| PEL Appliances Limited |
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| Annual
Report 1999 |
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| Contents |
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| Company
Information |
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| Notice of Meeting |
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| Directors' Report |
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| Auditors' Report |
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| Balance Sheet |
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| Profit
& Loss Account |
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| Cash
Flow Statement |
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| Notes
to the Accounts |
|
| Pattern
of Shareholding |
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|
|
| BOARD
OF DIRECTORS |
|
|
| Mr.
M. Naseem Saigol |
(Chairman/Chief
Executive) |
|
| Mr.
M. Azam Saigol |
|
| Mr. Shahid Sethi |
|
| Mr.
Haroon Ahmad Khan |
|
| Sh.
Mohibullah Usmani |
|
| Mr.
Homaeer Waheed |
|
| Mr. Maqbool Elahi |
|
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| COMPANY
SECRETARY |
|
| Sheikh
Muhammad Shakeel |
|
|
| AUDITORS |
|
| M/s
Manzoor Hussain Mir & Co. |
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| Chartered
Accountants |
|
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| BANKERS |
|
| ABN
Amro Bank N.V. |
|
| Deutsche
Bank AG |
|
| Faysal
Bank Limited |
|
| Mashreq
Bank PSC |
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| National
Bank of Pakistan |
|
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| REGISTERED
OFFICE |
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| 06-Egerton Road, |
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| Lahore |
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| Tel:
6306131 (5 Lines) |
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| WORKS |
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| 302-Gadoon
Amazai |
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| Industrial Estate. |
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| District
Swabi (NWFP) |
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| Notice
of Annual General Meeting |
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| Notice
is hereby given that the Eighteenth Annual General Meeting of Shareholders of
PEL APPLIANCES |
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| LIMITED will be held on Friday December 31, 1999 at 11:00 A.M. at
Factory Premises, 14 Kilometers |
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| Ferozepur
Road, Lahore to transact the following business:- |
|
|
| 1.
To confirm the minutes of Seventeenth Annual General Meeting held on December
31, 1998. |
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|
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| 2.
To receive and adopt the Annual Audited Accounts for the year ended June 30,
1999 alongwith |
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| Directors'
and Auditors' Reports thereon. |
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| 3.
To appoint Auditors to hold office till the conclusion of the next Annual
General Meeting and to fix |
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| their remuneration. |
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| 4.
Any other business with the permission of the Chair. |
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By order of the Board |
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| Lahore |
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|
SHEIKH MUHAMMAD SHAKEEL |
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| December 08, 1999 |
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|
Company Secretary |
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| NOTES: |
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| 1.
The 5hare Transfer Books of the Company will remain closed from December 30,
1999 to |
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| January
05, 2000 (both days inclusive). |
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| 2.
A member entitled to attend and vote at this meeting may appoint another
member as proxy. |
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| Proxies
in order to be effective, must be received at the Registered Office of the
Company not |
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| later
than forty-eight hours before the time of the meeting and must be duty
stamped, signed and |
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| witnessed. |
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| 3.
Members of all recognized fiqas may file with the Company their declaration
(if any) for |
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| Non-Deduction
of Zakat. |
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|
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| 4.
Members are requested to notify the Company change in their addresses, if
any. |
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| 5.
Members whose shares are deposited with Central Depository System are
requested to bring their |
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| original
National Identity Card alongwith their Account Number in Central Depository
System for |
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| attending
the meeting. |
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| Directors'
Report to the Members |
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| GENTLEMEN |
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| Your
Directors are pleased to submit their Report together with the Audited
Accounts of the Company |
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| for
the year ended June 30, 1999. |
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| FINANCIAL |
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|
|
1999 |
1998 |
|
|
|
|
(Rupees in
thousands) |
|
|
|
|
| Gross sales |
|
|
|
453,371 |
732,530 |
|
| Gross profit |
|
|
|
47,022 |
92,637 |
|
| Operating loss |
|
|
|
(9,568) |
(9,068) |
|
| Net
loss for the year |
|
|
|
(120,600) |
(88,113) |
|
|
| CHAIRMAN'S
REVIEW |
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| The
Review included in the Annual Report deals inter alia with the performance of
the Company for the |
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| year
ended June 30, 1999 and future prospects. The directors endorsed the contents
of the review. |
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| DIRECTORS |
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| During
the period since last annual general meeting Mr. Haroon Ahmad Khan, 5heikh
Mohibullah Usmani, |
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| Mr.
Homaeer Waheed and Mr. Maqbool Elahi have been appointed as director in place
of Mr. Muhammad |
|
| I1yas
Bajwa, Mr. Muhammad Asif Bajwa, Mr. Saeed Mian Ansari and Mr. Irfan Zubair. |
|
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| We
wish to record deep appreciation of the valuable services rendered by the
outgoing directors. |
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| AUDITORS
AND THEIR REPORT |
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| The
present Auditors Messrs Manzoor Hussain Mir & Company, Chartered
Accountants, retires and |
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| being
eligible, offer themselves for reappointment. |
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| The
company has chalked out a plan to bring its air-conditioner business out of
losses and to expand |
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| sales
of deep-freezer in a way that it should improve its operating results
substantially in the ensuing |
|
| year.
This plan has been explained in more detail in the Chairman's review and the
management is |
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| confident
to achieve the targets for the current year. |
|
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| No
provision has been made for diminution in the value of short term investments
in view of the fact |
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| that
prices quoted on Stock Exchanges are abnormally depressed these days.
Furthermore, some of the |
|
| investments
have been sold in the subsequent year at a price much higher than that quoted
on Stock |
|
| Exchanges. |
|
|
| Investments
in shares was made prior to 1995. According to the opinion of M/s. Hassan
& Hassan |
|
| Advocates,
the relevant provision of Companies Ordinance will be operative with effect
from 2nd day of : |
|
| July
1995 and will not be applicable to the investment made prior to amendment in
statute. |
|
|
| YEAR
2000-COMPLIANCE |
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| The
company has already converted all its applications in compliance |
|
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| PATTERN
OF SHAREHOLDING |
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| A
statement showing pattern of holding of the shares held by the shareholders
of PEL APPLIANCES |
|
| LIMITED
as at June 30, 1999 is attached. |
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|
For and on behalf of the Board |
|
|
|
|
|
|
| Lahore |
|
|
|
M. Naseem Saigol |
|
| December
08, 1999 |
|
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|
Chairman/Chief Executive |
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|
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| Auditors'
Report to the Members |
|
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| We
have audited the annexed balance sheet of PEL APPLIANCES LIMITED as at June
30, 1999 and the |
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| related
profit and loss account and cash flow statement, together with the notes
forming part thereof, |
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| for
the year then ended and we state that we have obtained all the information
and explanations which |
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| to
the best of our knowledge and belief were necessary for the purposes of our
audit and, after due |
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| verification
thereof, we report that: |
|
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| (a)
in our opinion, proper books of account have been kept by the Company as
required by the |
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| Companies
Ordinance, 1984; |
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|
|
|
|
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| (b) in our opinion: |
|
|
|
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| (i)
the balance sheet and profit and loss account together with notes thereon
have been drawn |
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| 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 |
|
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| (iii)
the business conducted. investments made and the expenditure incurred during
the year |
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| were
in accordance with the objects of the Company: |
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|
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| (c)
in our opinion and to the best of our information and according to the
explanations given to us, |
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| the
balance sheet, profit and loss account and cash flow statement, together with
the notes |
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| part
thereof, give the information required by the Companies Ordinance 1984 in the |
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| so
required and respectively give a true and fair view of the state of the
Company's affairs |
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| as
at June 30, 1999 and of the loss and cash flow statement for the year then
ended except for |
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| the
following and the extent to which it may effect, and |
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|
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| (i)
Share-holders' equity shows an adverse balance of Rs. 38.814 Million while
the current |
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| liabilities
have exceeded current assets by Rs. 17.674 Million. Without qualifying our
report |
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| it
is added that conception of going concern will be valid if some further
capital is injected |
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| in
the business or production activity is improved which during this year
remained substantially |
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| below
the plant rated capacity. |
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|
|
|
| (ii)
The diminution in value of shares of short term investment amounting to Rs.
8.258 Million. |
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| in
our view, following the method of valuation of lower of cost and market
instead of cost |
|
| should
have been provided in the accounts. |
|
|
| (iii)
Attention is also invited to Note No. 8.2 (i). |
|
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| (d)
in our opinion, no Zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980. |
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|
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| Lahore |
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|
Manzoor Hussain Mir & Co. |
|
| December 08. 1999 |
|
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1999 |
|
|
|
|
Note |
1999 |
1998 |
|
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|
(Rupees in
thousand) |
|
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| FIXED
CAPITAL EXPENDITURE |
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|
| Land- Freehold |
|
|
|
|
-- |
2,547 |
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| Operating assets |
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|
3 |
307,600 |
175,786 |
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|
------------------ |
------------------ |
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|
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|
307,600 |
178,333 |
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| LONG
TERM INVESTMENT |
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|
4 |
-- |
72,000 |
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| LONG
TERM DEPOSITS |
|
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|
-- |
1,226 |
|
|
|
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|
------------------ |
------------------ |
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|
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|
307,600 |
251,559 |
|
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| CURRENT
ASSETS |
|
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| Stores,
spares and stock in trade |
|
|
5 |
234,787 |
164,242 |
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| Trade debts |
|
|
|
6 |
148,057 |
74,302 |
|
| Advances,
deposits and prepayments |
|
7 |
104,219 |
84,928 |
|
| Short
term investment |
|
|
8 |
72,000 |
-- |
|
| Cash
and bank balances |
|
|
9 |
14,864 |
17,012 |
|
|
|
|
|
|
------------------ |
------------------ |
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|
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|
573,927 |
340,484 |
|
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|
| CURRENT
LIABILITIES |
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|
|
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| Short
term finances |
|
|
10 |
325,212 |
253,807 |
|
| Current
portion of long term liabilities |
|
11 |
51,200 |
4,815 |
|
| Creditors,
provisions and accrued liabilities |
|
12 |
215,189 |
120,560 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
591,601 |
379.18 |
|
|
|
|
------------------ |
------------------ |
|
| Net
working capital |
|
|
(17,674) |
(38,698) |
|
|
|
------------------ |
------------------ |
|
| Total net assets |
|
|
289,926 |
212,861 |
|
|
|
|
| CONTINGENCIES
AND COMMITMENTS |
|
13 |
-- |
-- |
|
|
|
|
| LONG
TERM LIABILITIES |
|
|
|
|
| Long term loans |
|
|
14 |
183,166 |
128,213 |
|
| Liabilities
against assets subject to finance lease |
|
15 |
-- |
2,862 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
183,166 |
131,075 |
|
|
|
|
------------------ |
------------------ |
|
| NET WORTH |
|
|
|
106,760 |
81,786 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
| REPRESENTED
BY |
|
|
|
| Share capital |
|
|
|
16 |
58,500 |
58.50 |
|
| Reserves |
|
|
|
17 |
245,250 |
245.25 |
|
| Unappropriated
loss |
|
|
|
(342,564) |
(221,964) |
|
|
|
|
------------------ |
------------------ |
|
| SHAREHOLDER'S
EQUITY |
|
|
(38,814) |
81,786 |
|
| Surplus
on revaluation of fixed assets |
|
18 |
145,574 |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
106,760 |
81,786 |
|
|
|
|
========== |
========== |
|
|
|
|
|
| The
annexed notes (1) to (30) form an integral part of these financial
statements. |
|
|
|
|
M. Azam Saigol |
|
M. Naseem Saigol |
|
|
Director |
|
Chairman/Chief Executive |
|
|
|
|
|
|
|
|
|
Manzoor Hussain Mir & Co. |
|
| Auditors'
report annexed |
|
Chartered Accountants |
|
|
|
|
| Profit
and Loss Account |
|
| For
the year ended June 30, 1999 |
|
|
|
|
|
Note |
1999 |
1998 |
|
|
|
|
(Rupees in
thousand) |
|
|
|
|
| SALES
- GROSS (LOCAL) |
|
453,371 |
732,530 |
|
| SALES TAX |
|
58,525 |
100,717 |
|
|
|
|
------------------ |
------------------ |
|
| SALES - NET |
|
|
394.85 |
631,813 |
|
| COST OF SALES |
|
19 |
347,824 |
539,176 |
|
|
|
|
------------------ |
------------------ |
|
| GROSS PROFIT |
|
47,022 |
92,637 |
|
|
|
|
|
| OPERATING
EXPENSES |
|
|
|
| Administrative |
|
20 |
15,318 |
19,798 |
|
| Selling |
|
21 |
41,272 |
81,907 |
|
|
|
|
------------------ |
------------------ |
|
|
|
56,590 |
101,705 |
|
|
|
|
------------------ |
------------------ |
|
| OPERATING
LOSS |
|
|
(9,568) |
(9,068) |
|
| FINANCIAL
EXPENSES |
|
22 |
(90,128) |
(83,575) |
|
| OTHER
INCOMES |
|
23 |
3,872 |
4,530 |
|
|
|
|
------------------ |
------------------ |
|
| NET
LOSS FOR THE YEAR |
|
|
(95,824) |
(88,113) |
|
| UNUSUAL ITEMS |
|
24 |
(24,776) |
-- |
|
|
|
|
------------------ |
------------------ |
|
| NET
LOSS AFTER UNUSUAL ITEMS |
|
|
(120,600) |
(88,113) |
|
| UNAPPROPRIATED
LOSS BROUGHT FORWARD |
|
|
(221,964) |
(133,851) |
|
|
|
|
|
------------------ |
------------------ |
|
| ACCUMULATED
LOSS CARRIED TO BALANCE SHEET |
|
(342,564) |
(221,964) |
|
|
|
========== |
========== |
|
| EARNING
PER SHARE |
|
-- |
-- |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes (1) to (30) Form an integral part of these financial
statements. |
|
|
|
|
|
M. Azam Saigol |
|
M. Naseem Saigol |
|
|
Director |
|
Chairman/Chief Executive |
|
|
|
|
|
|
|
|
|
Manzoor Hussain Mir & Co. |
|
| Auditors'
report annexed |
|
Chartered Accountants |
|
|
|
|
|
| Cash
Flow Statement |
|
| for
the year ended June 30, 1999 |
|
|
|
|
1999 |
1998 |
|
|
|
|
|
(Rupees in
thousand) |
|
|
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| Cash
received from customers |
|
|
337,165 |
603,952 |
|
| Cash
paid to suppliers and employees |
|
|
(448,519) |
(427,080) |
|
|
|
|
------------------ |
------------------ |
|
| Cash
generated from operations |
|
|
(111,354) |
176,872 |
|
| Markup paid |
|
|
(66,589) |
(77,728) |
|
| Tax
refund / (payment) |
|
|
(1,241) |
(3,226) |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash flow from operating activities |
|
|
(179,184) |
95,918 |
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
| Fixed
capital expenditures |
|
|
(1,010) |
(832) |
|
| Proceeds
from sale of fixed assets |
|
|
2,007 |
210 |
|
| Net
(increase) / decrease in long term deposits |
|
|
1,226 |
1,562 |
|
| Interest received |
|
|
4,932 |
-- |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash flow from investing activities |
|
|
7,155 |
940 |
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
| Payment
of lease liabilities |
|
|
(2,967) |
(5,966) |
|
| Increase/(decrease)
in short term finances |
|
172,848 |
(94,700) |
|
|
|
------------------ |
------------------ |
|
| Net
cash flow from financing activities |
|
169,881 |
(100,666) |
|
|
|
|
|
|
------------------ |
------------------ |
|
| Net
decrease in cash and cash equivalents |
|
(2,148) |
(3,808) |
|
| Cash
and cash equivalents at the beginning of the year |
|
17,012 |
20.82 |
|
|
|
|
------------------ |
------------------ |
|
| Cash
and cash equivalents at the end of the year |
|
14,864 |
17,012 |
|
|
|
|
========== |
========== |
|
|
|
M. Azam Saigol |
|
M. Naseem Saigol |
|
|
Director |
|
Chairman/Chief Executive |
|
|
|
|
| Notes
to the Accounts |
|
| for
the year ended June 30, 1999 |
|
|
| 1.
THE COMPANY AND ITS OPERATIONS |
|
| The
Company as Private Limited Company was incorporated in Pakistan under the
Companies Ordinance, |
|
| 1984
and converted into Public Limited Company on June 23, 1992. Its shares are
quoted on Stock Exchanges |
|
| of
Pakistan. It is a subsidiary of PAK ELEKTRON LIMITED holding 50.17% shares.
The Company is engaged in |
|
| the
manufacture and sale of domestic appliances. |
|
|
|
|
| 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
|
|
|
|
| 2.1
Accounting Convention |
|
|
|
| These
accounts have been prepared under "historical cost" Convention.
except building and plant & |
|
| machinery
which are stated at re-valued amount. |
|
|
|
|
|
| 2.2
Employees Retirement Benefits |
|
| The
Company has maintained a provident fund scheme for all its permanent
employees and contributions, |
|
| based
on salaries and wages, are made monthly to cover the obligations. |
|
|
|
|
| 2.3 Taxation |
|
|
|
| No
provision for taxation is made as the project is located in the area exempted
under clause 122 (c) of |
|
| the
lind schedule of the Income Tax Ordinance, 1979. The exemptions claimed. has
since been accepted |
|
| by the department. |
|
|
|
|
|
|
| 2.4
Tangible Fixed Assets and Depreciation |
|
|
| Operating
assets are stated at cost, except building and plant & machinery which
are stated at re-valued |
|
| amount,
less depreciation. Capital work-in-progress and machinery in transit are
stated at cost. |
|
|
|
|
| Depreciation
is charged to income on reducing balance method using the rates specified in
fixed assets |
|
| schedule
except for leasehold land which is being amortized proportionately over the
period of lease. A |
|
| full
year's depreciation is charged in the year of acquisition. However
depreciation on additions to plant |
|
| &
machinery is charged only for working period. No depreciation is charged in
the year of disposal. |
|
|
| Normal
repairs and maintenance are charged to income as and when incurred. Major
renewals and |
|
| improvements
are capitalized. Profit or loss on disposal of operating assets is charged to
current income. |
|
|
| 2.5 Trade Mark |
|
|
|
| The
Consideration paid for using trade mark is amortized over a period of ten
years commencing from |
|
| March 01, 1995. |
|
|
| 2.6
Assets Subject to Finance lease |
|
|
|
| Assets
under finance lease are stated at lower of present value of minimum lease
payments under the |
|
| agreement
or the fair value of assets. The aggregate amount of obligations relating to
these assets are |
|
| accounted
for at net present value of liabilities. Depreciation on these assets is
charged in line with |
|
| normal
depreciation policy adopted for assets owned by the company. |
|
|
|
| 2.7 Investments |
|
| Long
term investments are stated at cost while short term investments are valued
at lower of cost or |
|
| market value. |
|
|
|
|
| 2.8
Stores, Spares and Stock-in-Trade |
|
| Stores
and spares are valued at moving average cost. |
|
|
| Raw
material and components are valued at moving average cost. The cost of
work-in-process comprises |
|
| of
cost of materials, labour at actuals and factory overheads proportionate to
labour. Finished goods are |
|
| valued
at lower of cost or net realisable value. The raw materials and components in
bond and in transit |
|
| are valued at cost. |
|
|
| 2.9
Foreign Currency conversion |
|
|
|
| Foreign
currency liability is converted at exchange rates prevailing at the balance
sheet date. Variance |
|
| relating
to fixed assets are adjusted against the value of respective assets. while
others are charged to |
|
| current
year's income. |
|
|
|
|
|
|
| 2.10
Revenue recognition |
|
|
|
| The
sale of goods is recognised on delivery of goods to customers. |
|
|
|
|
|
1999 |
1998 |
|
|
|
|
|
|
(Rupees in
thousand) |
|
|
|
|
| 3.
OPERATING ASSETS |
|
|
|
| Own (Note 3.1) |
|
|
|
297,819 |
164,368 |
|
| Subject
to finance lease (Note 3,2) |
|
|
9,781 |
11,418 |
|
|
|
------------------ |
------------------ |
|
|
|
307,600 |
175,786 |
|
|
|
========== |
========== |
|
|
| 3.1
Schedule of operating assets - Own |
|
|
(Rupees in thousands) |
|
|
|
Cost as at |
Addition / |
Cost as at |
Depreciation |
Accumulated |
Written down |
Revaluation |
Re-valued |
|
| Description |
|
July 01, 1998 |
(Deletion) |
June 30, 1999 |
rate % |
depreciation as |
value as at |
Surplus |
amount as at |
|
|
|
|
at June 30, 1999 |
June 30, 1999 |
|
June 30, 1999 |
|
|
|
|
| TANGIBLE |
|
|
| Land - Leasehold |
|
4,734 |
-- |
4,734 |
-- |
454 |
4,280 |
-- |
4,280 |
|
| Building
on leasehold land |
65,945 |
-- |
65,945 |
5% |
29,938 |
36,007 |
62,210 |
98,217 |
|
| Plant
and Machinery |
101,142 |
2,618 |
103,760 |
5% |
40,333 |
63,427 |
83,364 |
146,791 |
|
| Office Equipment, |
|
|
|
|
|
| furniture & fixture |
|
3,711 |
249 |
3,960 |
10% |
1,522 |
2,438 |
-- |
2,438 |
|
|
------------------ |
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