in the fact that Human
Resources |
|
| have
always been given a high priority. Today, when we look back on past years, we
can see |
|
| that
while our objectives may have changed along the way, our Human Resource
policy has |
|
| always
been based on the underlying values of fairness, merit, equal opportunity and
social |
|
| responsibility.
These values manifest themselves in our policies of recruitment, performance |
|
| appraisal,
training and development, health and safety and industrial relations. |
|
|
| Complying
with our human resource policies, we do not employ any child labour and are
an |
|
| equal
opportunity employer. We maintain a high standard of employee working and
living |
|
| conditions
providing free, safe and clean residential facilities, utilities, medical and
life |
|
| insurance.
Added to this is a newly renovated air-conditioned, self-service dining
facility |
|
| providing
hygienic food at subsidized rates. |
|
|
| Recognizing
the importance of |
|
| HRM,
your Company has taken a |
|
| number
of measures to develop its |
|
| employees
to meet the challenges |
|
| of
today's competitive corporate |
|
| world.
The Company has invested |
|
| extensively
in employee |
|
| development
programs providing |
|
| technical,
computer, management, |
|
| health
and safety training in our in- |
|
| house
training facility installed with |
|
| the
latest audio/visual equipment. |
|
|
| Our
Human Resource policies reflect the Company's over-all purpose and culture. |
|
|
| FUTURE
PROSPECTS |
|
| The
management is striving to sustain the profitability achieved during the
period under |
|
| review.
We expect to achieve this by focusing on product and market diversification
with strong |
|
| emphasis
on value addition, further efficiency gains and reduction of operative and
non- |
|
| operative costs. |
|
|
| Presently
the Company is operating 228 shuttleless and airjet weaving machinery and is |
|
| evaluating
the prospects of further enhancing our weaving capacities. |
|
|
| DIRECTORS |
|
| During
the year under review Syed Jawad Gillani resigned from the Board and the
vacancy |
|
| so
created was filled up by co-opting Mr. Zamiruddin Azar for the remaining
period of the |
|
| term.
The Board wishes to record its appreciation to Syed Jawad Gillani for his
contribution |
|
| and
guidance for the growth of the Company. |
|
|
| AUDITORS |
|
| The
present auditors M/s. Riaz Ahmad & Co., Chartered Accountants retire and
being eligible, |
|
| offer
themselves for reappointment. |
|
|
| PATTERN
OF SHAREHOLDINGS |
|
| The
pattern of shareholdings as required by section 236 of the Companies
Ordinance, 1984 |
|
| is
being annexed herewith. |
|
|
| ACKNOWLEDGMENT |
|
| Your
Directors would like to compliment the management and all the employees of
the Company |
|
| for
their collective dedication and hard work. |
|
|
|
For and on behalf of the Board |
|
|
|
|
|
AAMIR FAYYAZ SHEIKH |
|
| Lahore:
February 24, 2000 |
|
Chief Executive |
|
|
|
|
|
| PATTERN
OF THE SHARES HELD BY THE SHAREHOLDERS |
|
| AS
AT 30 SEPTEMBER, 1999 |
|
|
|
NO OF |
SHAREHOLDINGS |
TOTAL |
|
| Sr. No. |
SHARE |
FROM |
TO |
SHARES HELD |
|
|
HOLDERS |
|
|
| 1 |
27 |
1 |
100 |
2380 |
|
| 2 |
156 |
101 |
500 |
64,420 |
|
| 3 |
117 |
501 |
1000 |
111,800 |
|
| 4 |
135 |
1,001 |
5,000 |
338,100 |
|
| 5 |
41 |
5,001 |
10,000 |
306,100 |
|
| 6 |
4 |
10,001 |
15,000 |
47,400 |
|
| 7 |
6 |
15,001 |
20,000 |
108,800 |
|
| 8 |
2 |
20,001 |
25,000 |
43,300 |
|
| 9 |
1 |
25,001 |
30,000 |
29,900 |
|
| 10 |
2 |
30,001 |
35,000 |
63,400 |
|
| 11 |
2 |
35,001 |
40,000 |
79,700 |
|
| 12 |
1 |
40,001 |
45,000 |
40,300 |
|
| 13 |
2 |
45,001 |
50,000 |
100,000 |
|
| 14 |
3 |
55,001 |
60,000 |
176,900 |
|
| 15 |
1 |
85,001 |
90,000 |
90,000 |
|
| 16 |
1 |
100,001 |
105,000 |
105,000 |
|
| 17 |
1 |
195,001 |
200,000 |
200,000 |
|
| 18 |
1 |
290,001 |
295,000 |
292,400 |
|
| 19 |
1 |
475,001 |
480,000 |
475,200 |
|
| 20 |
1 |
835,001 |
840,000 |
840,000 |
|
| 21 |
4 |
1,180,001 |
1,185,000 |
4,731,000 |
|
| 22 |
1 |
1,840,001 |
1,845,000 |
1,843,400 |
|
| 23 |
1 |
