| Lakson Tobacco Company Limited |
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| Annual
Report 1999 |
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| CONTENTS |
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| Company
Information |
|
| Notice
of Meeting |
|
| Directors'
Report |
|
| Auditors'
Report to the Members |
|
| Balance Sheet |
|
|
| Profit
& Loss Account |
|
| Statement
of Sources & Application of Funds (Cash Flow Statement) |
|
| Notes
to the Accounts |
|
| Pattern
of Holding of Shares |
|
|
| Subsidiary
Company's Accounts |
|
| Premier
Tobacco Company (Pvt) Limited |
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| Financial
Highlights |
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|
|
| Company
Information |
|
|
| BOARD
OF DIRECTORS |
|
|
| IQBAL
ALI LAKHANI |
|
(Chairman & Chief
Executive) |
|
| AMIN
MOHAMMED LAKHANI |
|
| E.A. NOMANI |
|
|
| HASAN
ALI H. MERCHANT |
|
| TASLEEMUDDIN
AHMED BATLAY |
|
| AZIZ
EBRAHIM |
|
| SHAHID
AHMED KHAN |
|
| RAMZANALI
HALANI |
|
| M.K. NAWAZ |
|
|
| MANSOOR
AHMED |
|
|
| ADVISOR |
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| SULTAN
ALI LAKHANI |
|
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| COMPANY
SECRETARY |
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| RAMZANALI
HALANI |
|
|
| AUDITORS |
|
| A.F.
FERGUSON & CO. |
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| Chartered
Accountants |
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|
|
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| EBRAHIM
& CO. |
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| Chartered
Accountants |
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| REGISTERED
OFFICE |
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| LAKSON
SQUARE, BUILDING NO. 2 |
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| SARWAR
SHAHEED ROAD |
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| KARACHI-74200 |
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| FACTORIES |
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| 1.
E/15, S.I.T.E., KOTRI |
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| DISTT.
DADU, (SINDH) |
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| 2.
PLOT NO. 20, SECTOR NO. 17 |
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| KORANGI
INDUSTRIAL AREA, KARACHI. |
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| 3. QADIRABAD |
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| DISTT.
SAHIWAL |
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| 4.
VILLAGE: MANDRA |
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| TEH:
GUJAR KHAN |
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| DISTT.
RAWALPINDI |
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| 5. ISMAILA |
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| DISTT. SWABI |
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| Notice
of Meeting |
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| NOTICE
IS HEREBY GIVEN that the 30th Annual General Meeting of Lakson Tobacco
Company Limited will |
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| be
held at Avari Renaissance Towers Hotel, Fatima Jinnah Road, Karachi on Friday
December 17,1999 at |
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| 10.00
a.m. to transact the following business: |
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| ORDINARY
BUSINESS |
|
|
| 1.
To receive, consider and adopt the audited Balance Sheet and Profit &
Loss Account for the year |
|
| ended
June 30, 1999 together with the Directors' and Auditors' Reports thereon. |
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|
|
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| 2.
To declare final dividend in cash @ 42% and by way of issue of fully paid
bonus shares @ 10% as |
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| recommended
by the Board of Directors. |
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|
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| 3.
To consider to appoint auditors and fix their remuneration. |
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| SPECIAL
BUSINESS |
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| 4.
To consider, subject to declaration of the final dividend as above, to
capitalise a sum of Rs. 21,598,040/- by |
|
| way
of issue of 2,159,804 fully paid bonus shares of Rs. 10/- each and if thought
fit to pass an ordinary |
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| resolution
in the matter. |
|
|
| The
statement under section 160 of the Companies Ordinance, 1984 and the draft of
the ordinary resolution to |
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| be
passed in the above matter are annexed. |
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|
By order of the Board |
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|
RAMZANALI HALANI |
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| Karachi:
November 10, 1999 |
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Director/Company Secretary |
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|
| NOTES: |
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| 1.
The share transfer books of the Company will remain closed from December 04,
1999 to December |
|
| 17,
1999 both days inclusive. Transfers received in order at the Company's
registered office situated |
|
| at
Lakson Square, Building No. 2, Sarwar Shaheed Road, Karachi, upto December
03, 1999 will be |
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| considered
in time for entitlement of the dividend and issue of bonus shares to the
transferees. |
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|
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| 2.
A member entitled to attend and vote at the general meeting may appoint
another member as his |
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| proxy
to attend, speak and vote instead of him. |
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|
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| 3.
Forms of proxy to be valid must be received at the Company's registered
office not later than 48 hours |
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| before
the time of the meeting. |
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| 4.
Members are requested to notify the Company promptly of any change in their
addresses. |
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| 5.
A form of proxy is enclosed herewith. |
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| STATEMENT
UNDER SECTION 160 OF THE COMPANIES ORDINANCE, 1984. |
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| The
Board of Directors has recommended to the members of the Company to declare
final cash |
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| dividend
@ 42% and by way of issue of fully paid bonus shares @ 10% and thereby
capitalise a |
|
| sum
of Rs. 21,598,040/- which has been transferred to 'reserve for issue of bonus
shares' out of |
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| the
profit for the year ended June 30, 1999. Subject to approval of the Board of
Directors' |
|
| recommendation
as above, the resolution as under will be considered to be passed by the |
|
| members
as an ordinary resolution' |
|
|
| "RESOLVED
THAT: |
|
|
| i)
a sum of Rs. 21,598,040/- out of the 'reserve for issue of bonus shares' be
capitalised and |
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| applied
in making payment in full of 2,159,804 ordinary shares of Rs. 10/- each and
that the |
|
| said
shares be allotted as fully paid up bonus shares to those members of the
Company |
|
| whose
names appear in the register of members on December 17, 1999 @ 10% i.e. in
the |
|
| proportion
of ONE share for every TEN existing shares and that such new shares shall
rank |
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| pari
passu in all respects with the existing ordinary shares of the Company except
that they |
|
| shall
not be eligible for dividend declared for the year ended June 30, 1999; |
|
|
| ii)
in the event of any member holding less than ten shares or a number of shares
which is not |
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| an
exact multiple of TEN, the fractional entitlements of shares of such members
shall be |
|
| consolidated
into whole new shares and the Directors of the Company be and are hereby |
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| authorised
to arrange sale of the shares constituted thereby in such manner as they may |
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| think
fit and to pay the proceeds of the sale to such of the members according to
their |
|
| entitlement; |
|
|
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| iii)
for the purpose of giving effect to the above, the Directors be and hereby
authorised to take |
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| all
necessary steps in the matter and to settle any question or difficulties that
may arise in |
|
| regard
to the distribution of the said new shares as they think fit." |
|
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| The
Directors are interested in this business to the extent of their entitlement
of bonus shares as |
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| shareholders. |
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|
|
| Directors'
Report |
|
|
| The
Directors of your Company take pleasure in presenting the thirtieth annual
report and audited accounts for |
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| the
year ended June 30, 1999. |
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|
1999 |
1998 |
|
|
|
|
|
(Rupees
000's) |
|
|
|
|
| Profit
before taxation |
|
|
349,221 |
228,566 |
|
| Taxation |
|
|
168,836 |
78,242 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
after taxation |
|
|
180,385 |
150.32 |
|
| Un-appropriated
profit brought forward |
|
|
346 |
268 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
180.73 |
150,592 |
|
| Appropriations: |
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|
|
|
| interim
dividend @ nil (1998: Rs. 1.90) |
|
|
|
|
| per
ordinary share of Rs. 10/- each |
|
|
-- |
37,306 |
|
|
|
|
|
|
| Proposed
cash dividend @ Rs. 4.20 |
|
|
|
|
| (1998:
Rs. 1.90) per ordinary share of Rs. 10/- each |
|
|
90,712 |
37,306 |
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|
------------------ |
------------------ |
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|
|
90,712 |
74,612 |
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| Transfer
to reserve for proposed issue of bonus shares |
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| in
ratio of one share for every ten shares |
|
|
| (1998:
one share for every ten shares) |
|
21,598 |
19,634 |
|
|
|
|
| Transfer
to general reserve |
|
|
68,000 |
56,000 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
180,310 |
150,246 |
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|
------------------ |
------------------ |
|
| Un-appropriated
profit carried forward |
|
|
421 |
346 |
|
|
|
|
========== |
========== |
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| OPERATING
RESULTS |
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| We
are pleased to inform that your Company has continued to maintain a growth
momentum, both in turnover and |
|
| profits,
during the year under review. Sales revenue and profit after tax increased by
Rs. 1,878 Million and Rs. 30 |
|
| Million
respectively, as compared to last year. Net earnings per share rose from Rs.
6.96 to Rs. 8.35. During the |
|
| year
under review, your Company's contribution to the national exchequer in the
shape of excise duties and sales |
|
| tax
rose to Rs.. 8.669 Billion as compared to Rs. 7.657 Billion in the previous
year. The component of excise duties |
|
| and
sales tax paid during the year was equivalent to 62.20% of domestic sales
turnover for cigarettes. |
|
|
| LEAF
TOBACCO |
|
| The
1998 tobacco crop was adequate to meet industry's requirement and that of the
Company. Your Company |
|
| was
able to procure the required quantity at competitive prices. |
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|
| FUTURE
OUTLOOK |
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| Your
Company will seek to consolidate its position in the face of challenges and
current difficult economic situation |
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| and
will strive to further improve its quality, volume and profitability.
Effective cost control measures will be continued |
|
| with
increasing emphasis and expansion of distribution coverage will receive full
focus in the ensuing year. Your |
|
| Company
will continue to invest to gear itself to meet future challenges and market
opportunities. |
|
|
| The
growing availability in the country of smuggled and counterfeited brands
across many product categories, |
|
| including
cigarettes, negatively impacts both the operations of legitimate
manufacturers of these products and |
|
| the
amount of duties and taxes collected by the Government. The Company looks
forward to more stringent |
|
| government
action to curtail these activities. |
|
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| The
government is expected to remove the discrimination in the dual excise
systems, one prevailing for the larger |
|
| cigarette
manufacturing companies and the other for the so called smaller units. As
cigarette manufacturing in |
|
| Pakistan
is not a cottage industry, we have recommended that all cigarette
manufacturing units must be placed |
|
| under
a uniform excise system. |
|
|
| It
will be your Company's endeavour to manage its resources as best as possible,
however, the recently imposed |
|
| L/C
margin on the import of industrial raw materials and machinery will likely
put a severe strain on the Company's |
|
| cash
flows. We are recommending that a relief from these impositions be allowed as
soon as possible. |
|
|
| An
underage smoking prevention programme has been initiated in association with
other participants in the cigarette |
|
| industry.
Through this campaign we hope to reinforce the message that smoking is an
adult informed choice. |
|
|
| BOARD
OF DIRECTORS |
|
|
| On
September 27, 1999 ten Directors were elected at the EOGM for a period of 3
years ending September 26, |
|
| 2002.
We welcome Mr. Shahid Ahmed Khan and Mr. Mansoor Ahmed who have recently
joined the Board as |
|
| Directors. |
|
|
| ENSURING
YEAR 2000 (Y2K) COMPLIANCE |
|
|
| The
management of your Company are fully aware of the Y2K issue. All the core
computer systems operating in |
|
| the
Company have been tested and where required, new software and hardware have
been obtained to ensure |
|
| full
year 2000 compliance. In addition, your Company has worked with key suppliers
to address year 2000 |
|
| compliance
issues, and where appropriate has adopted contingency plans to minimize
potential disruptions relating |
|
| to
these suppliers. |
|
|
| APPRECIATION |
|
|
| The
Directors wish to place on record their appreciation for the sincere and
dedicated services rendered by all |
|
| employees,
at all levels, and for the constructive co-operation extended by them in
ensuring the high levels of |
|
| performance
and growth that your Company has achieved during the year. The Board of
Directors also thank, the |
|
| banks
and financial institutions for the continued support and co-operation
extended to your Company during the |
|
| year
under report. |
|
|
| PATTERN
OF SHAREHOLDING |
|
|
| A
pattern of shareholding in the prescribed form appears at page number 31. |
|
|
| CONSOLIDATED
FINANCIAL STATEMENTS |
|
|
| Consolidated
financial statements have not been prepared as the investment in the
Company's subsidiary namely |
|
| Premier
Tobacco Company (Pvt) Ltd. is not material. |
|
|
| AUDITORS |
|
|
| The
Auditors M/s. Ebrahim & Co., Chartered Accountants and M/s. A.F. Ferguson
& Co., Chartered Accountants, |
|
| retire
and offer themselves for re-appointment. |
|
|
|
|
On behalf of the Board of Directors |
|
|
|
|
|
|
|
|
|
IQBALALI LAKHANI |
|
| Karachi:
October 22, 1999 |
|
Chairman |
|
|
|
| Auditors'
Report to the Members |
|
|
| We
have audited the annexed Balance Sheet of LAKSON TOBACCO COMPANY LIMITED as
at June 30, |
|
| 1999
and the related Profit and Loss Account and Statement of Sources and
Application of Funds, |
|
| together
with the notes forming part thereof, for the year then ended and we state
that we have obtained |
|
| all
the information and explanations which to the best of our knowledge and
belief were necessary for |
|
| the
purposes of our audit and, after due verification thereof, we report that: |
|
|
| a)
in our opinion, proper books of accounts 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 Statement of Sources and Application
of Funds |
|
| together
with the notes forming part thereof, give the information required by the
Companies |
|
| Ordinance,
1984 in the manner so required and respectively give a true and fair view of
the state |
|
| of
the Company's affairs as at June 30, 1999 and of the profit and the changes
in sources and |
|
| application
of funds for the year then ended; and |
|
|
| d)
in our opinion, zakat deductible at source under the Zakat and Ushr
Ordinance, 1980 was deducted |
|
| by
the Company and deposited in the Central Zakat Fund established under section
7 of that |
|
| Ordinance. |
|
|
|
|
A.F. FERGUSON & CO. |
|
|
EBRAHIM & CO. |
|
|
Chartered Accountants |
|
|
Chartered Accountants |
|
| Karachi |
|
|
|
|
|
| Dated:
November 08, 1999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance
Sheet as at June 30, 1999 |
|
|
|
|
NOTE |
1999 |
1998 |
|
|
|
|
(Rupees
000's) |
|
|
|
|
|
|
| TANGIBLE
FIXED ASSETS |
|
|
|
| Operating
assets |
|
|
3 |
716,362 |
457,777 |
|
| Capital
work-in-progress |
|
|
4 |
48,353 |
228,586 |
|
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
764,715 |
686,363 |
|
| LONG
TERM INVESTMENT |
|
|
5 |
1 |
1 |
|
| LONG
TERM LOANS |
|
|
6 |
548 |
647 |
|
| LONG
TERM DEPOSITS AND PREPAYMENTS |
|
7 |
38,797 |
42,138 |
|
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores
and spares |
|
|
8 |
96,132 |
85,094 |
|
| Stock in trade |
|
|
|
9 |
956,760 |
884.13 |
|
| Trade debts |
|
|
|
10 |
76,485 |
50,500 |
|
| Loans
and advances |
|
|
11 |
23,199 |
42,157 |
|
| Deposits,
prepayments and other receivables |
|
12 |
39,741 |
37,810 |
|
| Cash
and bank balances |
|
|
13 |
272,650 |
140,293 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
1,464,967 |
1,239,986 |
|
|
|
|
|
|
| Less:
CURRENT LIABILITIES |
|
|
|
| Current
portion of liabilities against assets subject |
|
|
| to finance leases |
|
20 |
99,361 |
79,509 |
|
| Short
term redeemable capital |
|
|
|
-- |
300,000 |
|
| Short
term finances |
|
|
14 |
647,638 |
240,334 |
|
| Creditors,
accrued and other liabilities |
|
15 |
478,062 |
420,215 |
|
| Taxation |
|
|
|
|
40,981 |
-- |
|
| Dividends |
|
|
|
16 |
93,234 |
77,350 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
1,359,276 |
1,117,408 |
|
|
|
|
------------------ |
------------------ |
|
| NET
CURRENT ASSETS |
|
|
|
105,691 |
122,578 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
909,752 |
851,727 |
|
|
|
|
========== |
========== |
|
|
|
|
| FINANCED BY: |
|
|
|
|
|
|
|
| SHARE
CAPITAL |
|
|
17 |
215,980 |
196,345 |
|
| RESERVES |
|
|
|
18 |
449,591 |
379,627 |
|
| UNAPPROPRIATED
PROFIT |
|
|
|
421 |
346 |
|
|
|
|
|
------------------ |
------------------ |
|
| SHAREHOLDERS
EQUITY |
|
|
|
665,992 |
576,318 |
|
|
|
|
|
|
| SURPLUS
ON REVALUATION OF FIXED ASSETS |
19 |
51,092 |
51,092 |
|
| LIABILITIES
AGAINST ASSETS SUBJECT |
|
|
|
| TO
FINANCE LEASES |
|
|
20 |
142,968 |
197,617 |
|
| DEFERRED
TAXATION |
|
|
|
49,700 |
26,700 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
21 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
909,752 |
851,727 |
|
|
|
|
========== |
========== |
|
|
|
|
| NOTE:
The annexed notes form an integral part of these accounts. |
|
|
|
IQBAL ALI LAKHANI |
|
|
TASLEEMUDDIN A. BATLAY |
|
|
Chairman & Chief Executive |
|
|
Director |
|
|
|
|
| Karachi:
October 22, 1999 |
|
|
|
|
| Profit
& Loss Account |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
|
NOTE |
1999 |
1998 |
|
|
|
|
|
(Rupees
000's) |
|
|
|
|
|
|
| Sales |
|
|
14,073,173 |
12,195,166 |
|
| Cost
of goods sold |
|
22 |
12,552,659 |
11,005,002 |
|
|
|
|
------------------ |
------------------ |
|
| Gross profit |
|
|
1,520,514 |
1,190,164 |
|
|
|
|
|
| Establishment
expenses |
|
23 |
156,608 |
145,663 |
|
| Selling
and distribution expenses |
|
24 |
804,756 |
655,381 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
961,364 |
801,044 |
|
|
|
|
------------------ |
------------------ |
|
| Operating profit |
|
|
559,150 |
389,120 |
|
| Other income |
|
25 |
13,645 |
14,865 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
572,795 |
403,985 |
|
|
|
|
------------------ |
------------------ |
|
| Financial
charges |
|
26 |
194,573 |
157,800 |
|
| Other charges |
|
27 |
29,001 |
17,619 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
223,574 |
175,419 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
before taxation |
|
|
349,221 |
228,566 |
|
| Taxation |
|
28 |
168,836 |
78,242 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
after taxation |
|
|
180,385 |
150,324 |
|
| Unappropriated
profit brought forward |
|
|
346 |
268 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
available for appropriation |
|
|
180,731 |
150,592 |
|
|
|
|
|
| Appropriations: |
|
|
|
|
| Proposed
dividend |
|
|
|
|
| - Interim @ nil (1998: 19% ) |
|
|
-- |
37,306 |
|
| - Final @ .42% (1998: 19%) |
|
|
90,712 |
37,306 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
90,712 |
74,612 |
|
| Reserve
for proposed issue of bonus shares @10% |
|
|
|
|
| (1998: 10%) |
|
|
21,598 |
19,634 |
|
| Transfer.
to general reserve |
|
|
68,000 |
56,000 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
180,310 |
150,246 |
|
|
|
|
------------------ |
------------------ |
|
| Unappropriated
profit carried forward |
|
|
421 |
346 |
|
|
|
|
========== |
========== |
|
|
|
|
|
Rupees |
|
| Earning
per share |
|
|
29 |
8.35 |
6.96 |
|
|
|
|
========== |
========== |
|
|
| NOTE
:The annexed notes form an integral part of these accounts. |
|
|
|
IQBAL ALI LAKHANI |
|
|
TASLEEMUDDIN A. BATLAY |
|
|
Chairman & Chief Executive |
|
|
Director |
|
|
| Karachi:
October 22, 1999 |
|
|
|
| Statement
of Sources and Application of Funds (Cash Flow Statement) |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
NOTE |
1999 |
1998 |
|
|
|
|
(Rupees
000's) |
|
|
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| Cash
generated from operations |
|
33 |
554,342 |
207,619 |
|
| Profit
paid on short term finance certificates |
|
|
(45,752) |
-- |
|
| Mark-up
paid on short term running finances |
|
|
(94,875) |
(99,836 |
|
| Mark-up
paid on export refinance |
|
|
(4,514) |
(2,292 |
|
| Interest
paid on security deposits |
|
|
(68) |
(74) |
|
| Payment
of finance charges on liabilities against |
|
|
|
|
| assets
subject to finance leases |
|
|
(44,177) |
(38,665 |
|
| Taxes paid |
|
|
(89,245) |
(80,662 |
|
| Long term loans |
|
|
99 |
260 |
|
