| Polypropylene Products Limited |
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| Annual
Report 1999 |
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| Contents |
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| Company
Information |
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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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| Profit
and Loss Account |
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| Statement
of Changes in Financial Position |
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| Notes
to the Accounts |
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| Pattern
of Shareholdings |
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| Notice
of Annual General Meeting |
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| Company
Information |
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| Board of |
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Mr. Razzak H. Mohammed |
Chairman |
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| Directors |
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Mr. Salim H. Mohammed |
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Mr. Shabbir S. Mohammed |
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Ms. Farzana Munaf |
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Mr. Iqbal Parekh |
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Mr. Fatehali R. Mohammed |
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Mr. A.Q. Malik |
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Mr. Mohammed Zafar Iqbal |
Chief Executive |
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| Secretary |
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Mr. M.A. Nasser |
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| Bankers |
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Allied Bank of Pakistan
Limited |
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American Express Bank
Limited |
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Bank Al-Habib Limited |
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Faysal Bank Limited |
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Habib Bank AG Zurich |
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Habib Bank Limited |
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Metropolitan Bank Limited |
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Muslim Commercial Bank
Limited |
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| Auditors |
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Ford, Rhodes, Robson,
Morrow |
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Chartered Accountants |
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| Factory |
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Korangi, Karachi. |
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| Registered |
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7th Floor, Trade Centre, |
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| Office |
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I.I. Chundrigar Road, |
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Karachi. |
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| Twenty
Sixth Annual Report of the Directors |
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| for
the year ended June 30, 1999 |
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| The
Shareholders, |
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| Your
directors are pleased to submit herewith the twenty sixth annual report on
the affairs of |
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| the
Company together with the audited accounts and the Auditors' Report for the
year ended |
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| June 30, 1999. |
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| Financial
Results |
|
Rupees |
|
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| Net
Profit for the year after providing for taxation |
|
3,197,207 |
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| Add:
Profit brought forward from last year's accounts |
|
5,216,311 |
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------------------ |
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| Profit
available for appropriation |
|
8,413,518 |
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|
========== |
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| Appropriations |
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| Proposed
dividend @ 20% i.e. Re. 1.00 per share on |
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| 4,000,000
ordinary shares of Rs. 5/- each for the |
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| year
ended June 30, 1999. |
|
4,000,000 |
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|
|
|
| Unappropriated
profit carried forward to the |
|
4,413,518 |
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| next
year's accounts. |
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|
------------------ |
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8,413,518 |
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========== |
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| By
the Grace of Allah, the Company has shown an after tax net profit of Rs. 3.2
million during |
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| the
year ended June 30, 1999 and the Board of Directors have recommended cash
dividend |
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| of 20%. |
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| The
production of Polypropylene bags increased by about 9% from 15.61 million
bags in |
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| 1997-98
to 16.97 million bags in 1998-99, but in terms of value gross sales have
decreased |
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| by
about 11% from Rs. 154.6 million in 1997-98 to Rs. 138.3 million in 1998-99,
mainly due |
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| to
decrease in sale price because of very unhealthy competition among the PP bag |
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| manufacturers
plus increase in cost specially in sales tax from 12.5% to15% and devaluation |
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| of
Pak Rupee against US Dollar by about 11% |
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| Future
Prospects |
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| The
situation in Polypropylene bag business may not improve because of excess |
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| manufacturing
capacity over demand and increase of sales tax from 12.5% to 15% will make |
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| it
even more difficult for us to compete against the unorganised sector which is
expanding |
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| very fast. |
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| C&F
price of raw material increased from US $ 500 per metric ton in May, 1999 to |
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| US
$ 800 per metric ton in September 1999, but selling price of PP Bag is not
keeping pace |
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| with
the increase in raw material price. |
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| Year
2000 Compliance of Computer System |
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| All
computer programmes of our Company are year 2000 compliant. |
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| Auditors |
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| The
present Auditors of the Company, Ford, Rhodes, Robson, Morrow, Chartered |
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| Accountants,
retires and being eligible, offer themselves for re-appointment for the year |
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| 1999-2000. |
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| Your
Directors would like to thank the workers and staff of the Company for
working with |
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| enthusiasm,
loyalty and devotion to duty. |
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On behalf of the Board |
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|
RAZZAK H. MOHAMMED |
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| Karachi:
October 21, 1999. |
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Chairman |
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| Auditors'
Report to the Members |
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| We
have audited the annexed balance sheet of POLYPROPYLENE PRODUCTS LIMITED |
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| as
at June 30, 1999 and the related profit and loss account and statement of
changes in |
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| financial
position (cash flow statement), together with the notes forming part thereof,
for |
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| the
year then ended and we state that we have obtained all the information and
explanations |
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| which
to the best of our knowledge and belief were necessary for the purposes of
our audit |
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| and,
after due 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 |
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| by
the Companies Ordinance, 1984; |
|
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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 |
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| drawn
up in conformity with the Companies Ordinance, 1984 and are in |
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| agreement
with the books of account and are further in accordance with |
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| accounting
policies consistently applied; |
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|
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| (ii)
the expenditure incurred during the year was for the purpose of the Company's |
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| business; and |
|
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| (iii)
the business conducted, investments made and the expenditure incurred during |
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| the
year were in accordance with the objects of the Company; |
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| (c)
in our opinion, and to the best of our information and according to the
explanations |
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| given
to us, the balance sheet, profit and loss account and the statement of
changes |
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| in
financial position (cash flow statement), together with the notes forming
part thereof, |
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| give
the information required by the Companies Ordinance, 1984 in the manner so |
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| 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 profit and the changes in financial position
(cash flows) |
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| for
the year then ended; and |
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| (d)
in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance,
1980 |
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| was
deducted by the Company and deposited in the Central Zakat Fund established |
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| under
section 7 of that Ordinance. |
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Ford, Rhodes, Robson, Morrow |
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| Karachi:
October 21, 1999. |
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Chartered Accountants |
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| BALANCE
SHEET AS AT JUNE 30, 1999 |
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1999 |
1998 |
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Note |
Rupees |
Rupees |
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| Tangible
Fixed Assets |
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| Operating
assets at cost less accumulated depreciation |
3 |
14,033,119 |
13,560,165 |
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| Capital
work-in-progress |
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|
-- |
1,054,792 |
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| Long
Term Investments |
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4 |
27,072,861 |
23,801,406 |
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| Long
Term Loans and Deposits |
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5 |
929,950 |
843,150 |
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| Current Assets |
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|
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| Stores
and spares |
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6 |
1,620,862 |
1,425,622 |
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| Stock-in-trade |
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7 |
18,983,368 |
16,247,395 |
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| Trade debtors |
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8 |
14,955,045 |
11,571,448 |
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| Advance
income tax |
|
|
4,238,029 |
6,914,195 |
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| Profit
accrued on investments |
|
|
2,296,000 |
931,000 |
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| Advances,
deposits, prepayments and other receivables |
9 |
2,673,197 |
2,665,685 |
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| Short
term investments |
|
10 |
20,000,000 |
22,500,000 |
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| Cash
and bank balances |
|
11 |
231,989 |
282,125 |
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|
------------------ |
------------------ |
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64,998,490 |
62,537,470 |
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------------------ |
------------------ |
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|
107,034,420 |
101,796,983 |
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|
========== |
========== |
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| Share
Capital and Reserves |
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| Share Capital |
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| Authorised |
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| 6,000,000
ordinary shares of Rs.5/- each |
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|
30,000,000 |
30,000,000 |
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|
========== |
========== |
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| Issued,
subscribed and paid-up |
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|
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| 4,000,000
ordinary shares of Rs. 5/- each fully paid-up |
12 |
20,000,000 |
20,000,000 |
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| Revenue
reserves |
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| General reserve |
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|
40,000,000 |
40,000,000 |
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| Unappropriated
profit |
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|
|
4,413,518 |
5,216,311 |
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|
------------------ |
------------------ |
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|
44,413,518 |
45,216,311 |
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| Deferred
Liabilities |
|
13 |
10,860,903 |
11,153,083 |
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| Current
Liabilities |
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| Creditors,
accrued and other liabilities |
|
14 |
4,318,201 |
5,978,272 |
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| Short
term running finances |
|
15 |
18,204,239 |
10,680,843 |
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| Provision
for taxation |
|
|
4,671,000 |
4,271,000 |
|
| Unclaimed
dividend |
|
|
566,559 |
497,474 |
|
| Proposed
dividend |
|
|
4,000,000 |
4,000,000 |
|
|
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|
------------------ |
------------------ |
|
|
|
|
31,759,999 |
25,427,589 |
|
| Contingencies
and Commitments |
|
16 |
------------------ |
------------------ |
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|
|
|
107,034,420 |
101,796,983 |
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|
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|
========== |
========== |
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| The
annexed notes form an integral part of these accounts. |
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| The
auditors' report is annexed hereto. |
|
|
|
Mohammed Zafar Iqbal |
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|
|
Salim H. Mohammed |
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|
Chief Executive |
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|
Director |
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|
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| PROFIT
AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 1999 |
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|
1999 |
1998 |
|
|
Note |
Rupees |
Rupees |
|
|
|
|
| Sales |
|
17 |
117,112,643 |
132,811,866 |
|
| Cost of Sales |
|
18 |
103,654,323 |
119,266,578 |
|
|
|
|
------------------ |
------------------ |
|
| Gross profit |
|
|
13,458,320 |
13,545,288 |
|
| Other income |
|
19 |
6,504,366 |
5,592,291 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
19,962,686 |
19,137,579 |
|
|
|
|
------------------ |
------------------ |
|
| Administrative
expenses |
|
20 |
7,075,925 |
7,603,185 |
|
| Selling expenses |
|
21 |
5,262,640 |
5,301,969 |
|
|
|
|
------------------ |
------------------ |
|
|
|
12,338,565 |
12,905,154 |
|
|
|
|
| Workers'
profit participation fund |
|
|
222,069 |
222,827 |
|
| Workers'
welfare fund |
|
|
7,628 |
74,560 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
229,697 |
297,387 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
7,394,424 |
5,935,038 |
|
| Provision
for diminution in value of investments |
|
|
968,035 |
5,233,673 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
6,426,389 |
701,365 |
|
| Financial
charges |
|
22 |
3,182,745 |
1,775,877 |
|
|
|
|
------------------ |
------------------ |
|
| Net
profit/(loss) before taxation |
|
|
|
3,243,644 |
(1,074,512) |
|
| Less: Taxation |
|
|
23 |
46,437 |
(3,389,544) |
|
|
|
|
|
------------------ |
------------------ |
|
| Net
profit after taxation |
|
|
|
3,197,207 |
2,315,032 |
|
| Unappropriated
profit brought forward |
|
|
5,216,311 |
6,901,279 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
8,413,518 |
9,216,311 |
|
| Appropriations |
|
|
|
|
|
| Proposed
dividend @ 20% (1998: 20%) |
|
|
4,000,000 |
4,000,000 |
|
|
|
|
|
|
------------------ |
------------------ |
|
| Unappropriated
profit carried forward |
|
|
4,413,518 |
5,216,311 |
|
|
|
|
|
========== |
========== |
|
| Basic
earnings per share |
|
|
24 |
0.80 |
0.58 |
|
|
|
|
========== |
========== |
|
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| The
annexed notes form an integral part of these accounts. |
|
|
|
Mohammed Zafar Iqbal |
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|
Salim H. Mohammed |
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|
Chief Executive |
|
|
|
Director |
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|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION (CASH FLOW STATEMENT) |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
|
1999 |
1998 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| Cash
flows from operating activities |
|
|
|
|
|
| Profit
before taxation |
|
3,243,644 |
(1,074,512) |
|
|
|
|
| Adjustments for |
|
|
|
| Depreciation |
|
1,932,084 |
1,789,986 |
|
| Profit
on sale of fixed assets |
|
(207,786) |
(138,667) |
|
| Provision
for retirement gratuity |
|
956,449 |
1,915,098 |
|
| Gratuity paid |
|
(148,629) |
(40,879) |
|
| Loss
on sale of shares |
|
|
-- |
263,265 |
|
| Provision
for diminution in value of investments |
|
968,035 |
5,233,673 |
|
| Income
from investments |
|
(4,843,205) |
(4,456,624) |
|
| Financial
charges |
|
3,165,896 |
1,729,028 |
|
|
|
------------------ |
------------------ |
|
| Operating
profit before working capital changes |
|
5,066,488 |
5,220,368 |
|
|
|
|
| Changes
in working capital |
|
|
|
| (Increase)
/ decrease in current assets |
|
|
|
|
|
| Stores
and spares |
|
(195,240) |
200,954 |
|
| Stock-in-trade |
|
(2,735,973) |
5,013,585 |
|
| Trade debtors |
|
(3,383,597) |
(5,235,264) |
|
| Profit
accrued on investments |
|
(1,365,000) |
(931,000) |
|
| Advances,
deposits, prepayments and other receivables |
|
(7,512) |
(363,050) |
|
|
|
|
| Decrease
in current liabilities |
|
|
|
|
|
|
| Creditors,
accrued and other liabilities |
|
|
(2,100,985) |
(1,137,954) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(9,788,307) |
(2,452,729) |
|
|
|
|
------------------ |
------------------ |
|
| Cash
generated from operations |
|
(4,721,819) |
2,767,639 |
|
| Refund of Taxes |
|
2,751,753 |
4,109,262 |
|
| Taxes paid |
|
(822,024) |
(3,059,468) |
|
| Financial
charges paid |
|
(2,724,982) |
(1,724,366) |
|
|
|
------------------ |
------------------ |
|
| Net
cash flows from operating activities (A) |
|
(5,517,072) |
2,093,067 |
|
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
|
| Cash
flows from investing activities |
|
|
| Sale
of fixed assets |
|
|
765,000 |
184,500 |
|
| Acquisition
of fixed assets |
|
|
(1,907,460) |
(2,774,348) |
|
| Capital
work-in-progress |
|
|
-- |
(1,054,792) |
|
| Short
term investments |
|
|
2,500,000 |
(10,467,000) |
|
| Income
from investments |
|
|
4,843,205 |
4,456,624 |
|
| Long
term loans and deposits |
|
|
(86,800) |
(254,800) |
|
| Sale
of long term investments |
|
|
-- |
293,035 |
|
| Long
term investments |
|
|
(4,239,490) |
-- |
|
|
|
------------------ |
------------------ |
|
| Net
cash flows from investing activities (B) |
|
1,874,455 |
(9,616,781) |
|
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
|
| Cash
flows from financing activities |
|
|
| Short
term finances |
|
|
7,523,396 |
10,680,843 |
|
| Dividend paid |
|
|
(3,930,915) |
(3,873,685) |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash flows from financing activities (c) |
|
3,592,481 |
6,807,158 |
|
|
|
========== |
========== |
|
| Net
increase in cash and cash equivalents (A+B+C) |
|
(50,136) |
(716,556) |
|
| Cash
and cash equivalents at beginning of the year |
|
282,125 |
998,681 |
|
|
|
------------------ |
------------------ |
|
| Cash
and cash equivalents at the end of the year |
|
231,989 |
282,125 |
|
|
|
|
|
|
========== |
========== |
|
|
|
Mohammed Zafar Iqbal |
|
Salim H. Mohammed |
|
|
Chief Executive |
|
Director |
|
|
|
|
|
| Notes
to the Accounts |
|
| for
the year ended June 30, 1999 |
|
|
| 1.
The Company and its operations |
|
| Polypropylene
Products Limited, incorporated in 1973, as a public limited company, quoted |
|
| on
stock exchanges in Pakistan. The Company is engaged in the manufacture and
sale |
|
| of
polypropylene woven bags. |
|
|
| 2.
Statement of significant accounting policies |
|
|
| 2.1
Accounting convention |
|
| These
accounts have been prepared under the historical cost convention. |
|
|
|
|
| 2.2
Retirement benefits |
|
| The
Company operates an unfunded gratuity scheme covering employees who have |
|
| completed
atleast one year of service with the Company. Provision is made annually |
|
| to
cover obligations under the scheme. |
|
|
| 2.3 Taxation |
|
| Provision
for current taxation is based on taxable income at current rates of taxation |
|
| or
0.5% of the turnover under section 80D of the Income Tax Ordinance, 1979 |
|
| whichever
is higher. |
|
|
| The
Company accounts for deferred taxation on all significant timing differences |
|
| which
are likely to reverse in the foreseeable future, using the liability method.
As |
|
| a
measure of prudence, deferred tax debits are not accounted for. |
|
|
| 2.4 Fixed assets |
|
| Fixed
assets are stated at cost less accumulated depreciation except leasehold |
|
| land
which is stated at cost. |
|
|
| Depreciation
on fixed assets is calculated on written down values at the rates given |
|
| below: |
|
|
| Office premises |
|
|
5% per annum |
|
| Vehicles |
|
|
20% per annum |
|
| Computers |
|
|
30% per annum |
|
| All other assets |
|
|
10% per annum |
|
|
| Normal
repairs and maintenance cost is charged to revenue in the year in which it |
|
| is
incurred, major renewals and improvements are capitalised. |
|
|
| Profits
and losses on disposal of fixed assets are taken to profit and loss account. |
|
|
| 2.5 Investments |
|
| Short
term investments are valued at cost or market value whichever is lower,
calculated |
|
| on
aggregate basis. In case of long term investments provision for diminution in
value of |
|
| investments
is made on individual basis if it is considered to be permanent. |
|
|
| 2.6
Stock-in-trade, stores and spares |
|
| These
are stated at the lower of cost or net realisable value. Cost is determined
on |
|
| "first-in,
first-out" basis. Stock-in-transit is valued at cost. |
|
|
| 2.7
Revenue recognition |
|
|
| (a)
Sales are recorded when goods are despatched and invoiced. |
|
|
| (b)
Income on investments is accounted for as follows: |
|
|
| (i)
dividend income is accounted for upon declaration of dividends by the |
|
| investee
companies. |
|
|
| (ii)
income on Regular Income Certificates and Defence Saving Certificates is |
|
| accounted
for as and when due according to the terms of the schemes. |
|
|
| (c)
Other income is accounted for on an accrual basis. |
|
|
|
| 3.
Tangible Fixed Assets |
|
|
|
|
COST |
|
DEPRECIATION |
|
Written |
|
|
|
|
|
down |
|
|
As at |
|
As at |
As at |
For the |
On |
As at |
Value as at |
|
|
July 1, |
Additions |
Disposals |
June 30, |
July 1, |
Year |
disposals |
June 30, |
June 30, |
|
|
1998 |
|
1999 |
1998 |
|
1999 |
1999 |
|
|
| Leasehold land |
|
147,271 |
-- |
-- |
147,271 |
-- |
-- |
-- |
-- |
147,271 |
|
|
|
| Office premises |
|
1,807,653 |
-- |
-- |
1,807,653 |
576,860 |
61,540 |
-- |
638,400 |
1,169,253 |
|
|
| Building
on lease-hold land |
4,495,739 |
-- |
-- |
4,495,739 |
3,741,862 |
75,388 |
-- |
3,817,250 |
678,489 |
|
|
| Plant
and machinery |
39,827,298 |
2,044,642 |
1,632,044 |
40,239,896 |
32,578,558 |
897,416 |
1,312,822 |
32,163,152 |
8,076,744 |
|
|
| Office
equipment and computers |
1,173,692 |
318,610 |
-- |
1,492,302 |
526,209 |
204,757 |
-- |
730,966 |
761,336 |
|
|
| Furniture
and fixtures |
1,999,170 |
-- |
-- |
1,999,170 |
1,142,980 |
85,619 |
-- |
1,228,599 |
770,571 |
|
|
| Vehicles |
|
7,859,698 |
599,000 |
628,500 |
7,830,198 |
5,183,887 |
607,364 |
390,508 |
5,400,743 |
2,429,455 |
|
|
|
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