| Pakistan Papersack Corporation Limited |
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| Annual
Report 1999 |
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| Contents |
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| COMPANY
INFORMATION |
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| MILESTONES |
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| NOTICE
OF ANNUAL GENERAL MEETING |
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| DIRECTORS'
REPORT |
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| TEN
YEARS AT A GLANCE |
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| AUDITORS'
REPORT |
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| BALANCE
SHEET |
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| PROFIT
& LOSS ACCOUNT |
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| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
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| NOTES
TO THE ACCOUNTS |
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| SCHEDULE
OF FIXED ASSETS |
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| PATTERN
OF SHAREHOLDINGS |
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| ACCOUNTS
OF NOBLE COMPUTER SERVICES (PVT.) LTD. |
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| CONSOLIDATED
FINANCIAL STATEMENTS |
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| Company
Information |
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| CHAIRMAN |
|
Rafiq M. Habib |
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| CHIEF
EXECUTIVE & |
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| MANAGING
DIRECTOR |
S.Z. Kazmi |
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| DIRECTORS |
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All S. Habib |
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|
Kersi D. Kapadia |
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|
Mohamedali R. Habib |
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|
Zahid Ali H. Jamal |
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NIT Nominee |
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|
Nasim Beg |
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NIT Nominee |
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| COMPANY
SECRETARY |
S.M.A. Naqvi |
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| AUDITORS |
|
Hyder Bhimji & Co. |
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Chartered Accountants |
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| LEGAL
ADVISER |
S. Mahboob Rizvi |
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Advocate |
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| BANKERS |
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Habib Bank AG Zurich |
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Habib Bank Limited |
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Hongkong & Shanghai
Banking Corporation |
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Metropolitan Bank Limited |
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National Bank of Pakistan |
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| FACTORIES |
|
Stepped-end Division |
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Hub Chowki, Balochistan |
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Balochistan Laminates
Division |
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Hub Chowki, Balochistan |
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Forest Products Division |
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Hub Chowki, Balochistan |
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| REGISTERED
OFFICE |
5th Floor, Siddiqsons
Towers, |
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|
3-Jinnah Cooperative
Housing Society, |
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Sharea Faisal, Karachi -
Pakistan. |
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Tel: 4312030-34 |
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Fax: 92-21 -4312198 |
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E-Mail: ppcl@cyber.
net.pk |
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| REGIONAL SALES |
1st Floor, E-83/A, Super
Town, |
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| OFFICE |
|
Walton Road, |
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|
Lahore Cantt. |
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Tel: 6664571 |
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| MILESTONES |
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| The
Company through the years |
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|
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| Development
and Growth |
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|
| 1973 |
Company Incorporated. |
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| 1976 |
Converted into Public
Limited Company. |
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| 1981 |
Established Balochistan
Laminates Division at Hub Chowki. |
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| 1982 |
Best Performance Award
received from The Karachi Stock Exchange |
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|
(Guarantee) Limited for
the years 1978, 1979, 1980 and 1981. |
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| 1982 |
International Gold
Mercury Award received. |
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| 1984 |
Best Performance Award
received Fifth time from The Karachi Stock |
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|
Exchange (Guarantee)
Limited for the year 1983. |
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| 1984 |
Corporate Excellency
Award for the year 1979-1983 from Management |
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|
Association of Pakistan. |
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| 1986 |
Established Stepped-End
Division at Hub Chowki. |
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| 1987 |
Established Forest
Products Division. |
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| 1998 |
Performance Excellence
Award received from The Karachi Stock Exchange |
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|
(Guarantee) Limited for
the year 1997. |
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| Notice
of Meeting |
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| Notice
is hereby given that the 25th Annual General Meeting of the Company will be
held at Raffia |
|
| Choudri
Memorial Hall, Sidco Avenue Centre, 264 R. A. Lines, Karachi, on Wednesday,
November 24, |
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| 1999
at 11.00 A.M. to transact the following business: |
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| ORDINARY
BUSINESS: |
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| 1)
To receive, consider and adopt the Audited Accounts of the Company for the
year ended |
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| June
30, 1999 and the Reports of the Directors and Auditors thereon. |
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| 2)
To approve payment of dividend @35% i.e. Rs. 1.75 per share as recommended by
the Board |
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| of Directors. |
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| 3)
To appoint Auditors for the ensuing year and fix their remuneration. |
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By order of the Board |
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|
(S. M. A. Naqvi) |
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| Karachi:
November 01 1999. |
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Company Secretary |
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| NOTES: |
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|
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| i)
A member entitled to attend and vote at this meeting may appoint another
member as his/her |
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| proxy
to attend the meeting and vote for him/her. Proxies in order to be effective
must be |
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| received
by the Company at its Registered Office not less than 48 hours before the
time for |
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| holding
the meeting. |
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|
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| ii)
Shareholders are advised to notify to the Company or its Registrar change, if
any, in their |
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| addresses. |
|
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| iii)
CDC shareholders are requested to bring their National Identity Card, Account
and Participant's |
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| I.D.
Numbers, while attending the meeting for identification. |
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| DIRECTORS'
REPORT TO THE SHAREHOLDERS |
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| FOR
THE YEAR ENDED JUNE 30, 1999 |
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| The
Directors of your Company are pleased to welcome you to the twenty-fifth
Annual General Meeting of |
|
| your
Company and place before you the Company's Annual Report and the audited
accounts for the fiscal |
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| year
ended June 30, 1999. |
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|
| FINANCIAL
RESULTS' |
|
| The
financial results of the Company for the year under review are summarized as
under · |
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|
1999 |
1998 |
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|
Rs.'000 |
Rs.'000 |
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|
|
|
| Operating Profit |
|
|
|
|
86,593 |
71,240 |
|
| Trading Loss |
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|
(315) |
(347) |
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| Other Income |
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|
13,226 |
13,472 |
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|
------------------ |
------------------ |
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99,504 |
84,365 |
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| Financial
Expenses |
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|
123,654 |
13,215 |
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| Other Charges |
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|
5,121 |
4,743 |
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------------------ |
------------------ |
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28,775 |
17,958 |
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------------------ |
------------------ |
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|
70,729 |
66,407 |
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| Prior
years' adjustment |
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|
-- |
(3,085) |
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------------------ |
------------------ |
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| Profit
before Taxation |
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|
70,729 |
63,322 |
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| Provision
for Taxation |
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(22,500) |
(17,655) |
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------------------ |
------------------ |
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|
48,229 |
45,667 |
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| Un-appropriated
Profit B/R |
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|
1,986 |
467 |
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|
------------------ |
------------------ |
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|
50,215 |
46,134 |
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========== |
========== |
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| Appropriations |
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| Proposed
Cash Dividend @ 35% i.e. Rs. 1.75 per share |
|
24,148 |
24,148 |
|
| Transferred
to General Reserve |
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|
25,000 |
20,000 |
|
| Un-appropriated
Profit C/F. |
|
|
|
1,067 |
1,986 |
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|
------------------ |
------------------ |
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50,215 |
46,134 |
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|
========== |
========== |
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|
| EARNING
PER SHARE: |
|
| Earning
per share for the year ended June 30, 1999 comes to Rs. 3.50 as compared to
Rs. 3.31 in the |
|
| preceding year. |
|
|
| PAPERSACK
OPERATIONS: |
|
| Total
sales of papersacks during the year under review amounted to Rs. 473 million
as against the last year's |
|
| sales
of Rs. 409 million registering an increase of 15.65%. The production of
papersacks also increased from |
|
| 39.16
million in 1997-98 to 43 million in 1998-99 showing an increase of 9.8% over
the last year. |
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|
| The
increase in duty structure and unrealistic fixation of Import Trade Prices
(ITP) have adversely affected our |
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| import
costs. The Import duty on sackkraft paper, which is our raw material, has
been subjected to repeated |
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| increases
since May, 1997. This is in sharp contrast to the normal slab of duty of 25%
on all intermediate |
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| industrial
raw materials throughout the tariff. In addition, there is also an element of
increase in import levies |
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| on
account of price difference between fixed Import Trade Prices and actual
C&F Prices. ITPs are generally |
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| fixed
at much higher levels e.g. at $ 60-80 higher than actual C&F prices. Your
company has, therefore, to |
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| bear
additional burden of 12% to 16% on import of raw materials. |
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| We
have taken up these issues for review with National Tariff Commission,
Central Board of Revenue and |
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| other
departments of the Federal Government. |
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| The
neighbouring gulf countries which are the main consumers of our products have
levied duty upto 15% to |
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| protect
their local industry with the result that our export has dropped by 12.4%. We
have also to face |
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| inordinate
delays (usually extending from 6 months to 2 years) for claiming Duty Draw
Back. |
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| There
seems to be no end to the downward slide in the Rupees/US Dollar parity in
particular and against the |
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| major
currencies in general. During the year ended June, 1999, the rupee value has
eroded by about 11.6% |
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| against
the US Dollar. The trend is indeed very alarming for the industries totally
dependent on imported raw |
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| material
such as ours. |
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| LAMINATES
OPERATIONS: |
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| The
sales during the year increased by 15% from Rs. 252 million to Rs. 290
million. Operating profit |
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| decreased
from Rs. 5 million to Rs. 2.91 million due to depreciation of Pak. Rupee and
increase in Sales Tax |
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| by
2.5% from 12.5% to 15% the effect of which could not be passed on to the
customers due to unhealthy |
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| competition. |
|
|
| Export
of Decorative and Industrial Laminates increased from Rs. 9.5 million to Rs.
16 million. Efforts are |
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| continuing
to boost it further. |
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|
| An
in-house plant has been installed to produce Phenolic Resin to cater to our
needs. |
|
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| FOREST
PRODUCTS DIVISION: |
|
|
| Sales
during the year under review amounted to Rs. 3.4 million as compared to Rs.
3.5 million last year. |
|
| Operations
resulted in a loss of Rs. 2.3 million as compared to a loss of Rs. 2 million
preceding year. The |
|
| Company
is facing tough competition from the unorganised sector. |
|
|
| TOP
COMPANIES AWARD: |
|
| Your
Company was the proud recipient of "Top Companies Award 1997" given
by the Karachi Stock |
|
| Exchange
(Guarantee) Limited for its exemplary performance and commendable
distribution to the |
|
| shareholders
for the year ended June 30, 1997. |
|
|
| PATTERN
OF SHAREHOLDINGS: |
|
| The
Pattern of Shareholdings as at June 30, 1999 is provided on Page No. 32 of
this Report. |
|
|
| FUTURE
OUTLOOK: |
|
| We
are passing through a critical phase of economic and social upheavals. On top
of it, rising inflation, power |
|
| crisis,
deteriorating law & order situation & frequent strikes have further
confounded the business & industrial |
|
| activities.
Your company is, however, striving hard to minimise the ill effects &
stay afloat. |
|
|
| YEAR
2000 COMPLIANCE OF COMPUTER SYSTEM: |
|
| The
company has already switched over to a RC. based software system which is
fully compliant to Y2K. |
|
|
| SUBSIDIARY
ACCOUNTS: |
|
| Noble
Computer Services (Pvt.) Limited, our fully owned subsidiary company, has
disinvested its |
|
| shareholdings
in Computer Products Corporation (Pvt.) Limited and Noble Software Service
(Pvt.) Limited. |
|
|
| APPOINTMENT
OF AUDITORS: |
|
| The
retiring auditors M/s. Hyder Bhimji & Co., Chartered Accountants being
eligible, offer themselves for re- |
|
| appointment. |
|
|
| EMPLOYEES
RELATIONS: |
|
| The
relations between the Management and Workers continued to remain cordial
through out the year. |
|
|
|
|
On behalf of the |
|
|
|
Board of Directors |
|
|
|
|
|
|
|
|
|
S. Z. Kazmi |
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| Karachi:
September 23, 1999. |
|
Chief Executive |
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|
|
| TEN
YEARS AT A GLANCE |
|
|
| Particulars |
|
1999 |
1998 |
1997 |
1996 |
1995 |
1994 |
1993 |
1992 |
1991 |
1990 |
|
|
| Assets
Employed |
|
|
| Fixed
Assets (Owned & Leased) |
57,200 |
56,570 |
59,493 |
59,208 |
60,570 |
61,999 |
63,122 |
78,795 |
84,003 |
102,881 |
|
| Capital
Work in Progress |
4,474 |
170 |
-- |
-- |
-- |
-- |
-- |
-- |
-- |
-- |
|
| Investments
& Deposits |
104,362 |
83,970 |
84,341 |
43,013 |
41,165 |
43,696 |
43,603 |
44,243 |
44,270 |
33,939 |
|
| Net
Current Assets / (Liabilities) |
120,611 |
121,287 |
97,244 |
115,525 |
108,614 |
103,931 |
97,970 |
72,179 |
72,193 |
69,489 |
|
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|
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
|
| Total
Assets Employed |
286,647 |
261,997 |
241,078 |
217,746 |
210,349 |
209,626 |
204,695 |
195,217 |
200,466 |
206,309 |
|
|
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
|
|
| Financed by |
|
| Shareholders'Equity |
279,060 |
254,979 |
233,460 |
209,267 |
201,539 |
199,888 |
197,405 |
183,123 |
182,442 |
179,551 |
|
| Long
term & deferred liabilities |
7,587 |
7,018 |
7,618 |
8,479 |
8,810 |
9,738 |
7,290 |
12,094 |
18,024 |
26,758 |
|
|
|
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
|
|
|
286,647 |
261,997 |
241,078 |
217,746 |
210,349 |
209,626 |
204,695 |
195,217 |
200,466 |
206,309 |
|
|
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
|
|
|
|
| Sales & Profits |
|
| Sales |
|
767,270 |
665,224 |
720,902 |
827,904 |
269,080 |
498,338 |
451,605 |
347,588 |
464,615 |
598,174 |
|
| Gross Profit |
|
146,130 |
123,739 |
126,684 |
104,754 |
34,265 |
59,731 |
55,201 |
51,793 |
84,361 |
87,887 |
|
| Profit
before interest & taxation |
94,383 |
76,537 |
80,871 |
66,904 |
22,055 |
30,834 |
41,387 |
30,468 |
43,826 |
51,114 |
|
| Profit
before taxation |
70,729 |
63,322 |
69,866 |
54,286 |
15,076 |
20,832 |
31,131 |
21,030 |
30,289 |
33,352 |
|
| Profit
after taxation |
48,229 |
45,667 |
58,690 |
35,325 |
12,000 |
12,832 |
24,631 |
11,030 |
16,689 |
32,352 |
|
| Cash Dividend |
|
24,148 |
24,148 |
34,497 |
27,597 |
10,349 |
10,349 |
10,349 |
10,349 |
13,798 |
13,798 |
|
| Retained
Earnings |
24,081 |
21,519 |
24,193 |
7,728 |
1,651 |
2,483 |
14,282 |
681 |
2,891 |
18,554 |
|
|
| Financial Ratios |
|
|
| Gross
Profit as percentage of sales |
19.05 |
18.60 |
17.57 |
12.65 |
12.73 |
11.99 |
12.22 |
14.90 |
18.16 |
14.69 |
|
| Net
Profit before tax as percentage |
|
| of
sales excluding other Income and |
|
| Trading Loss |
|
7.54 |
7.54 |
8.35 |
5.59 |
3.40 |
3.35 |
3.02 |
2.85 |
7.43 |
5.42 |
|
| Current ratio |
|
1.38 |
1.61 |
1.57 |
1.55 |
1.54 |
1.75 |
1.80 |
1.59 |
1.49 |
1.31 |
|
| Long term debt |
|
0.00% |
0.11% |
0.60% |
1.20% |
1.78% |
2.35% |
2.07% |
6.17% |
11.02% |
15.54% |
|
| equity |
|
100.00% |
99.89% |
99.40% |
98.80% |
98.22% |
97.65% |
97.93% |
93.83% |
88.98% |
84.46% |
|
| Earning
per share |
3.50 |
3.31 |
4.25 |
2.56 |
0.87 |
0.93 |
1.78 |
0.80 |
1.21 |
2.34 |
|
| Cash
Dividend (%) |
35 |
35 |
50 |
40 |
15 |
15 |
15 |
15 |
20 |
20 |
|
|
| *
Six months operations |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed Balance Sheet of PAKISTAN PAPERSACK CORPORATION
LIMITED, as at |
|
| June
30, 1999 and the related Profit and Loss Account and the Statement of Changes
in Financial |
|
| Position
(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 purpose 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 the accounting policies
consistently |
|
| applied; |
|
|
|
| ii)
the expenditure incurred during the year was for the purpose of Company's
business; and |
|
|
| iii)
the business conducted, investments 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, Profit and Loss Account and the Statement of Changes in
Financial Position |
|
| (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 profit
and the changes in |
|
| financial
position for the year then ended; and |
|
|
|
|
| d)
in our opinion, Zakat deductible at source, under the Zakat and Ushr
Ordinance, 1980, was |
|
| deducted
by the Company and deposited in the Central Zakat Fund established under
Section 7 |
|
| of
that Ordinance. |
|
|
|
|
HYDER BHIMJI & CO. |
|
| Karachi:
September 23, 1999. |
|
Chartered Accountants. |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1999 |
|
|
|
|
|
|
Note |
1999 |
1998 |
|
|
|
|
Rs. '000 |
Rs.'000 |
|
| CAPITAL
AND LIABILITIES |
|
|
|
|
|
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
|
|
|
| Authorised
Capital: |
|
|
|
| 20,000,000
Ordinary Shares of Rs. 5/-each |
|
|
100,000 |
100,000 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| Issued,
Subscribed & Paid-up Capital |
|
3 |
68,993 |
68,993 |
|
| General Reserve |
|
|
4 |
209,000 |
184,000 |
|
| Un-appropriated
Profit |
|
|
|
1,067 |
1,986 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
279,060 |
254,979 |
|
|
|
|
| DEFERRED
LIABILITIES |
|
5 |
7,587 |
7,018 |
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
|
| Current
portion of Long Term Loan |
|
|
-- |
281 |
|
| Short
Term and Running Finance utilised |
|
|
|
| under
mark-up arrangements |
|
6 |
178,786 |
107,414 |
|
| Creditors,
Accrued and Other Liabilities |
|
7 |
113,579 |
68,517 |
|
| Proposed
Dividend |
|
|
24,148 |
24,148 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
316,513 |
200,360 |
|
| CONTINGENCIES
& COMMITMENTS |
|
8 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
603,160 |
462,357 |
|
|
|
|
|
========== |
========== |
|
| PROPERTY
AND ASSETS |
|
|
|
|
|
|
|
| FIXED ASSETS |
|
|
|
|
| Operating
Assets |
|
9 |
57,200 |
56,570 |
|
| Capital
Work in progress |
|
|
4,474 |
170 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
61,674 |
56,740 |
|
|
|
|
|
| LONG
TERM INVESTMENTS |
|
10 |
102,435 |
82,273 |
|
| LONG
TERM LOANS |
|
11 |
78 |
77 |
|
| LONG
TERM DEPOSITS |
|
|
1,849 |
1,620 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores & Spares |
|
12 |
11,513 |
9,366 |
|
| Stock-in-Trade |
|
13 |
248,672 |
138,839 |
|
| Trade Debts |
|
14 |
116,431 |
102,869 |
|
| Loans
& Advances |
|
15 |
|
40,514 |
|
| Deposits
& Prepayments |
|
16 |
2,789 |
1,586 |
|
| Other
Receivables |
|
17 |
5,118 |
2,997 |
|
| Short
Term Investments |
|
18 |
-- |
7,500 |
|
| Cash
& Bank Balances |
|
19 |
3,762 |
17,976 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
437,124 |
321,647 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
603,160 |
462,357 |
|
|
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
RAFIQ M. HABIB |
|
ALl S. HABIB |
|
S.Z. KAZMI |
|
|
Chairman |
|
Director |
|
Chief Executive |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
Note |
1999 |
1998 |
|
|
|
Rs. '000 |
Rs. '000 |
|
|
|
|
| Sales |
|
20 |
767,270 |
665,224 |
|
| Cost of Sales |
|
21 |
621,140 |
541,485 |
