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Moonlite (Pak) Limited
Annual Report 1999
CONTENTS
COMPANY INFORMATION
NOTICE OF MEETING
DIRECTORS' REPORT
AUDITORS' REPORT
BALANCE SHEET
PROFIT &-LOSS ACCOUNT
CASH FLOW STATEMENT
NOTES TO THE ACCOUNTS
PATTERN OF SHARE HOLDING
COMPANY INFORMATION
BOARD OF DIRECTORS MR. TAR, H. ISMAIL (Chairman & Chief Executive)
MR. ABDUL AZIZ T. ISMAIL
MR. ASHRAF T. ISMAlL
MR. M. SOHAIL UMER
MR. SHAHID UMER
MRS. NASREEN ASHRAF
MS. AALIYA K. DOSSA (N.I.T. Nominee)
AUDITORS RAHIM IQBAL RAFIQ & CO.
Chartered Accountants
BANKERS MUSLIM COMMERCIAL BANK LIMITED
ASKARI COMMERCIAL BANK LIMITED
BANK AL-HABIB LIMITED
UNITED BANK LIMITED
REGISTERED F-120, Hub River Road,
OFFICE & MILLS S.I.T.E., Karachi - 75730
NOTICE OF MEETING
Notice is hereby given that the 29th Annual General Meeting of the shareholders of
Moonlite (Pak) Limited will be held at Registered Office of the Company F-120, Hub River
Road, S.I.T.E., Karachi - 75730 on Wednesday December 22, 1999 at 11.30 A.M. to
transact the following business:-
1. To confirm the minutes of 28th Annual General Meeting held on December 07, 1998.
2. To receive and adopt the directors' report and audited accounts of the company for
the year ended June 30, 1999.
3. To appoint Auditors and fix their remuneration.
4. To transact any other business with the permission of the Chairman.
By order of the Board
TAR H. ISMAlL
Karachi CHAIRMAN & CHIEF EXECUTIVE
10th November 1999.
Notes:
1. The Share Transfer Books of the Company will be closed from December 20, 1999 to
December 31, 1999 (Both days inclusive).
2. A member of the company entitled to attend and vote at meeting may appoint a proxy
and vote for him/her. A Proxy must be a member of the company and in order to be
effective must be received by the company not less than 48 hours before the time of
holding the meeting.
DIRECTORS' REPORT
On behalf of the Board of Directors I welcome you to the 29th Annual General Meeting of the
company and take opportunity to present the Annual Report together with the audited accounts for
the year ended June 30,1999.
1. FINANCIAL HIGHLIGHTS 1999
Rupees
Loss Before Taxation 2,973,025
Add: Taxation
Current Year 1,205,546
Prior Years 85,724
------------------
1,291,270
------------------
Loss for the year after Taxation 4,264,295
==========
2. OPERATING RESULTS
2.1 Depressed conditions continued during the year and sales revenue did not pick up
but matched the last year's level Rs. 22.83 million. Selling prices of tufted products
and sales volume remained under pressure where as input costs increased
disproportionately which could not be passed on to buyers. Gross profit consequently
decreased from 15.58% to 14.74% during the year as compared to last year.
2.2 Bank markup ranging from 0.53 to 0.61 paisas per thousand per day continued to
erode the profitability and liquidity position of the company. The high financing cost
matter has been taken up with the bankers in the recent past.
2.3 Free import of carpet and blankets together with channel like Smuggling and Afghan
Transit have blatantly affected our manufacturing. Carpet manufacturing remained
more or less inoperative because of fiscal anomaly in the sense that Finished Carpet
duty is 35 % whereas carpet yarn being raw material for our use the duty is 35%.
2.4 Earning per share at the year end computes in negative Rs. 1.97 (1998 negative
Rs. 1.71) due to after tax loss and minimum tax.
2.5 Pattern of shareholding is annexed to the report.
2.6 The company has made an assessment of the computer system related to the year
2000 and is satisfied that same is Y2K compliant.
3. AUDIT OBSERVATION
The audit observation regarding accounts receivable balance to the extent of
Rs. 1,457,428/= were outstanding for over three years at the year end. In this connection
out of the outstanding balance a sum total of Rs. 542,450/- has been received subsequent
to the balance sheet date till the signing of this report. Management is confident to recover
the remaining balance Rs. 914,978/= by June 30, 2000.
4. FUTURE OUTLOOK
Sluggish conditions coupled with unending upward trend of input costs will have a definite
bearing on operating performance. General depressed economic condition visa vis ongoing
smuggling and tariff policy will continue to hamper the organized industry in competing the
market on a level playing field.
5. AUDITORS
M/S. RAHIM IQBAL RAFIQ & COMPANY, Chartered Accountants retire and offer themselves
for reappointment as auditors for the ensuing year.
6. ACKNOWLEDGEMENT
Under the highly depressed and recessionary conditions we appreciate the commitment of
our workforce at all levels. The response of our esteemed clients and dealers never let us
down despite sluggish market conditions. We have been always louding the contribution
and co-operation extended from time to time by MCB and PICIC as banker and lender in
our growth over the years.
On behalf of Board of Directors
TAR H. ISMAlL
Karachi November 10, 1999. CHAIRMAN & CHIEF EXECUTIVE
AUDITORS' REPORT TO THE MEMBERS
We have audited the annexed Balance Sheet of Moonlite (Pak) Limited as at June 30,
1999 and the related Profit and Loss Account and Cash Flow Statement 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 account have been kept by the company as required
by the Companies Ordinance, 1984;
(b) in our opinion:
(i) the Balance Sheet and Profit and Loss Account together with the notes
thereon have been 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, investment 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 and Profit and Loss Account and the Cash Flow
Statement together with the notes forming part thereof, give the information required
by the Companies Ordinance, 1984 in the manner so required and respectively
give a true and fair view of the state of the company's affairs as at June 30, 1999;
and of the loss and the change in financial position for the year then ended: and
(d) in our opinion, "No Zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980".
Karachi: RAHIM IQBAL RAFIQ & CO.
10th November 1999. Chartered Accountants
BALANCE SHEET AS AT JUNE 30, 1999
1999 1998
NOTE RUPEES RUPEES
SHARE CAPITAL AND RESERVES
Authorised Capital
4,000,000 Ordinary Shares of Rs. 10/- each 40,000,000 40,000,000
========== ==========
Issued, subscribed and paid-up capital 3 21,595,860 91,595,860
Reserves 4 399,305 399,305
Accumulated (loss) / profit (7,731,483) (3,467,188)
------------------ ------------------
14,263,682 18,597,977
LONG TERM LOANS 5 7,118,799 14,049,057
LIABILITIES AGAINST ASSETS
SUBJECT TO FINANCE LEASE 6 9,799,393 15,749,982
DEFERRED TAXATION 1,800,000 1,800,000
CURRENT LIABILITIES
Short Term 'Finances 7 134,983,429 134,903,264
Current portion of long term liabilities 8 19,149,749 13,935,840
Creditors, accrued and other liabilities 9 138,958,926 103,960,457
Taxation 1,205,546 1,202,239
------------------ ------------------
294,297,650 254,001,800
CONTINGENCY AND COMMITMENTS 10 ------------------ ------------------
327,279,524 304,128,816
========== ==========
FIXED CAPITAL EXPENDITURE
Operating assets 11 67,587,459 69,389,431
Capital work-in-progress 12 5,900,000 1,200,000
------------------ ------------------
73,487,459 70,589,431
LONG TERM INVESTMENTS 13 25,000 25,000
LONG TERM DEPOSITS 14 3,019,208 3,079,918
CURRENT ASSETS
Stores, spares and loose tools 15 5,346,667 6,410,734
Stock in trade 16 152,709,405 143,377,958
Trade debts 17 77,027,155 64,117,609
Loans, advances, deposits,
prepayments and other receivables 18 15,257,351 15,922,875
Cash and bank balances 19 407,279 605,291
------------------ ------------------
250,747,857 230,434,467
------------------ ------------------
327,279,524 304,128,816
========== ==========
The annexed notes form an integral part of these financial statements.
Karachi: TAR H. ISMAlL M. SOHAIL UMER
10th November 1999. CHIEF EXECUTIVE DIRECTOR
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 1999
1999 1998
NOTE RUPEES RUPEES
Sales 20 228,270,917 228,575,255
Cost of goods sold 21 (194,625,929) (192,948,324)
------------------ ------------------
Gross profit 33,644,988 35,626,931
Processing receipts 22 12,077,647 10,338,946
------------------ ------------------
45,722,635 45,965,877
Operating Expenses
Administration and general 23 7,775,516 10,379,768
Selling and distribution 24 5,282,820 5,559,754
Financial 25 35,903,933 32,999,668
------------------ ------------------
(48,939,190) (48,962,269)
------------------ ------------------
Operating loss (3,239,634) (2,973,313)
Other income 26 266,609 966,798
------------------ ------------------
(2,973,025) (2,006,515}
Workers' welfare fund -- (93,789)
------------------ ------------------
(Loss) / Profit before taxation (2,973,025) (2,100,304)
Taxation
- Current 1,205,546 1,202,239
- Prior years' 85,724 389,876
------------------ ------------------
(1,291,270) 1,592,115)
------------------ ------------------
(Loss) / Profit after taxation (4,264,295) (3,692,419)
Unappropriated (Loss) / Profit brought forward (3,467,188) 225,231
------------------ ------------------
Accumulated (Loss) / Profit carried forward (7,731,483) (3,467,188)
------------------ ------------------
Earning per share - Basic and Diluted 33 (1.97) (1.71)
========== ==========
The annexed notes form an integral part of these financial statements.
TAR H. ISMAIL M. SOHAIL UMER
CHIEF EXECUTIVE DIRECTOR
STATEMENT OF CHANGES IN FINANCIAL POSITION
(CASH FLOW STATEMENT) FOR THE YEAR ENDED JUNE 30, 1999
1999 1998
NOTE RUPEES RUPEES
CASH FLOW FROM OPERATING ACTIVITIES
(Loss) / Profit before taxation (2,973,025) (2,100,304)
Adjustment for:
Depreciation 7,886,182 8,070,253
Gain on disposal of fixed assets (266,609) (392,635)
Financial charges , 35,903,933 32,999,668
(Increase) / Decrease in working capital 29 5,570,576 (12,429,530)
------------------ ------------------
Cash generated from operation 46,121,057 26,147,452
Financial charges paid ( 17,389,217) (31,772,288)
Taxes paid (1,287,963) (1,690,285)
Gratuity paid (9,544,383) (885,467)
------------------ ------------------
Net cash (out flow)/inflow from operating activities 17,899,494 (8,200,588)
CASH FLOW FROM INVESTING ACTIVITIES
Fixed capital expenditure (12,289,759) (2,098,304)
Proceeds from disposal of fixed assets 1,772,158 602,000
------------------ ------------------
Net cash (outflow) from investing activities ( 10,517,601) (1,496,304)
CASH FLOW FROM FINANCING ACTIVITIES
Lease finance obtained -- 10,180,029
Loan from directors and their family members -- 4,106,156
Repayment of long term loans (3,963,000) (7,151,000)
Payment of lease liabilities (3,703,938) (3,531,985)
Long term deposits (net) 60,710 (935,788)
Dividend paid (227) (2,131,831)
------------------ ------------------
Net cash inflow/(outflow) from financing activities (7,606,455) 535,581
------------------ ------------------
(Decrease)/Increase in cash and cash equivalents {224,562) (9,161,311)
Cash and cash equivalents at beginning of the year (15,805,211) (6,643,900)
------------------ ------------------
Cash and cash equivalents at end of the year 30 (16,029,773) (15,805,211)
========== ==========
TAR H. ISMAlL M. SOHAIL UMER
CHIEF EXECUTIVE DIRECTOR
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED JUNE, 30, 1999
1. STATUS AND ACTIVITIES
Moonlite (Pak) Limited was incorporated in Pakistan as Public Limited Company and is quoted on Karachi Stock
Exchange. The company is engaged in the manufacturing oaf woollen yarn, acrylic blankets, synthetic tufted carpets and
allied cotton synthetic products.
2. SIGNIFICANT ACCOUNTING POLICIES
2.1 Accounting convention
These financial statements have been prepared under the 'historical cost convention.'
2.2 Foreign currencies
Assets and liabilities in foreign currencies not covered by forward exchange risk cover are translated into Pak rupees at
the exchange rates prevailing at the balance sheet date except those covered by forward exchange risk cover are
converted at contracted rates. Exchange differences are charged to income.
2.3 Staff retirement benefit
The Company operated an unfunded gratuity scheme upto March 31, 1997 Provision was made to cover the obligation
under the scheme upto that date, From April 1, 1997 company operates an approved contributory provident fund
scheme for all eligible employees. The scheme is administered by Trustees nominated under the relevant Trust Deed.
2.4 Borrowing costs
Borrowing costs are recognised as an expense in the year in which they are incurred except those that are directly
attributable to the acquisition of a fixed assets.
The capitalisation of borrowing costs as part of a fixed assets commences when expenditure for the assets are being
incurred, borrowing costs are being incurred and activity that are necessary to prepare asset for their intended use are
in progress. Capitalization of borrowing costs ceases when substantially all the activities necessary to prepare the assets
for their intended use are complete.
2.5 Taxation
Current
The charge for current taxation is based on taxable income at the current rate of taxation after taking into account tax
credits and tax rebates available, if any, or on the basis of 0.5% of turnover, whichever is higher.
Deferred
The company accounts for deferred taxation using the liability method on all major timing differences. However, deferred
tax is not provided if it is determined with reasonable probability that these timing differences will not reverse in the
foreseeable future. 'The deferred tax debits are not incorporated in the financial statements.
2.6 Fixed capital expenditure
Operating assets
These are stated at cost less accumulated depreciation except lease hold land which is stated at cost.
Depreciation is charged to income applying the reducing balance method at the rates specified in operating assets note.
Maintenance and normal repairs are charged to income as and when incurred. Major renewals and improvements are
capitalised, and assets so replaced, if any, are retired. Gain and loss on disposals of operating assets is included in
income currently.
Additions to fixed assets are depreciated for full year irrespective of date of purchase. No depreciation is charged on
fixed assets in the year of their disposal.
Capital work in progress
All cost/expenditure connected with specific assets incurred during the project implementation period is carried under
this head. These are transferred to specific assets as and when assets are available for use.
2.7 Accounting for lease
The company accounts for the assets acquired under finance lease by recording the assets and. related liability. Finan-
cial. charges are allocated to accounting period in a manner so as to provide a constant periodic rate of charge on the
outstanding liability. Depreciation is charged at the rates specified in the related note to write off the assets over its
estimated useful life in view of the certainty of ownership of the assets at the end of the lease period.
2.8 Long term investments
These are valued at cost
2.9 Stores, spares and loose tools
Stores, spares and loose tools are valued at average cost.
2.10 Stock in trade
These are valued at lower of cost and net realizable value. Cost is determined by applying the following basis.
a. Raw and packing material at average cost.
b. Work in process at average prime cost.
c. Finished good at average manufacturing cost.
d. Raw material in bonded warehouse at actual cost.
e. Raw material in transit at actual cost.
2.11 Trade debts
Debts if considered irrecoverable are written off and provision is made for the amount considered doubtful.
2.12 Revenue recognition
- Sales are recorded on despatch of goods.
- Income on investments are recorded when received.
- Export rebate is recorded when received.
1999 1998
RUPEES RUPEES
3. ISSUED, SUBSCRIBED AND PAID-UP CAPITAL
1,9,34,050 (1998: 1,234,050) Ordinary Shares
of Rs. 10/- each fully paid in cash 12,340,500 12,340,500
925,536 (1998: 99.5,536) Ordinary Shares
of Rs. 10/- each issued as fully paid bonus shares 9,255,360 9,255,360
------------------ ------------------
21,595,860 21,595,860
========== ==========
4. RESERVES
Capital Reserve 399,305 399,305
========== ==========
5. LONG TERM LOANS
Secured (5.1) 3,012,643 9,942,901
Unsecured (5.2) 4,106,156 4,106,156
------------------ ------------------
7,118,799 14,049,057
========== ==========
5.1 Secured
From Pakistan Industrial Credit and Investment Corporation Limited
Total Total
Particulars Loan-I Loan-II Loan-III Loan-IV 1999 1998
Rupees Rupees Rupees Rupees Rupees Rupees
Opening balance 6,538,243 2,418,015 5,963,967 3,231,676 18,151,901 25,302,901
Less:
- Paid during the year 2,034,000 544,000 834,000 551,000 3,963,000 7,151,000
- Current Portion shown
under current liabilities 4,504,243 1,874,015 2,867,000 1,931,000 11,176,258 8,209,000
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
6,538,243 2,418,015 3,701,000 2,482,000 15,139,258 15,360,000
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Closing balance -- -- 2,262,967 749,676 3,012,643 9,942,901
========== ========== ========== ========== ========== ==========
No. of Installment 10 11 13 12
upon re-scheduling Semi Semi Semi Semi
Annually Annually Annually Annually
Rate of interest 14% 14% 14% 3%
per annum per annum per annum above bank rate
First installment paid after
rescheduling 01-01-95 01-01-95 01-01-95 01-01-95
Securities
These loans are secured by first charge by way of equitable mortgage of all its immovable
properties, hypothecation of all its plant and machinery and floating charge on other
assets and demand promissory note.
1999 1998
RUPEES RUPEES
5.2 Unsecured (Interest free)
From Directors 3,615,088 3,615,088
From family members of the Directors 491,068 491,068
------------------ ------------------
4,106,156 4,106,156
========== ==========
6. LIABILITIES AGAINST ASSETS SUBJECT
TO FINANCE LEASE
Opening balance 21,476,822 14,828,778
Addition during the year (6.1) -- 10,180,029
------------------ ------------------
21,476,822 25,008,807
Repayment during the year {3,703,938) {3,531,985)
------------------ ------------------
17,772,884 21,476,822
Payable within one year shown
under current liabilities (7,973,491) (5,726,840)
------------------ ------------------
9,799,393 15,749,982
========== ==========
The cost plus financial charges are payable in equal monthly installments. Implicit
mark-up rate charged range from 21% to 23% per annum.
The lease finance is secured against the personal guarantee of the Directors and
long term deposit of Rs. 2,766,603 (Refer note 14).
Purchase option is available to the Company after payment of last installment and
on surrendering of deposit at the end of lease period. No financial restriction has
been imposed on the Company by the execution of lease agreement. The cost of
operating and maintaining the assets under finance lease is to be borne by the
Company.
The future minimum lease payments to which the company is committed as at
June 30, 1999 are as under:-
Year ending Rupees
June 30
2000 12,416,704
2001 6,087,280
2002 4,225,302
------------------
22,729,286
(4,956,402)
------------------
17,772,884
==========
6.1 Sale and lease back arrangement was made during the year 1998 with Security
Leasing Corporation Limited amounting to Rs. 5.188 million with 16 quarterly
installments of Rs. 453,045/- each and First U.D.L. Modaraba amounting to Rs.
4.991 million with 16 quarterly installments of Rs. 435,800/- each. These lease
agreements are due to mature in September 2001.
1999 1998
RUPEES RUPEES
7. SHORT TERM FINANCES
Secured
From Muslim Commercial Bank Limited
- Running finance (7.1) 16,437,052 16,410,502
- Cash finance (7.2) 99,978,680 99,980,515
- Demand finance (7.3) 18,418,633 18,418,633
------------------ ------------------
134,834,365 134,809,650
Unsecured - Interest free
From directors 149,064 93,614
------------------ ------------------
134,983,429 134,903,264
========== ==========
Securities
7.1 Secured against hypothecation of stock in trade and sponsors shares.
7.2 Secured against open pledge of stocks and personal guarantees of directors.
7.3 Secured against second charge on fixed assets.
Sanctioned limit 1999 1998
Rupees Rupees
Running finance Rs. 15 million Rs. 15 million
Demand finance Rs. 25 million Rs. 25 million
Cash finance Rs. 100 million Rs. 100 million
The total credit facility of above finances available to the company aggregates to
Rs. 140 million (1998: Rs. 140 million). L/C facility available is Rs. 75 million
(1998: Rs. 75 million).
Mark-up
All above secured short term finances carry mark-up @ Re. 0.53/0.56 (1998: Re.
0.53) per thousand rupees per day. Mark-up on L/C liability is charged @ Rs. 0.61
per thousand rupees per day.
1999 1998
RUPEES RUPEES
8. CURRENT PORTION OF LONG TERM LIABILITIES
Current portion of long term loans 11,176,258 8,209,000
Current portion of liabilities against assets
subject of finance lease 7,973,491 5,726,840
------------------ ------------------
19,149,749 13,935,840
========== ==========
9. CREDITORS, ACCRUED AND OTHER LIABILITIES
Creditors
- For goods 88,836,726 61,884,265
- For machinery & parts 751,008 751,008
Accrued expenses 6,495,862 8,377,018
Advance from customers -- 195,676
Accrued interest/mark-up on
Secured loan/ finances
- long term (9.1) 4,670,137 2,328,220
- short term (9.2) 32,789,345 16,402,121
------------------ ------------------
Accrued interest on provident fund 214,962 --
Accrued central excise duty 81,351 510,738
Custom dues 499,160 1,125,936
Workers' profit participation fund (Note9.3) 34,940
Workers' welfare fund 157,754 157,754
Unclaimed dividend 89,552 89,779
Sales tax 4,313,933 2,027,836
Gratuity -- 9,544,383
Others 59,136 647548
Zakat -- 466,235
------------------ ------------------
138,958,926 103,960,457
========== ==========
9.1 Include over due mark-up of Rs. 4.670 million in respect of long term loan.
9.2 Include over due mark-up of Rs. 39,.789 million in respect of short term loan.
9.3 Workers' profit participation fund
Balance at the beginning of the year 34,940 310,281
Allocation for the year -- --
------------------ ------------------
34,940 310,281
Interest on fund utilised in
company's business -- 34,940
------------------ ------------------
34,940 345,221
Less: Payment to trustees 34,916 310,184
Balance deposited with the
Government authorities 24 97
------------------ ------------------
34,940 310,281
------------------ ------------------
-- 34,940
========== ==========
10. CONTINGENCY AND COMMITMENTS
Contingency
Continuing guarantees amounting to Rs. 1.767 million (1998: Rs. 1.996 million).
Commitments
- In respect of outstanding letter of credit of Rs. 4.594 million established for
import of raw material (1998: Rs. 9.559 million).
- In respect of lease liability of Rs. 22.729 million against assets subject to
finance lease (1998: Rs. 29.33 million).
11. OPERATING ASSETS - TANGIBLE
COST DEPRECIATION Written
As on As on For the down value
PARTICULARS July 01, Additions/ As on June Rate July 01, Year As on June as on June
1998 (Deletions) 30, 1999 % 1998 (on Disposal) 30, 1999 30, 1999
Leasehold land 561,164 -- 561,164 -- -- -- -- 561,164
Factory building on
leasehold land 19,782,572 -- 19,782,572 10 13,147,886 663,469 13,811,355 5,971,217
Plant and machinery (11.2) 100,734,356 6,015,820 104,232,987 10 68,866,814 3,700,567 70,927,881 33,305,106
(2,517,189) (1,639,500)
Electric and gas fittings 1,501,728 -- 1,501,728 10 1,154,531 34,720 1,189,251 312,477
Factory and office equipments 2,149,391 39,950 2,189,341 10 1,170,883 101,846 1,272,729 916,612
Furniture and fixture 795,111 -- 795,111 10 543,650 25,146 568,796 226,315
Vehicles 7,309,230 1,533,989 7,637,657 20 4,805,669 681,938 4,909,905 2,727,752
(1,205,562) (577,702)
------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Total 132,833,552 7,589,759 136,700,560 89,689,433 5,207,686 92,679,917 44,020,643
(3,722,751) (2,217,202)
UNDER FINANCE LEASE:
Plant and machinery 31,627,395 -- 31,627,395 10 5,921,731 2,570,566 8,492,297 23,135,098
Vehicles 1,194,425 -- 1,194,425 20 654,777 107,930 762,707 431,718
------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Total 32,821,820 -- 32,821,820 6,576,508 2,678,496 9,255,004 23,566,816
------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Rupees - 1999 (11.1) 165,655,372 7,589,759 169,522,380 96,265,941 7,886,182 101,934,921 67,587,459
(3,722,751) (2,217,202)
========== ========== ========== ========== ========== ========== ==========
Rupees - 1998 148,627,000 17,706,522 165,655,372 88,664,473 8,070,253 96,265,941 69,389,431
(678,150) (468,785)
========== ========== ========== ========== ========== ========== ==========
11.1 Depreciation for the period has been allocated as follows:
1999 1998
RUPEES RUPEES
Cost of goods sold 7,296,108 7,494,720
Administration and general expenses 326,785 321,932
Selling and distribution expenses 263,289 253,601
------------------ ------------------
7,886,182 8,070,253
========== ==========
11.2 Addition to Plant and machinery comprises of used machinery procured locally.
11.3 DETAILS OF DISPOSAL OF OPERATING ASSETS
Fixed Assets Cost Accumulated Written Sales Profit Mode of
Depreciation Down value Price disposal Sold to
Honda Motor Cycle 25,395 20,069 5,326 32,000 26,674 By Negotiation Mr. Ahmed
H. No. 1726/121 Baldia Town
Karachi.
Honda Motor Cycle 9,800 9,623 177 22,000 21,823 By Negotiation Mr. Mubarak Gorey
House No. 1726/2027
Baldia Town, Karachi.
Honda Civic 664,700 392,439 272,261 383,000 110,739 By Negotiation Mr. Ashraf Din
126 Green Belt PECHS
Karachi.
Suzuki Van 95,000 82,250 12,750 100,000 87,250 By Negotiation Mr. Mohammad Saleem
5/26 Gali # 5, 37-C, Babar
Market, Landhi, Karachi.
Honda Motor Cycle 25,117 22,420 2,697 32,000 29,303 By Negotiation Mr. Naeem Ahmed
L-1948 Sector 11-E, Muslim
Town, North Karachi.
Suzuki Pickup 27,350 27,035 315 60,000 59,685 By Negotiation Mr. Hafiz Khair Mohammad
H. No. 1730/233,
Baldia Town, Karachi.
Honda Motor Cycle 30,200 23,866 6,334 25,000 18,666 By Negotiation Mr. Mohammad Arif Bawany
Flat No. 301, Gulshan-e-Shamim
Azizabad, Karachi.
Suzuki Khyber 328,000 -- 328,000 340,000 12,000 Insurance Claim EFU Insurance Co. Ltd.
------------------ ------------------ ------------------ ------------------ ------------------ against theft
1,205,562 577,702 627,860 994,000 366,140
Plant & Machinery 2,517,189 1,639,500 877,689 778,158 (99,531) Insurance Claim EFU Insurance Co. Ltd.
destroyed by fire ------------------ ------------------ ------------------ ------------------ ------------------ against fire
Total-1999 3,722,751 2,217,202 1,505,549 1,772,158 266,609
========== ========== ========== ========== ==========
Total-1998 678,150 468,785 209,365 602,000 392,635
========== ========== ========== ========== ==========
1999 1998
RUPEES RUPEES
12. CAPITAL WORK-IN-PROGRESS
Plant. and machinery
Owned               4,700,000 --
------------------ ------------------
4,700,000 --
Advance against office premises   1,200,000 1,200,000
------------------ ------------------
5,900,000 1,200,000
========== ==========
13. LONG TERM INVESTMENTS - AT COST
In M/s. Economics Publication (Private) Limited
50 fully paid Ordinary shares of Rs. 100/- each 5,000 5,000
20 fully paid (10%) cumulative preference shares
of Rs. 1,000/- each Chief Executive - Mr. Suhail Abbas
(1998: Mr. Suhail Abbas) 20,000 20,000
------------------ ------------------
25,000 25,000
========== ==========
14. LONG TERM DEPOSITS
Lease security deposit 2,766,603 2,815,833
Others 252,605 264,085
------------------ ------------------
3,019,208 3,079,918
========== ==========
15. STORES, SPARES AND LOOSE TOOLS
Stores 496,215 529,703
Spares 4,727,674 5,756,481
Loose tools 122,778 124,550
------------------ ------------------
5,346,667 6,410,734
========== ==========
16. STOCK-IN-TRADE
Raw material
- in hand 66,896,123 51,091,986
- in bonded warehouse 3,145,084 12,005,665
- in transit -- 3,712,684
------------------ ------------------
70,041,207 66,810,335
Packing material 1,263,103 1,141,911
Work-in-process 22,577,584 20,358,795
Finished goods 58,827,511 55,066,917
------------------ ------------------
152,709,405 143,377,958
========== ==========
17. Trade debts
Unsecured - considered good
Accounts receivables 77,027,155 64,117,609
========== ==========
Includes balances equal to Rs. 1,457,428/- outstanding for over three years against
which no provision has been made in the account as the management consider
these accounts as good and recoverable.
1998 1999
RUPEES RUPEES
18. LOANS, ADVANCES, DEPOSITS, PREPAYMENTS
AND OTHER RECEIVABLES
Loans to employees (secured) considered good 592,097 7,121,309
Advances (unsecured) - considered good
- to employees 5,100 20,600
- to suppliers 2,811,363 146,848
- Income tax 2,271,268 4,875,073
------------------ ------------------
5,679,828 12,163,823
Deposits -- 453,700
Prepayments 179,760 551,008
Other receivables
- Margin of letter of credit and expenses 4,636,041 41,522
- Insurance claim -- 20,000
- Income tax refundable (Note 18.1) 4,760,991 2,692,822
- Excise duty refundable 731 --
------------------ ------------------
9,397,763 2,754,344
------------------ ------------------
15,257,351 15,922,875
========== ==========
18.1 This amount represents the balance of income tax refundable as worked
out by the company on the basis of CIT appeals order passed u/s. 132 in
respect of assessment year 1998-99 (1997-98: 2,692,822).
19. CASH AND BANK BALANCES
In hand 305,292 186,435
With banks:
- in current accounts 101,987 418,856
------------------ ------------------
407,279 605,291
========== ==========
20. SALES
Local 228,270,917 227,553,190
Export -- 884,916
------------------ ------------------
228,270,917 228,438,106
Export rebate received -- 198,130
------------------ ------------------
228,270,917 228,636,236
Discount -- (60,981)
------------------ ------------------
228,270,917 228,575,255
========== ==========
21. COST OF GOODS SOLD
Raw material and packing--
Material consumed (21.1) 150,087,477 138,069,443
Stores and spares consumed (21.2) 4,862,631 4,788,374
Fuel, water and power 18,382,249 16,853,371
Salaries, wages and other benefits 17,164,796 18,316,378
Designing charges 56,000 52,200
Repairs and maintenance 1,279,321 1,708,897
Insurance 827,021 665,093
Rent, rates and taxes 1,044,000 220,481
Depreciation (11.1) 7,296,108 7,494,720
------------------ ------------------
200,999,803 188,168,957
Sale of waste
- Local (394,491) --
- Export -- (566,714)
------------------ ------------------
200,605,312 187,602,243
Work-in-process
Opening 20,358,795 21,113,952
Closing (22,577,584) (20,358,795)
------------------ ------------------
(2,218,789) 755,157
------------------ ------------------
Cost of goods manufactured 198,386,523 188,357,400
Finished goods
Opening 55,066,917 59,657,841
Closing (55,827,511) (55,066,917)
------------------ ------------------
(3,760,594) 4,590,924
------------------ ------------------
194,625,929 192,948,324
========== ==========
21.1 Raw and packing material consumed
Raw Packing
Materials Materials 1999 1998
Rupees Rupees Rupees Rupees
Purchases and
expenses thereon 163,919,020 2,093,786 166,012,806 160,042,047
Opening stock 51,091,986 1,141,911 52,233,897 30,261,293
Closing stock (66,896,123) (1,263,103) (68,159,226) (52,233,897)
------------------ ------------------ ------------------ ------------------
(15,804,137) (121,192) (15,925,329) (21,972,604)
------------------ ------------------ ------------------ ------------------
Consumed 148,114,883 1,972,594 150,087,477 138,069,443
========== ========== ========== ==========
1999 1998
RUPEES RUPEES
21.2 Stores and spares consumed
Opening stock 6,410,734 6,043,682
Purchases 3,798,564 5,155,426
Closing stock (5,346,667) (6,410,734)
------------------ ------------------
4,862,631 4,788,374
========== ==========
22. PROCESSING RECEIPTS
Scouring 5,791,560 4,792,296
Wool Spinning 6,230,300 5,546,650
Dying 55,787 --
------------------ ------------------
12,077,647 10,338,946
========== ==========
23. ADMINISTRATION AND GENERAL
Directors' remuneration 1,428,000 1,428,000
Directors' fees 1,000 2,000
Salaries and other benefits 3,312,470 4,684,588
Travelling and vehicles running 844,366 1,468,109
Repairs and maintenance 110,086 132,088
Postage, telegram, telephone and telex 813,327 1,149,001
Printing and stationery 204,869 296,969
Entertainment 310,784 383,483
Electricity, gas & water 151,230 287,346
Fees and subscription 184,884 138,290
Newspaper and periodicals 20,805 20,987
Charity and donations (23.1) 310 480
Auditors' remuneration (23.2) 66,600 66,180
Depreciation (11.1) 326,785 321,932
Others -- 315
------------------ ------------------
7,775,516 10,379,768
========== ==========
23.1 Charity and donations
None of the directors or their spouses had any interest in donees' fund.
23.2 Auditors' remuneration
Audit fees 60,000 60,000
Out of pocket expenses 6,600 6,180
------------------ ------------------
66,600 66,180
========== ==========
24. SELLING AND DISTRIBUTION
Salaries and other benefits 365,920 313,803
Handling, storage and transportation 3,370,868 3,569,211
Postage, telegram and telephone 265,055 185,791
Rent 403,400 309,786
Advertisement and publicity 411,430 472,133
Depreciation (11.1) 263,289 253,601
Insurance and security services 202,858 455,429
------------------ ------------------
5,282,820 5,559,754
========== ==========
25. FINANCIAL
Interest on long term loans 2,827,517 3,879,888
Lease finance charges 4,586,899 2,565,087
Mark-up on short term finances  27,839,319 25,899,133
Interest on provident fund     214,962 --
Interest on workers' profit participation fund -- 34,940
Bank commission and charges 417,620 620,620
Excise duty on lease finance  17,616 --
------------------ ------------------
35,903,933 32,999,668
========== ==========
26. OTHER INCOME
Commission income -- 547,655
Gain on sale of operating fixed assets (Note 11.3) 266,609 392,635
Profit on SND from MCB -- 26,508
------------------ ------------------
266,609 966,798
========== ==========
27. TAXATION
Current
Income tax assessment has been finalised upto accounting year 1997-98 (assess-
ment year 1998-99). Provision has been made for the year in accordance with
section 80-D of the Income Tax Ordinance, 1979.
Deferred
The potential deferred tax liability arising due to timing difference amounts to
approximately Rs. 4.4 million (1998-Rs 4.01 million) against which a provision of
Rs. 1.8 million exist in the account. The liability is not expected to materialise in
the foreseeable future in excess of the provision made.
28. DIRECTORS' REMUNERATION AND FEES
1999 1998
Rupees Rupees
PARTICULARS
Chief Chief
Executive Directors Executives Executive Directors Executives
Fees -- 1,000 -- -- 2,000 --
Managerial remuneration 300,000 1,128,000 234,898 300,000 1,128,000 441,012
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Total 300,000 1,129,000 234,898 300,000 1,130,000 441,012
========== ========== ========== ========== ========== ==========
No. of persons 1 6 2 1 6 2
Meeting fee -- 1 -- -- 3 --
Remuneration 1 4 2 1 4 2
28.1 The Chief Executive, Directors, and Executives are provided with free use of
company's owned and maintained cars.
1999 1998
RUPEES RUPEES
29. STATEMENT OF CHANGES IN WORKING CAPITAL
(Increase)/Decrease in current assets
Stores, spares and loose tools 1,064,067 (367,052)
Stock in trade (9,331,447) (14,548,553)
Trade debts (12,909,546) (5,066,695)
Loans, advances, deposits, prepayments and
other receivables 665,524 (751,076)
------------------ ------------------
(20,511,402) (10,599,986)
Increase/(Decrease) in current liabilities
Short term finances 53,615 18,461,565
Creditors, accrued & other liabilities 26,028,363 (20,291,109)
------------------ ------------------
26,081,978 (1,829,544)
------------------ ------------------
Decrease/(Increase) in working capital 5,570,576 (12,429,530)
========== ==========
30. CASH AND CASH EQUIVALENTS
Cash in hand and bank balances 407,279 605,291
Running finance (16,437,052) (16,410,502)
------------------ ------------------
(16,029,773) (15,805,211)
========== ==========
31. PRODUCTION AND CAPACITY
Knitting Unit Wool Spinning Units Tufting Units
(Based on Single Shift) (Based on Three Shifts) (Based on Single Shift)
Square Meters Kilograms Square Meters
1999 1998 1999 1998 1999 1998
Annual capacity 250,000 250,000 1,700,000 1,700,000 1,100,000 1,100,000
Actual production 40,054 98,847 990,197 856,805 124,428 94,879
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Percentage 16 40 58 50 11 9
========== ========== ========== ========== ========== ==========
31.1 Reason for short fall
The production capacity in each of three units were under utilised due to low
demand.
32. TRANSACTIONS UNDER ASSOCIATED UNDERTAKING
Purchase of plant & machinery 10,715,820 --
33. EARNING PER SHARE - Basic and Diluted
Net loss after tax (4,264,295) (3,692,419)
------------------ ------------------
Weighted average number of ordinary shares 2,159,586 2,159,586
------------------ ------------------
Earning per share (1.97) (1.71)
------------------ ------------------
Diluted N/A N/A
34. FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value of all financial assets and financial liabilities are estimated to approximate their
respective carrying amount.
35. INTEREST RATE RISK EXPOSURE
(Figures in Rupees)
Less than One month to One Year Non-Interest Total
One Month one year and onward bearing
Financial Assets
Long Term Investments -- -- -- 25,000 25,000
Long Term Deposits -- -- -- 3,019,208 3,019,208
Trade Debts -- -- -- 77,027,155 77,027,155
Loans, advances, deposits
& other receivables -- -- -- 15,077,591 15,077,591
Cash and Bank Balances -- -- -- 407,279 407,279
------------------ ------------------ ------------------ ------------------ ------------------
-- -- -- 95,556,233 95,556,233
Financial Liabilities
Long Term Loans -- 11,176,258 3,012,643 4,106,156 18,295,057
Liabilities against assets subject
to Finance Lease -- 7,973,491 9,799,393 -- 17,772,884
Short Term Finances -- 134,834,365 -- 149,064 134,983,429
Creditors, accrued & other liabilities -- -- -- 138,958,926 138,958,926
------------------ ------------------ ------------------ ------------------ ------------------
-- 153,984,114 12,812,036 143,214,146 310,010,296
------------------ ------------------ ------------------ ------------------ ------------------
On-Balance Sheet Gap (a) -- (153,984,114) (12,812,036) (47,657,913) (214,454,063)
------------------ ------------------ ------------------ ------------------ ------------------
Cumulative Interest rate sensitivity gap -- (153,984,114) (166,796,150) (214,454,063) --
========== ========== ========== ========== ==========
(a) The on Balance Sheet Gap represents the net amounts of on balance sheet items.
(b) Effective rates of Interest / markup for financial Instruments are as follows:
Rate of Interest
Long Term Loans Refer Note 5.1
Liabilities against assets subject to Finance Lease Refer Note 6
Short Term Finances Refer Note 7
1999 1998
RUPEES RUPEES
36. Credit Risk
The following financial assets of the company are
exposed to credit risk
Long Term Deposits 3,019,208 3,079,918
Trade Debtors 77,027,155 64,117,609
Loans, advances, deposits & other receivables 15,077,591 15,371,867
Nominal portion of credit to customers was subsequently realised.
37. OTHER INFORMATION
The company has made an assessment of its computer system related to the year 2000
problem and is satisfied that the same is Y2K compliant.
38. GENERAL
-- Separate working results for wool spinning unit, tufting unit and knitting unit are not
determinable in view of their inter related and inter connected activities.
-- Previous year's figures have been re-arranged wherever necessary for the purpose of
comparison.
-- Figures have been rounded off to the nearest rupee.
TAR H. ISMAIL M. SOHAIL UMER
CHIEF EXECUTIVE DIRECTOR
PATTERN OF SHARE HOLDING AS AT JUNE 30, 1999
SIZE OF HOLDING OF SHARES
NUMBER OF TOTAL SHARES
SHAREHOLDERS FROM TO HELD
2,189 1 100 75,602
216 101 500 36,811
10 501 1000 6,204
19 1001 5000 32,836
2 5001 10000 13,493
1 15001 20000 17,325
4 30001 35000 127,242
1 35001 40000 38,565
1 65001 70000 70,000
1 70001 75000 73,793
1 75001 80000 78,443
2 125001 130000 252,845
2 130001 135000 263,393
1 140001 145000 144,811
2 150001 155000 305,556
1 185001 190000 189,829
1 195001 200000 196,009
1 235001 240000 236,829
------------------ ------------------
2,455 2,159,586
========== ==========
CATEGORIES OF SHARES
SHAREHOLDERS NUMBER HELD PERCENTAGE
Individual 2,450 1,871,275 86.65
Investment Companies -- -- --
Insurance Companies 2 43,325 2.01
Joint Stock Companies -- -- --
Financial Institutions 2 243,761 11.28
Modaraba Companies -- -- --
* Others 1 1,225 0.06
------------------ ------------------ ------------------
2,455 2,159,586 100.00
========== ========== ==========
* Administrator Abandoned Properties Government of Pakistan.
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