| Liberty Mills Limited |
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| Annual Report 1999 |
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| Contents |
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| Board of Directors |
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| Notice of Meeting |
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| Report of the Directors |
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| Auditors'
Report to the Members |
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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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| Pattern of Share Holding |
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| Board of Directors |
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| DIRECTORS |
MR. SALIM N. MUKATY |
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MR. ARIF N. MUKATY |
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MR. YUSUF N. MUKATY |
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MR. ASHRAF SALIM MUKATY |
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MR. NOOR MOHAMMAD YOUSUF
MUKATY |
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MR. ARIF HAJI ABDUL
SATTAR MANIYA |
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MR. GHAYUR A. KHAN |
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MR. LUQMAN F. POONA WALA |
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MR. MADNI GUL MUHAMMAD |
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| CHIEF EXECUTIVE |
MR. YUSUF N. MUKATY |
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| SECRETARY |
MR. MUHAMMAD ASHRAF GHAZI |
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| AUDITORS: |
HYDER BHIMJI & CO. |
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CHARTERED ACCO UNTANTS |
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A. R. DIWAN & CO. |
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CHARTERED ACCO UNTANTS |
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| BANKERS: |
HABIB BANK LIMITED |
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HABIB BANK A. G. ZURICH |
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METROPOLITAN BANK LTD. |
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SONERI BANK LTD. |
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BANK AL HABIB LTD. |
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| REGISTERED OFFICE: |
10TH FLOOR, ADAMJEE
HOUSE, |
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I. I. CHUNDRIGAR ROAD, |
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KARACHI- 74000. |
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TEL. NOS. 2417205-6-7-8 |
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TELE FAX: (021) 2412194 |
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CABLE: MUKA TICO |
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TELEX: 20845 MKC PK |
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| MILLS: |
A-51-A, S.I.T.E.,
KARACHI. |
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TEL. NOS. 2578103 TO
2578116 |
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TELEX: 21989 LML PK |
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TELE FAX · (021) 2564600 |
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| Notice of Meeting |
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| NOTICE
is hereby given that 33rd Annual General Meeting of Shareholders of LIBERTY
MILLS |
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| LIMITED
will be held at Beach Luxury Hotel, Moulvi Tamizuddin Khan Road, Karachi on
Monday |
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| 27th
December, 1999 at 11.30 A.M. to transact the following business: |
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| To
confirm the minutes of the Extra-ordinary General Meeting of the Company held |
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| on 03-05-1999. |
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| 2.
To receive and adopt the Directors' and Auditors Report and Annual Audited
Accounts |
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| of
the Company for the year ended 30th June, 1999. |
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| 3.
To approve cash dividend @6% (i.e. Rupee 0.60 per share)for the year ended
June |
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| 30,
1999 as recommended by the Directors. |
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| 4.
To appoint Auditors for the year ending 30th June 2000 and to fix their
remuneration. |
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| The
retiring Auditors M/s. Hyder Bhimji & Company and M/s. A. R. Diwan &
Company |
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| Chartered
Accountants of the Company have offered themselves for re-appointment. |
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| 5.
To transact any other ordinary business which may be placed before the
meeting with |
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| the permission of the chair. |
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By Order of the Board |
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|
(Muhammad Ashraf Ghazi) |
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| KARACHI:
02nd December, 1999 |
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Company Secretary |
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| NOTE: |
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| 1.
The Share Transfer Books of the Company will be closed from 20th December,
1999 |
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| to
27th December 1999 (both days inclusive). |
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| 2.
The shareholders are requested to communicate the Company of any change in
their |
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| address. |
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| Report
of the Directors |
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| The
Directors of the Company take pleasure in presenting their report together
with audited |
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| accounts
of the Company and auditors report thereon for the year ended 30th June,
1999. |
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| OPERATING RESULTS |
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| During
the year under review Pakistan faced worst ever economic crisis due to
nuclear tests in |
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| May,
1998. Despite of difficult economic situation, performance of your Company
has improved. |
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| Sales
increased by 37.03% over corresponding period. Gross Profit increased by
35.42%. Profit |
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| before
taxation increased by 116.76%. The summarised results are as under:- |
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|
1999 |
1998 |
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|
Rs. in million |
Rs. in million |
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| Sales & Services |
|
1,437.97 |
1,049.39 |
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| Gross Profit |
|
133.68 |
98. 71 |
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| Profit before Taxation |
|
27.62 |
12.74 |
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| Profit after Taxation |
|
8.99 |
10. 02 |
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| Earning per share (Rupee) |
|
0.60 |
0.67 |
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| Your
Directors are pleased to recommend case dividend @ 6% (i.e. Re. 0.60 per
share). |
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| FUTURE OUT LOOK: |
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| By
the grace of Almighty, we have been successful in achieving our goal of
exploring foreign |
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| markets,
as discussed in our last report for the year ended 30th June, 1998, and has
increased |
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| 'our
export sales by 61.60% over corresponding period. We plan further expansion
in our export |
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| market
share and hope to get better return in future. Previously there were no
consistent government |
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| policies,
now that, we have non political government in our country, we see consistency
in |
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| application
of policies which in turn will result in development of industries in
particular and |
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| economy in general. |
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| PATTERN
OF SHAREHOLDING: |
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| The
Shareholding pattern of the Company as on 30th June, 1999 is given on page
No. 26. |
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| AUDITORS: |
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| The
present Auditors Messrs. Hyder Bhimji & Company, Chartered Accountants
and Messrs A.R. |
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| Diwan
& Company, Chartered Accountants, retire and offer themselves for
re-appointment. |
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| EMPLOYEES' RELATION: |
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| Your
Directors place on record their appreciation for efforts put in by management
team and |
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| workers of the Company. |
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| Year 2000 problem: |
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| Measures
have been taken to make hardware and software system compliant to year 2000.
We do |
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| no
anticipate any problem in this regard. |
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|
For and on behalf of the
Board of Directors |
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|
YUSUF N. MUKATY |
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| Karachi:
the 2nd December, 1999 |
|
Chief Executive |
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| Auditors'
Report to the Members |
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| We
have audited the annexed Balance Sheet of Liberty Mills Limited, as at 30th
June, 1999, and the |
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| related
Profit and Loss Account for the year then ended and the Statement of Changes
in Financial |
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| Position,
(Cash Flow Statement), together with the notes forming part thereof, for the
year then ended |
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| and
we state that we have obtained all the information and explanations which to
the best of our |
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| knowledge
and belief were necessary for the purposes of our audit and after due
verification thereof, |
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| we report that |
|
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| (a)
in our opinion, proper books of accounts have been kept by the Company as
required by the |
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| Companies
Ordinance, 1984. |
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| (b) in our opinion: |
|
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| i)
the Balance Sheet and Profit and Loss Account together with the notes thereon
have been |
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| drawn
up in conforming with the Companies Ordinance, 1984 and are in agreement with |
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| the
books of accounts and are further in accordance with accounting policies
consistently |
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| applied. |
|
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| ii)
the expenditure incurred during the year were for the purpose of the
company's business; |
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| and |
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| iii)
the business conducted, investments made and the expenditure incurred during
the year |
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| were
in accordance with the objects of the Company; |
|
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| (c)
in our opinion and to the best of our information and according to the
explanations given to |
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| us,
the Balance Sheet, Profit and Loss Account and Statement of Changes in
Financial Position |
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| (Cash
Flow Statement), together with the notes forming part thereof, give the
information |
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| required
by the Companies Ordinance, 1984 in the manner so required and respectively
give |
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| a
true and fair view of the state of the company's affairs as at 30th June,
1999 and of the Profit |
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| and
the Changes in Financial Position, (Cash Flows Position)for the year then
ended; and |
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| (d)
in our opinion, Zakat deductible at source under the Zakat and Ushr
ordinance, 1980 was |
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| deducted
by the Company and deposited in the Central Zakat Fund established under
Section |
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| 7 of that Ordinance. |
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| HYDER BHIMJI & CO. |
|
A.R. DIWAN & CO. |
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| Chartered Accountants |
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|
Chartered Accountants |
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| Karachi:
the 2nd December, 1999 |
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|
|
| Balance
Sheet as at 30th June,1999 |
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|
1999 |
1998 |
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|
NO TES |
RUPEES |
RUPEES |
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|
| CAPITAL AND RESERVES |
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| CAPITAL |
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| Authorised: |
|
| 20,000,000 Ordinary Shares |
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| of Rs. 10/- each |
|
200,000,000 |
200,000,000 |
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|
=========== |
=========== |
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| ISSUED,
SUBSCRIBED AND PAID- UP |
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3 |
148, 946, 900 |
148, 946, 900 |
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| RESERVE AND SURPLUS |
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| Revenue Reserve |
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4 |
24,000,000 |
24,000, 000 |
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| Un-appropriated Profit |
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|
102, 3 75 |
45,168 |
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|
-------------------- |
-------------------- |
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|
173,049, 2 75 |
172.992,068 |
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| REDEEMABLE CAPITAL |
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5 |
-- |
11.089.811 |
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| LONG TERM LOANS |
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6 |
7,171,440 |
19,153,190 |
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| DIRECTORS LOAN |
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7 |
125, 000, 000 |
-- |
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| DEFERRED LIABILITIES |
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8 |
35,553,466 |
42,053,852 |
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| CURRENT LIABILITIES |
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| Current
Portion of Redeemable Capital |
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|
11,089, 811 |
10, 221,023 |
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| Current
Portion of Long Term Loans |
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|
11,981,750 |
10,564, 750 |
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| Short
Term Running Finance utilised under |
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|
|
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| mark-up Arrangements |
|
9 |
297,880,609 |
229,416,392 |
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| Creditors,
Accrued and Other Liabilities |
|
10 |
126,435,191 |
149,864,452 |
|
| Proposed Dividend |
|
|
8, 936, 814 |
-- |
|
|
|
-------------------- |
-------------------- |
|
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|
456, 324,175 |
400,066,617 |
|
| CONTINGENCIES
& COMMITMENTS |
|
11 |
-- |
-- |
|
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|
-------------------- |
-------------------- |
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|
Total |
797,098,356 |
645,355,538 |
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|
=========== |
=========== |
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| FIXED
TANGIBLE ASSETS |
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| Operating Assets |
|
12 |
363,348,415 |
356,263,124 |
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| Capital Work-in-progress |
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13 |
113,265,556 |
24,733,141 |
|
|
-------------------- |
-------------------- |
|
|
476, 613, 971 |
380, 996, 265 |
|
| LONG TERM DEPOSITS |
|
2,646, 245 |
2,646, 245 |
|
|
|
|
| CURRENT ASSETS |
|
|
|
| Stores & Spares |
|
14 |
8,001,595 |
6,220,813 |
|
| Stock- in- Trade |
|
15 |
33, 433, 923 |
30, 084, 210 |
|
| Trade Debts |
|
16 |
207, 971,201 |
166, 046, 444 |
|
| Advances,
Deposits, Prepayments and |
|
|
|
|
| other Receivables |
|
17 |
65,483,492 |
48, 255,540 |
|
| Cash & Bank Balances |
|
18 |
2, 94 7, 929 |
11,106, 021 |
|
|
|
-------------------- |
-------------------- |
|
|
|
317,838,140 |
261,713,028 |
|
|
|
-------------------- |
-------------------- |
|
|
Total |
797,098,356 |
645,355,538 |
|
|
=========== |
=========== |
|
| NOTE:
The annexed Notes form an integral part of these accounts. |
|
|
|
YUSUF N. MUKATY |
SAL1M N. MUKATY |
|
| Karachi:
the 2nd December, 1999 |
Chief Executive |
|
Director |
|
|
|
| Profit
and Loss Account |
|
| For
the Year Ended 30th June, 1999 |
|
|
|
1999 |
1998 |
|
|
NO TES |
RUPEES |
RUPEES |
|
|
| Sales & Services |
|
19 |
1,437,969,750 |
1,049,393,049 |
|
| Cost of Sales and Services |
|
20 |
1,304,293,217 |
950,684,069 |
|
|
|
-------------------- |
-------------------- |
|
| Gross Profit |
|
|
133, 676, 533 |
98, 708, 980 |
|
|
|
|
|
| Administrative Expenses |
|
21 |
31,968, 991 |
23,648, 556 |
|
| Selling
& Distribution Expenses |
|
22 |
42,469,652 |
22,560,346 |
|
|
|
-------------------- |
-------------------- |
|
|
|
74, 438, 643 |
46, 208, 902 |
|
|
|
-------------------- |
-------------------- |
|
| Operating Profit |
|
|
59, 23 7, 890 |
52,500, 078 |
|
|
|
|
|
| Financial Charges |
|
23 |
37, 624,586 |
38. 844, 460 |
|
| Other Charges |
|
24 |
2,001,030 |
1,122,019 |
|
|
|
-------------------- |
-------------------- |
|
|
|
39,625,616 |
39,966,479 |
|
|
|
|
|
|
|
19,612,274 |
12,533,599 |
|
| Other Income |
|
25 |
8,007,289 |
208,417 |
|
|
|
-------------------- |
-------------------- |
|
| Profit before Taxation |
|
|
2 7, 619.563 |
12,742.02 |
|
| Taxation |
|
26 |
(18,625,542) |
(2,724, 46 7) |
|
|
|
-------------------- |
-------------------- |
|
| Profit after Taxation |
|
|
8,994,021 |
10,0l7,549 |
|
| Un-appropriated
Profit brought forward |
|
|
45,168 |
2 7, 619 |
|
|
|
-------------------- |
-------------------- |
|
| Profit
available for Appropriation |
|
|
9, 039,189 |
10, 045,168 |
|
|
|
|
|
| Less Appropriation: |
|
|
|
|
| Transfer
(to)/from Revenue Reserve |
|
|
-- |
(10,000,000) |
|
| Proposed Dividend @ 6% |
|
|
(8,936,814) |
-- |
|
|
|
-------------------- |
-------------------- |
|
|
|
'(8,936,814) |
' (10,000,000) |
|
|
|
-------------------- |
-------------------- |
|
| Un-appropriated
profit carried forward |
|
|
102, 3 75 |
45,168 |
|
|
|
=========== |
=========== |
|
| Note:
The annexed Notes form an integral part of these accounts. |
|
|
|
YUSUF N. MUKA TY |
SALIM N. MUKA TY |
|
| Karachi:
the 2nd December, 1999 |
Chief Executive |
|
Director |
|
|
|
| Statement
of Changes in Financial Position |
|
| (Cash
Flow Statement) for the Year Ended 30th June, 1999 |
|
|
|
1999 |
1998 |
|
|
RUPEES |
RUPEES |
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| Net
Profit for the year before taxation |
|
2 7, 619,563 |
12,742, 016 |
|
|
| Adjustments
for items not involving movement of funds |
|
|
| Depreciation |
|
40,190, 692 |
39, 290,124 |
|
| Depreciation written back |
|
(35,500) |
-- |
|
| Provision
for staff Retirement benefits (Net) |
|
(9, 300,386) |
3, 412, 2 78 |
|
| (Profit)/Loss
on sale of fixed assets |
|
(531,739) |
(208,417) |
|
| Financial charges |
|
37,624,586 |
38,844,460 |
|
| Capital Gain |
|
(7,440,050) |
-- |
|
|
-------------------- |
-------------------- |
|
|
60,507,603 |
81,338,445 |
|
|
=========== |
=========== |
|
|
88,127,166 |
94,080,461 |
|
|
| Add:
Net (Increase) / Decrease in working capital |
|
(95, 793,151) |
43,741,735 |
|
|
| Less:
Financial charges paid |
|
(35,890,026) |
(39,445,011) |
|
| Income Taxes paid |
|
(9,479,419) |
(12,275,936) |
|
| Long term security deposits |
|
-- |
(241,050) |
|
|
-------------------- |
-------------------- |
|
| Net
cash flow generated from operations |
|
|
(53,035,430) |
85,860,199 |
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
| Fixed Capital Expenditure |
|
|
|
(142,450,915) |
(71,562,441) |
|
| Proceeds
from disposal of fixed assets |
|
|
14, 649,809 |
4,433,000 |
|
|
-------------------- |
-------------------- |
|
| Net
cash flow towards investing activities |
|
|
(127,801,106) |
(67,129,441) |
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
| Repayment
of long term loans |
|
|
(10,564, 750) |
(9,420,298) |
|
| Repayment
of Reedemable capital |
|
|
(10,221,023) |
(9, 326, 750) |
|
| Repayment
of long term liability |
|
|
-- |
(314,025) |
|
| From Directors Loan |
|
|
125,000,000 |
-- |
|
| Dividend paid |
|
|
-- |
(14.894.690) |
|
|
|
|
-------------------- |
-------------------- |
|
| Net
cash flow from Financing activities |
|
|
104,214,227 |
(33.955, 763) |
|
| Net
increase in Cash & Cash equivalents |
|
|
(76,622,309) |
(15,225,005) |
|
| Cash
& cash equivalent at the beginning of the year |
|
(218,310,371) |
(203,085,366) |
|
|
|
|
-------------------- |
-------------------- |
|
| Cash
& cash equivalent at the end of the year |
|
|
(294,932,680) |
(218,310,371) |
|
|
=========== |
=========== |
|
|
|
|
|
|
YUSUF N. MUKA TY |
SALIM N. MUKA TY |
|
| Karachi:
the 2nd December, 1999 |
Chief Executive |
|
Director |
|
|
|
|
|
| Notes to the Accounts |
|
| For
the Year Ended 30th June, 1999 |
|
|
| 1.
COMPANY AND ITS BUSINESS |
|
|
| The
Company was incorporated in Pakistan in 1965 as Private Limited Company and
was |
|
| converted
into Public Limited Company on 12th September 1969. Its shares are quoted in
the |
|
| Karachi
Stock Exchange. The principal activity of the Company is manufacturing and
process- |
|
| ing of all kinds of Fabrics. |
|
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
| 2.01
Accounting Convention |
|
| The
Account of the Company have been prepared under the historical cost
convention |
|
| modifications
thereto if any are specifically stated. |
|
|
| 2.02 Taxation |
|
|
| The
charge for current taxation is based on taxable income at the current rates
of taxation |
|
| after
considering admissible tax credit and rebates, if any |
|
|
| The
Company accounts for deferred taxation on all material timing differences by
using |
|
| liability method. |
|
|
| 2.03 Gratuity |
|
|
| The
Company operates an un-funded gratuity scheme for all its employees who are
eligible |
|
| to the benefit. |
|
|
| 2.04
Foreign Currency Transaction |
|
| Transactions
in foreign currencies are translated at the rates prevailing on the Balance |
|
| Sheet date. |
|
|
|
| 2.05 Fixed Tangible Assets |
|
| These
are stated. at cost less accumulated depreciation except leasehold land and
capital |
|
| work-in-process
which are stated at cost. |
|
|
| Depreciation
is charged to income applying the reducing balance method at normal tax |
|
| rates,
whereby the cost of assets is written off over its estimated useful life.
Maintenance |
|
| and
normal repairs are charged to income as incurred. Major renewals and
improvement |
|
| are
capitalised and assets so replaced, if any, are retired. Addition to fixed
assets are |
|
| depreciated
for the whole year irrespective of date of purchase while no depreciation |
|
| is
provided on Assets disposed off during a year. Profit or Loss on disposal of
fixed assets |
|
| is
included in income currently. |
|
|
| 2.06 Stores and Spares |
|
| These
are valued at cost on First-in-First out method. |
|
|
| 2.07 Stock-in-Trade |
|
|
| These are stated as under: |
|
|
| (a)
Raw Material at cost on FIFO basis. |
|
| (b)
Work-in-process at average cost of raw material. |
|
| (c)
Finished Stock at the lower of cost on FIFO basis and net realisable value. |
|
| (d)
Stock in Bonded Warehouse at actual. |
|
| (e) Trading Stock at actuals. |
|
|
|
|
| 2.08 Trade Debts |
|
| Debts
consider irrecoverable, are written off and provision is made for debts
considered |
|
| doubtful, if any. |
|
|
| 2.09 Revenue Recognition |
|
| Sales
are recorded on despatch of goods to the Customers. Income from process
services |
|
| is recorded when earned. |
|
|
| 3. ISSUED, SUBSCRIBED AND PAID-UP-CAPITAL |
|
|
|
1999 |
1998 |
|
|
|
Rupees |
Rupees |
|
|
| 12,732,092 |
Ordinary Shares of |
|
127,320,920 |
127,320,920 |
|
|
Rs. 10/- each fully |
|
|
paid issued for cash |
|
| 2,162,598 |
Ordinary Shares of |
|
21,625,980 |
21,625, 980 |
|
|
Rs. 10/-each fully |
|
|
paid issued as |
|
|
Bonus Shares. |
|
| -------------------- |
|
-------------------- |
-------------------- |
|
| 14,894,690 |
|
|
148,946,900 |
148,946,900 |
|
| =========== |
|
=========== |
=========== |
|
|
|
| 4. REVENUE RESERVE |
|
|
|
| Balance as at start |
|
24,000,000 |
14,000,000 |
|
| Transfer
(to)/from Profit and Loss Account |
|
-- |
10.000,000 |
|
|
|
-------------------- |
-------------------- |
|
|
|
24,000,000 |
24,000,000 |
|
|
|
=========== |
=========== |
|
|
|
|
|
| 5.
REDEEMABLE CAPITAL |
|
| Long
Term Demand Finance: |
|
| From
Islamic Development Bank |
|
11,089,811 |
21,310,834 |
|
| (Islamic
Dinar 305166) (1998: Islamic Dinar 586426) |
|
| Less:
Repayable in next twelve months |
|
(11,089,811) |
(10,221,023) |
|
|
|
-------------------- |
-------------------- |
|
|
-- |
(11,089,811) |
|
|
=========== |
=========== |
|
|
|
|
| FINANCE
FROM ISLAMIC DEVELOPMENT BANK |
|
| The
above Finance (under the credit line of instalment sale) is financed by
Islamic Development |
|
| Bank
on the Guarantee of PICIC and is re-payable in Islamic Dinar. |
|
|
| Security: |
|
|
|
|
|
| The
Guarantee given by PIC[C to Islamic Development Bank is secured by 1st charge
on all |
|
| the
assets including the assets for which the above financing was obtained and
2nd charge on |
|
| other
assets over which Habib Bank has 1st charge. |
|
|
| Rate of Markup: |
|
|
|
| a) The markup on Islamic Development Bank
Re-finance is 8.5% however, if all the |
|
| Installments are paid as per the schedule
there will be a rebate of 15% bringing the |
|
| effective rate of return to 7.2250%. |
|
|
| b)
The Guarantee commission is 3% per annum of the total outstanding guarantee
amount |
|
| is payable to PICIC. |
|
|
| c) The Exchange Risk Coverage fee @ 6.8% is
payable by the Company. |
|
|
| Repayment: |
|
|
| The
loan is repayable in 10 semi-annual installment commencing from January 1,
1996. |
|
|
