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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