| Millat Tractors Limited |
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| Annual
Report 1999 |
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| Contents |
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| MILLAT
TRACTORS LIMITED |
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| Notice
of Meeting |
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| Directors'
Report to the Shareholders |
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| Chairman's
Review |
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| Pattern
of Shareholding |
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| Decade
at a glance |
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| Auditor's
Report to the Members |
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| Balance Sheet |
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| Profit
and Loss Account |
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| Cash
Flow Statement |
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| Notes
to the Account |
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| GROUPS'
CONSOLIDATED FINANCIAL STATEMENTS |
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| Auditors'
Report to the Members |
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| Balance Sheet |
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| Profit
and Loss Account |
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| Cash
Flow Statement |
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| Notes
to the Accounts |
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| MILLAT
EQUIPMENT (PVT) LIMITED |
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| Directors' Report |
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| Auditors'
Report to the Members |
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| Balance Sheet |
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| Receipt
and Payment Account |
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| Notes
to the Accounts |
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| Boards
of Directors |
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| Sikandar
Mustafa Khan |
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| Chairman
& Chief Executive |
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| EMPLOYEES
GROUP |
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| Latif
Khalid Hashmi |
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| Sohail
Bashir Rana |
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| Laeeq
Uddin Ansari |
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| S.R. Bokhari |
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| Mian
Mohammad Saleem |
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| Rana
Mohammad Siddique |
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| Mian
Mohammad Saleem |
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| Company
Secretary |
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| OTHERS |
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| S.M. Tanvir |
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| (M.C.B.
Nominee) |
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| Dr.
Amjad Waheed |
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| (NIT Nominee) |
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| Manzoor
A. Sheikh |
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| (NIT Nominee) |
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| Organization
Structure |
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| Sikandar
Mustafa Khan |
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| Chairman
& Chief Executive |
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| Mian M. Saleem |
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| Company
Secretary |
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| Sohail
Bashir Rana |
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| Director
Technical |
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| Shaukat Ali Sh. |
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| Gen.
Manager P.C. |
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| Dr.
Syed Amer Ali |
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| Gen.
Manager Projects & Dev. |
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| Pir Asad Iqbal |
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| Dy.
Gen. Manager Procurement |
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| Pervaiz Aslam |
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| Sr.
Manager Procurement |
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| Mansoor Abbasi |
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| Sr.
Manager Tractor Assy. |
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| Shafaat Ahmed |
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| Sr.
Manager Mfg. |
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| M.
Ashfaq Farooqi |
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| Sr.
Manager Projects & Dev. |
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| Jehangir
Qureshi |
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| Sr.
Manager Eng./MPA |
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| Rehan
A. Qureshi |
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| Sr.
Manager Maintenance |
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| M.
Akbar Sheikh |
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| Manager Mfg. |
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| Athar Zubair |
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| Manager
Projects & Dev. |
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| Zahid H. Butt |
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| Manager
Tractor Assy. |
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| Altaf Hussain |
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| Manager
Projects & Dev. |
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| M. Naeem Tahir |
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| Manager
Projects & Dev. |
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| Saif-ur-Rehman |
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| Manager
Eng./MPA |
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| Khurshid
Majeed |
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| Manager
Projects & Dev. |
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| Sohaib Ahmad |
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| Manager
Projects & Dev. |
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| Laeeq
Uddin Ansari |
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| Director Finance |
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| Mian M. Saleem |
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| Gen.
Manager Finance |
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| Mubashar Iqbal |
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| Gen.
Manager Accounts |
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| Tariq Masood |
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| Sr.
Manager Data Processing |
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| Farogh Iqbal |
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| Sr.
Manager Data Processing |
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| Masood
A. Chaudhry |
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| Manager
accounts |
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| M. Pervaiz Butt |
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| Manager
Budget & MIS |
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| Rustam Ali |
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| Manager
Carporate Affairs |
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| Javed Akbar Gil |
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| Manager
Data Processing |
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| Akhtar Hussain |
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| Manager
Finance |
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| S.M.
Abdul Qadir |
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| Manager
Finance |
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| Latif
Khalid Hashmi |
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| Director
Marketing |
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| Bashir
A. Chaudhry |
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| Gen.
Manager Marketing |
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| M.
Aslam Khokhar |
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| Dy.
Gen. Manager Service & Parts |
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| Ahsan Imran |
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| Dy.
Gen. Manager Multi App. |
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| Idrees Zubair |
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| Sr.
Manager Sales |
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| Ch.
Abdul Ghafoor |
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| Sr.
Manager Service |
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| M.A. Kakakhail |
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| Sr.
Manager Parts |
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| M. Akram |
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| Sr.
Mangr. Reg. Off Islamabad |
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| Javed Munir |
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| Gen.
Manager Admn./Pers. |
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| Zaair
Farid Shah |
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| Dy.
Gen. Manager Admn./Pers |
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| Mian M. Anwar |
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| Manager
Purchase |
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| S. Imtiaz Ali |
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| Manager
Reg. Off. Karachi |
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| Nasim
A. Sindhu |
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| Manager Admn. |
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| Ch.
Imtiaz Hussain |
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| Manager
Personal |
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| Shahid S. Toor |
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| Dy.
Gen. Manager Q.C. |
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| Chaudhry
M. Anwar |
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| Manager
Q.C. BOF |
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| Abdul Razzak |
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| Manager
Lab./Gauge Control |
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| M. Ameer Khan |
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| Manager
Q.C. MFG. |
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| M. Anwar Malik |
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| Manager
Q.C. Assy. |
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| Abdul
Qayyum Butt |
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| Manager HRD |
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| Mian
Habib Ahmad |
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| Dy.
Manager SA & CP |
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| Notice
of Meeting |
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| Notice
is hereby given that 36th Annual General Meeting of Millat Tractors Limited
will be held at |
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| the
Company's Registered Office, 9 K.M. Sheikhupura Road, Shahdara, Lahore, on
Thursday, December 30, |
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| 1999
at 1.30 P.M. to transact the following business: |
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| 1.
ORDINARY BUSINESS |
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| i)
To confirm minutes of the 35th Annual General Meeting. |
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| ii)
To receive, consider and adopt the audited accounts of the Company for the
year ended |
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| June
30, 1999 together with the Directors' and Auditors' Reports thereon. |
|
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| iii)
To approve payment of cash dividend as recommended by the Directors at the
rate of |
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| Rs.
12.00 per share (120%). |
|
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| iv)
To appoint auditors and fix their remuneration for the year ending June 30,
2000. The present |
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| auditors
M/s. A.F. Ferguson & Company, Chartered Accountants, retire and are
eligible |
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| for
re-appointment. |
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| 2.
SPECIAL BUSINESS |
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| i)
To approve investment of Rs. 8.0 million in equity of Millat Equipment (Pvt)
Limited by |
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| passing
the following resolution. "RESOLVED that the payment of Rs. 8.0 |
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| million
made to Millat Equipment (Pvt) Limited as investment in MEL equity be and is
hereby |
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| approved." |
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| ii)
To approve investment of Rs. 80,650 made in Baluchistan Wheels Limited by
passing the |
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| following
resolution: |
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| "RESOLVED
that an investment of Rs. 80,650 in Baluchistan Wheels Limited by way of |
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| acquisition
of 5,000 shares at an average price Rs. 16.13 per share be and is hereby
approved." |
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| 3.
ANY OTHER BUSINESS |
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| To
transact any other business with the permission of the Chair. |
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| Notes |
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| 1.
The share transfer books of the Company will remain closed from Dec. 17, 1999
to Dec. 30, |
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| 1999
(both days inclusive) and no transfer will be accepted during this period.
The members |
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| whose
names appear in the register of members as at the close of business on
December 16, |
|
| 1999
will qualify for the payment of cash dividend. |
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| 2.
A member entitled to attend and vote at this meeting may appoint another
member as his / |
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| her
proxy to attend the meeting and vote for him / her. Proxies in order to be
effective must |
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| be
received by the Company not less than 48 hours before the meeting. |
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| 3.
Shareholders are requested to notify the change of address, if any,
immediately. |
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| STATEMENT
U/S 160 OF THE COMPANIES ORDINANCE, 1984 |
|
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| i)
The Board of Directors in its meeting held on Feb. 24, 1999 had approved to
invest Rs. 50 |
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| million
in the Gear Manufacturing Project through its wholly owned subsidiary Company |
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| i.e.,
Millat Equipment (Pvt) Limited (MEL). During the year, an amount of Rs. 8
million |
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| was
paid to MEL as part of MTL'S equity. |
|
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| ii)
During the year, 5000 shares of Baluchistan Wheels Limited (BWL) were
purchased @ Rs. |
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| 16.13
per share. The Company was already holding 1,360,500 shares of BWL. |
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By order of the Board |
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| Lahore: |
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Mian Muhammad Saleem |
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| Nov, 30, 1999 |
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Company Secretary |
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|
| Directors'
Report to the Shareholders |
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| Your
Directors feel pleasure in presenting their 36th Annual Report together with
the audited accounts of |
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| the
Company for the year ended June 30, 1999. |
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| APPROPRIATIONS |
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| Your
directors recommend the payment of cash dividend at the rate of Rs. 12.00 per
share (120%) |
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| out
of the profits available for appropriations. Accordingly, the following
appropriations have been |
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| made: |
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|
Rupees |
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| ACCOUNTS |
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in thousands |
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| Profit
before taxation |
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|
337,128 |
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| Less: Taxation |
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|
106,666 |
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------------------ |
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| Profit
after taxation |
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|
230,462 |
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| Add:
Unappropriated |
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| profit
brought forward |
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47 |
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------------------ |
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| Profit
available for appropriations |
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230,509 |
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| Less:
Appropriations: |
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| Transfer
to General Reserves |
|
134,000 |
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| Proposed
Dividend @ 120% |
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|
96,113 |
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| (1998: 85%) |
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------------------ |
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230,113 |
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------------------ |
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| Unappropriated
profit |
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|
396 |
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| carried forward |
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========== |
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| EARNING
PER SHARE |
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| Earning
per share for the year ended June 30, 1999 was registered at Rs. 28.77 as
compared to Rs. 17.25 |
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| in
the preceding year. |
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| DIRECTORS |
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| Since
the last report, there have been changes in the Board of directors. M/s.
Wusooq Khaleeli and |
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| Razi-ur-Rehman
Khan nominees of NIT on the Board tendered their resignations w.e.f. April
16, 1999 and |
|
| May
3, 1999 respectively and in their place Dr. Amjad Waheed and Mr. Manzoor A.
Sheikh, NIT nominees |
|
| were
co-opted as Directors under Article 96(2) of the Memorandum and Articles of
Association of the |
|
| Company
to fill the casual vacancies. |
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| YEAR
2000 COMPLIANCE |
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| The
year 2000 verification process for computer software, hardware and the
manufacturing machinery |
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| has
been completed. The non-compliant computer hardware has been replaced and
software redeveloped. |
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| All
the new systems have been tested by simulation techniques. The manufacturing
machinery and quality |
|
| control
equipment wag validated through the suppliers. |
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|
| AUDITORS |
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| The
present auditors M/s. A.F. Ferguson & Company, Chartered Accountants,
retire and being eligible offer |
|
| themselves
for re-appointment. |
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| CHAIRMAN'S
REVIEW |
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| The
Directors of your Company endorse the contents of the Chairman' s Review
dealing with he Company |
|
| affairs
which is included in the Annual Report. |
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| PATTERN
OF SHAREHOLDING |
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| The
pattern of shareholding is annexed. |
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| NUMBER
OF EMPLOYEES |
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| The
number of permanent employees as on June 30, 1999 were 526 compared to 531 of
last year. |
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| CONSOLIDATED
FINANCIAL STATEMENTS |
|
| Consolidated
financial statements of the Company and its wholly owned Subsidiary, Millat
Equipment |
|
| (Pvt)
Ltd. are annexed. |
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|
for and on behalf of the Board |
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| Lahore: |
|
Sikandar Mustafa Khan |
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| November
15, 1999 |
|
Chairman & Chief Executive |
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| Chairman's
Review |
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|
| Dear
shareholders: |
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| It
gives me immense pleasure in welcoming you to the 36th Annual General Meeting
of the Company |
|
| and
present the audited accounts and my review on the performance of your Company
for the year ended |
|
| June 30, 1999. |
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|
| Tractor
industry in this country has a checkered history of fluctuating fortunes. The
industry despite |
|
| having
the highest content of locally manufactured components with high value
addition in the tractor, |
|
| it
has suffered at the hands of bad Government policies. Your Company has done
well despite |
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| uncertainty
and ever changing conditions. The vending associates have shared this
responsibility in |
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| achieving
difficult targets. |
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| By
the Grace of Almighty Allah and the dedicated efforts of the Company
employees, your Company |
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| earned
a record pretax profit of Rs. 337 million on a sale of over Rs. 5 billion
during the current financial |
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| year
which is the highest in the history of MTL. The higher profits were achieved
despite substantial |
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| reduction
in tractor selling prices due to phenomenal growth in volumes. MTL
significantly contributed |
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| towards
the target to supply 30,000 tractors to the farmers by the local industry
during the year |
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| 1998-99
with a view to achieve self-sufficiency in the Agriculture Sector. The
Company generated major |
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| portion
of the revenue through sale of tractors on cash basis and also substantial
contribution by Multi- |
|
| Application
Products like Generator Sets valuing Rs. 134 million which of course
indicates good sign for |
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| the
Company's future. |
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| FINANCE |
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| The
year under review witnessed all round improvement in performance standards,
Pre-tax profit |
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| was
Rs. 337 million as against Rs. 190 million of the previous year showing an
increase of 77%. After |
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| making
provision for current taxation, the after tax profit amounted to Rs. 230
million, Net sales increased |
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| by
93% from Rs. 2.75 billion to Rs. 5,32 billion. The selling, administration
and general expenses were |
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| increased
by 18% due to higher volumes and inflation. The financial charges decreased
by 34% from Rs. |
|
| 91
million to Rs. 42 million due to improvement in cash sales and also better
inventory management. |
|
| The
break-up value of a share increased to Rs. 83.21 from Rs. 66,44 in 1998.
Earning per share also |
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| increased
to Rs. 28.77 from Rs. 17.25 of previous year. After providing for the current
taxation of Rs. |
|
| 106.7
million, the profit available for appropriations amounted to Rs. 230.5
million. Out of the profits |
|
| available
for appropriations, your Board in line with its policy of giving equitable
returns to the |
|
| shareholders
feels pleasure to recommend a cash dividend of Rs. 12.00 per share (120%). A
sum of |
|
| Rs.
134 million has been retained by way of transfer to General Reserve now
standing at Rs. 586 million. |
|
|
| MARKETING |
|
|
| Millat
Tractors Limited accepted the challenge to supply 15,000 tractors during the
year 1998-99. By |
|
| the
grace of Allah Almighty, the Company surpassed its commitment. The reduction
in prices brought the |
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| tractors
within the buying range of the small farmers thus reviving our agricultural
economy and the tractor |
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| industry
of the country. |
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| During
the year 1998-99 tractors industry booked 47,000 tractors as against 15,000
tractors of last year. |
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| The
main reason for increase in booking was the reduction in tractors' prices by
the manufacturers |
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| and
withdrawal of duties and sales tax by the Government. |
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| Your
Company achieved a booking of 25,000 tractors i.e., a share of 53% which
included cash booking of |
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| 13,000
tractors during the year 1998-99. Against above booking, 15,151 tractors were
sold as against |
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| 7010
tractors of the previous year registering an increase of 116%. The Company
registered record |
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| booking
and sales during the year under review. |
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| The
Multi-Application Products have started playing a significant role in MTL
trading activity and are |
|
| contributing
significantly towards profitability of the Company. There is considerable
demand of our Gen. |
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| Sets
both in public and private sectors, We added special features in already
developed Gen. Sets to |
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| meet
the specific requirements of our customers. It is fervently hoped that our
Gen. Sets would continue |
|
| to
improve their presence in the market in the coming years. |
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|
|
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| Marketing
of imported Massey Ferguson (UK) Diesel Gen. Sets comprising Perkins Engines
and Newage |
|
| Alternator
of capacity 50 KVA to 880 KVA is also gaining momentum and has emerged as a
potential |
|
| source
of income. |
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|
|
|
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| We
intend to utilize our technical, financial and administrative source to
attain new dimensions of |
|
| diversification
in future. |
|
|
| TECHNICAL |
|
| During
the year under review, your Company produced 14,4153 units compared to 7,854
units of |
|
| previous
year reflecting an increase of 84%. The Company successfully achieved the
production target |
|
| given
by the Government to the local industry for self reliance and economic
growth, through a |
|
| combination
of better manpower utilization and planning. |
|
|
|
|
|
| To
meet market requirements, the Company developed new tractors and
Multi-Application |
|
| products
during the period in addition to numerous variants on our existing product
range. Efforts to |
|
| broaden
the range of locally produced Gen. Sets is progressing satisfactorily. The
products will be |
|
| launched
as soon as possible. |
|
|
|
|
|
| The
vendor interactions and support were re-emphasized to ensure supplies and
quality of |
|
| components
required for the enhanced production volume for financial year. Pricing
competitiveness |
|
| was
created amongst our vending associates to prepare the industry for the
challenges posed with the |
|
| implementation
of Trade Related Investment Measures (TRIMs) under the World Trade Order to |
|
| be
implemented in early 2000. |
|
|
|
|
|
| Millat
Tractors Limited is fully geared to produce 20,000 tractors during the year
1999-2000 while the |
|
| industry
as a whole is capable of supplying 40,000 tractors for the year. The
reduction in tractor prices |
|
| will
revolutionize agriculture by bringing farm mechanization to an affordable
level and also provide |
|
| a
jump start to the dormant engineering industry. |
|
|
|
|
|
| QUALITY
CONTROL |
|
|
|
| Millat
Tractors Limited has a strong commitment to quality and has successfully
maintained international |
|
| standards
since its inception. Our tractors and other products are well known in the
market for their |
|
| quality.
Complete customer satisfaction is our cherished goal and we are fully
committed to achieve it. |
|
|
|
|
| Our
quality activities are wide spread throughout the Company and completely
cover all the materials, |
|
| machines
and processes. We have reliable inspection facilities at MTL to ensure
adherence to specification |
|
| and
standards. Our Laboratories and Gauge Control is fully equipped and ISO 9002
certified. It is playing |
|
| vital
role in establishing high standards of quality. In May this year, it
qualified ISO Surveillance Audit, |
|
| which
is acknowledgment to the fact that world standard Quality Management Systems
are in place. |
|
|
|
|
| At
MTL quality is our prime doctrine that can never be compromised at any stage.
We are conducting |
|
| internal
quality audits and taking corrective/preventive actions for continuous
improvement. An improved |
|
| quality
approach has been introduced at all levels and a product is available for the
customer. |
|
|
|
|
| ADMINISTRATION |
|
|
| A
high standard of discipline was maintained in the Company. The increased
level of production could |
|
| only
be possible be way of cordial management labour relations. The CBA fully
supported the |
|
| management
in implementation of production plans. The plant security has been revamped
with the |
|
| installation
of Close Circuit T.V Cameras in the Tractors Assembly Plant, and by taking
other security |
|
| measures. |
|
|
|
|
|
|
| A
number of dignitaries including Chief Minister Punjab visited the plant. High
level delegations from |
|
| various
Institutions i.e. LUMS, NIPA and Command & Staff College of Pakistan Army
visited our factory |
|
| for
study tours. The Company has been providing training/internship to various
institutions to facilitate |
|
| and
update their knowledge and its practical application. Different Welfare
Schemes for the benefit |
|
| of
the employees of the Company continued which include Haj Scheme, Gifts and
education scholar |
|
| ships.
The Company has been participating since many years in the Horticulture and
flowers |
|
| competitions.
The Company again won best performance awards in different competitions. |
|
|
| FUTURE
OUTLOOK |
|
| In
the year 1999-2000 the sale volume is expected to improve due to affordable
prices of tractors. MTL |
|
| and
its vending associates are committed to produce 20,000 tractor in the next
year out of the target of |
|
| 40,000
tractors given by the Government to the local tractor industry. Endeavours
would be made for the |
|
| promotion
of farm mechanization and maintaining stability in tractor prices to make it
self-sufficient in |
|
| food
and agriculture. |
|
|
|
|
|
|
|
|
|
|
| Product
diversification, quality improvement, cost reduction and effective after sale
support would thus |
|
| continue
to be our strategic objectives in the years to come. |
|
|
| Acknowledgment |
|
| It
is my pleasure to place on record my appreciation for the untiring efforts of
MTL employees at all levels |
|
| which
helped achieve our targets, I have special thanks to offer to the vending
associates who whole |
|
| heartedly
participated in our efforts to reduce tractor selling prices. My thanks are
due to the farming |
|
| community
and all other institutions for their cooperation and support. My sincere
thanks to the |
|
| Company's
shareholders as well as for whom we always strive to protect their interest.
With Allah's |
|
| blessings
we move forward with hope and determination to be more prosperous and
stronger in |
|
| future. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sikandar Mustafa Khan |
|
|
|
|
|
|
| PATTERN
OF SHAREHOLDING AS AT JUNE 30, 1999 |
|
|
| No. of |
Size of
Holding |
Total Shares |
|
|
| Shareholders |
From |
To |
Held |
|
|
|
| 971 |
1 |
100 |
34954 |
|
| 586 |
101 |
500 |
148976 |
|
| 207 |
501 |
1000 |
150424 |
|
| 480 |
1001 |
5000 |
975365 |
|
| 59 |
5001 |
10000 |
380600 |
|
| 24 |
10001 |
15000 |
278154 |
|
| 12 |
15001 |
20000 |
200265 |
|
| 9 |
20001 |
25000 |
199040 |
|
