| Pakistan Synthetics Limited |
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| Annual Report 1999 |
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| CONTENTS |
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| Company Information |
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| Performance
of the Company at a Glance |
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| Notice of Meeting |
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| Report of the Directors |
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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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| Cash Flow Statement |
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| Notes to the Accounts |
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| Pattern of Shareholding |
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| COMPANY
INFORMATION |
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| BOARD OF DIRECTORS |
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EBRAHIM HAJI KARIM
CHAIRMAN |
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UMER HAJI KARIM-CHIEF
EXECUTIVE |
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HAROON HAJI KARIM |
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ANWAR HAJI KARIM |
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YAKCOB HAJI KARIM |
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AHMED EBRAHIM |
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NASIM BEG |
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AALIYA DOSSA |
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| SECRETARY |
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HAROON AHMED LAKHANI |
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| BANKERS |
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HABIB BANK LIMITED |
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HABIB BANK AG ZURICH |
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CITIBANK N.A. |
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AMERICAN EXPRESS BANK
LIMITED |
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METROPOLITAN BANK LIMITED |
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BANK AL-HABIB LIMITED |
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MUSLIM COMMERCIAL BANK
LIMITED |
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NATIONAL BANK OF PAKISTAN |
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| AUDITORS |
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HYDER BHIMJI &
COMPANY |
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CHARTERED ACCOUNTANTS |
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| LEGAL ADVISORS |
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MANSOOR AHMED KHAN &
COMPANY |
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ADVOCATES AND SOLICITORS |
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| REGISTERED OFFICE |
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3RD FLOOR, KARACHI DOCK
LABOUR BOARD |
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BUILDING, 58- WEST WHARF
ROAD, |
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KARACHI-74000 |
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| FACTORY |
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F. 1,2, 3, & F. 13,
14 & 15, |
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HUB INDUSTRIAL TRADING
ESTATE, |
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DISTRICT LASBELLA,
BALOCHISTAN |
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| PERFORMANCE
OF THE COMPANY AT A GLANCE |
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EIGHTEEN |
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MONTHS |
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YEAR |
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ENDED |
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ENDED |
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YEAR ENDED
DECEMBER 31, |
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JUNE 30, |
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JUNE 30, |
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1991 |
1992 |
1993 |
1994 |
1995 |
1997 |
1998 |
1999 |
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| STATISTICAL
SUMMARY |
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Rupees in million |
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| Gross sales |
|
909 |
833 |
1,143 |
1,409 |
1,699 |
2,054 |
1,170 |
1,013 |
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| Profit/(loss)
before taxation |
15 |
35 |
154 |
257 |
274 |
36 |
(8) |
12 |
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| Taxation |
|
4 |
4 |
5 |
6 |
7 |
9 |
5 |
1 |
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| Profit/(loss) after taxation |
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11 |
31 |
149 |
251 |
267 |
27 |
(13) |
11 |
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| Gross assets employed |
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| (including
capital work-in-progress) |
1,452 |
1,290 |
1,365 |
1,443 |
1,481 |
1,477 |
1,446 |
1,392 |
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| Paid-up capital |
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374 |
374 |
374 |
448 |
560 |
560 |
560 |
560 |
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| Shareholders' equity |
|
384 |
416 |
565 |
816 |
985 |
1,012 |
999 |
969 |
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| EARNING AND PAY OUT |
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|
Rs. per share of Rs. 10 |
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| Earnings
per share after taxation |
0.29 |
0.84 |
3.98 |
5.60 |
4.77 |
0.49 |
(0.23) |
0.21 |
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| Break-up value |
|
10.29 |
11.13 |
15.11 |
18.19 |
17.57 |
18.06 |
17.83 |
17.29 |
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| Bonus shares |
|
-- |
-- |
1:5 |
1:4 |
-- |
-- |
-- |
-- |
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| Cash dividend |
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-- |
-- |
-- |
-- |
1.75 |
-- |
-- |
0.75 |
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| *
The net earning per share for the year ended June 30,1998 is negative |
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| FINANCIAL RATIOS |
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Ratio |
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| Current
Assets ' Current Liabilities |
0.66:1 |
0.63:1 |
0.86:1 |
1.12:1 |
1.30:1 |
1.31:1 |
1.34:1 |
1.39:1 |
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| Long-term Debts · Equity |
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62:38 |
55:45 |
45:58 |
25:75 |
13:87 |
7:93 |
2:98 |
0:100 |
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| PRODUCTION |
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Tonnes |
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| Polyester Staple Fibre |
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17,457 |
16,673 |
20,858 |
19,430 |
17,834 |
27,290 |
21,055 |
18,745 |
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| Polyester Chips |
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-- |
-- |
497 |
772 |
1,267 |
976 |
-- |
-- |
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| Pakistan
Synthetics Limited |
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| NOTICE OF MEETING |
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| Notice is hereby given that the
Fourteenth Annual General Meeting of Pakistan Synthetics Limited will |
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| be
held on Wednesday, the 22nd December, 1999, at 2.00 p.m. at the Registered
Office of the Company at |
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| Third
Floor, KDLB Building, 58-West Wharf Road, Karachi-74000, Pakistan, to
transact the following business:- |
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| 1.
To confirm the minutes of the Thirteenth Annual General Meeting of the
Company held on |
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| 14th December, 1998. |
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| 2.
To receive and adopt the Audited Accounts of the Company together with
Directors' and |
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| Auditors' Reports for the year ended 30th
June, 1999. |
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| 3.
To approve the payment of a Final Dividend for the year ended 30th June,
1999, as recommended by |
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| the Board of Directors. |
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| 4.
To appoint Auditors and fix their remuneration. |
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| 5.
To transact such other ordinary business as may be placed before the meeting
with the |
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| permission of the Chair. |
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| By Order of the Board |
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| Karachi: 17th November, 1999 |
UMER HAJI KARIM |
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|
CHIEF EXECUTIVE |
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| Pakistan
Synthetics Limited |
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| NOTICE OF MEETING |
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| NOTES :- |
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| 1. |
Shares Transfer Books of
the Company will remain closed from Wednesday, 15th December, 1999 |
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to Friday, 24th December,
1999 (both days inclusive). Transfers received at the Registered Office of |
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the Company at the close
of business on 14th December, 1999 will be treated in time for the purpose of |
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payment of proposed cash
dividend to the transferees and entitlement to attend the Annual General |
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Meeting of the Company. |
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| 2. |
A member of the Company
entitled to attend and to vote at the meeting may appoint any other member |
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as his/her proxy to
attend and to vote on his/her behalf. Proxies, in order to be effective, must
be |
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received at the
Registered Office of the Company at 3rd Floor, Karachi Dock Labour Board
Building, |
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58-West Wharf Road,
Karachi, duly stamped, signed and witnessed not less than 48 hours before the |
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time of holding the
meeting. |
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| 3 |
Account holders and
sub-account holders holding book entry securities of the Company. in Central |
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|
Depository Company of
Pakistan Limited, who wish to attend the Annual General Meeting, are
requested |
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to bring original
National Identity Card with copy thereof duly attested by their Bankers for
identification |
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|
purpose and should
present their CDC Account Number. |
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| 4.
Shareholders are requested to notify any change in their addresses
immediately. |
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| Pakistan
Synthetics Limited |
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| REPORT
OF THE DIRECTORS FOR THE YEAR ENDED 30TH JUNE, 1999 |
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| Your Directors are pleased to present the
Annual Report of your Company together with the |
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| Audited
Accounts for the year ended 30th June, 1999. |
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| OVERVIEW |
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| The
severe crisis through which the Polyester Staple Fibre Industry is passing
due to over |
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| supply
and the dumping by international suppliers is not yet over. The prices of the
Polyester Staple |
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| Fibre
remained under pressure during the year under review due to steep fall in the
international fibre |
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| prices.
It is imperative that the Government should introduce anti-dumping measures
to protect the |
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| local
fibre industry from the onslaught of dumping by the Far Eastern producers. |
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| It is heartening to note that the Company
has redeemed all its long term loans including loan |
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| from
Asian Development Bank and LT-TFCs. |
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| Y2K COMPLIANCE |
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| The
Management has taken appropriate measures to comply with Y2K problems and all |
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| necessary
modifications have been carried out. The Management is pleased to report that
the |
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| Company
is now Y2K compliant. |
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| PRODUCTION |
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| The
Company produced 18,745 tons of Polyester Staple Fibre during the year under
review as |
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| against
21,055 tons of Polyester Staple Fibre in the corresponding period of last
year. Though there is a |
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| constant
growth in demand for the Polyester Staple Fibre in the country but still a
gap between its supply |
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| and demand exists. |
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| REPORT
OF THE DIRECTORS FOR THE YEAR ENDED 30TH JUNE, 1999 |
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| FINANCIAL RESULTS |
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| The
gross turnover for the year ended 30th June,1999 decreased to Rs. 1,013
million |
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| as
compared to the gross turnover of Rs. 1,170 million for the year ended 30th
June, 1998.The |
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| main
reason for decrease in the gross turnover was reduction in the sales volume
as well as |
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| depressed
sale prices of Polyester Staple Fibre. |
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| The
raw material in-put cost reduced in the second half of the year under review
due to downward |
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| international
prices of PTA and MEG resulting in the improvement of the overall financial
results of the Company |
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| for the year under review. |
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| By
the grace of Almighty Allah, the Company has earned a net profit before
taxation of Rs. 12.340 |
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| million,
after providing for depreciation and financial charges aggregating to Rs.
143.017 million as against a net |
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| loss
of Rs. 7.988 million in the last year. The net profit, after providing for
minimum tax on turnover @ 0.50% and |
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| prior
year's tax adjustment, works out to Rs. 11.726 million. |
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| Your
Directors are pleased to propose payment of cash dividend of Re. 0.75 per
share (7.5%) for the |
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| year
under review by transferring an amount of Rs. 42.500 million from revenue
reserve. |
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| Accordingly,
the following appropriations have been proposed:- |
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|
(Rs' 000) |
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| Net profit after taxation |
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|
11,726 |
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| (Accumulated
loss) brought forward |
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|
(11,240) |
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|
---------------- |
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| Profit
available for appropriations |
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|
486 |
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| Transfer
from revenue reserve |
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|
42,500 |
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|
---------------- |
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|
42,986 |
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| Appropriations:- |
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| Final
dividend @ Re. 0.75 per share of Rs. 10/- each |
|
42,030 |
|
|
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|
---------------- |
|
| Unappropriated
profit carried forward |
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|
956 |
|
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|
========= |
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| REPORT
OF THE DIRECTORS FOR THE YEAR ENDED 30TH JUNE, 1999 |
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| EARNINGS PER SHARE |
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| The net earnings per share after
providing for taxation for the year ended 30th June, |
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| 1999
was Re. 0.21 (1998' Re. 0.23 - negative). |
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|
| FUTURE OUTLOOK |
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| The
prices of PTA and MEG have shown upward trend in the current year which would
enhance |
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| the
input cost. However, the sale prices of the Polyester Staple Fibre have also
improved. Moreover, |
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| the
Management is striving its best to improve the results by maximising
production, improving the |
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| operating
efficiences and taking appropriate cost reduction measures. |
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|
| AUDITORS |
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| The
present Auditors, M/s. Hyder Bhimji & Co., Chartered Accountants, retire
at the conclusion |
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| of
the 14th Annual General Meeting and being eligible, offer themselves for
re-appointment as auditors |
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| of the Company. |
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| PATTERN
OF SHAREHOLDING |
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| A Statement showing the pattern of
shareholding in the Company as on 30th June, 1999 is |
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| attached to the accounts. |
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| ACKNOWLEDGEMENT |
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| The Management Employees relations
remained conducive throughout the year. The |
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| Management
wishes to express its gratitude for the valuable services rendered by its
employees and |
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| workers
during the year under review. |
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|
For and on behalf of |
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| Karachi:
17th November, 1999 |
|
Board of Directors |
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|
UMER HAJI KARIM |
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|
CHIEF EXECUTIVE |
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| AUDITORS'
REPORT TO THE MEMBERS |
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| We
have audited the annexed Balance Sheet of PAKISTAN SYNTHETICS LIMITED as at
June 30, 1999 |
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| and
the 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 to the |
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| best
of our knowledge and belief were necessary for the purposes of our audit and,
after due verification thereof, |
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| 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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| b) in our opinion: |
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| i)
the Balance Sheet and Profit and Loss Account together with the 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 |
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| account and are further in accordance with
accounting policies consistently applied; |
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| 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 were in |
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| 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 given to us, the |
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| Balance Sheet, Profit and Loss Account and
Cash Flow Statement, together with the notes forming |
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| part thereof, 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 as at |
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| June 30, 1999 and of the profit and cash
flows for the year then ended; and |
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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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|
HYDER BHIMJI & CO. |
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| Karachi:
17th November, 1999 |
|
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 in thousand) |
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| SHARE
CAPITAL AND RESERVES |
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| Authorised Capital |
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| 70,000,000
(1998: 70,000,000) ordinary shares of |
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| Rs. 10 each |
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|
700,000 |
700,000 |
|
|
============ |
============ |
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| Issued,
subscribed and paid-up capital |
|
3 |
560,400 |
560,400 |
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| Revenue reserves |
|
4 |
407,500 |
450,000 |
|
| Unappropriated
profit/(accumulated loss) |
|
956 |
.(11,240) |
|
|
-------------------- |
-------------------- |
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|
968,856 |
999,160 |
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| REDEEMABLE CAPITAL |
|
5 |
-- |
16,160 |
|
| DEFERRED LIABILITIES |
|
| Provision for staff gratuity |
|
|
11,310 |
10,236 |
|
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| CURRENT
LIABILITIES AND PROVISIONS |
|
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| Short
- term running finance utilized |
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| under
mark up arrangement |
|
7 |
232,782 |
243,695 |
|
|
|
|
|
|
| Short
- term loan from Associated Undertaking |
|
- |
10,000 |
|
| Current
portion of redeemable capital |
|
5 |
16,160 |
28,950 |
|
| Current
portion of long-term loans |
|
6 |
- |
24,801 |
|
| Creditors,
accrued and other liabilities |
|
8 |
109,515 |
96,026 |
|
| Tax on turnover |
|
|
11,760 |
16,606 |
|
| Proposed dividend |
|
|
42,030 |
- |
|
|
|
|
-------------------- |
-------------------- |
|
|
|
|
412,247 |
420,078 |
|
| CONTINGENT
LIABILITIES AND CAPITAL |
|
| COMMITMENTS |
|
9 |
- |
- |
|
|
-------------------- |
-------------------- |
|
|
|
TOTAL |
1,392,41 3 |
1,445,634 |
|
|
|
|
============ |
============ |
|
|
|
| TANGIBLE
FIXED ASSETS |
|
| Operating fixed assets |
|
10 |
815,291 |
878,909 |
|
| Capital work - in - progress |
|
11 |
450 |
1,262 |
|
|
|
|
-------------------- |
-------------------- |
|
| LONG
- TERM LOANS AND ADVANCES |
|
12 |
898 |
1,260 |
|
| LONG
- TERM DEPOSITS |
|
13 |
2,601 |
1,998 |
|
|
|
|
|
| CURRENT ASSETS |
|
|
| Stores and spares |
|
14 |
105,105 |
101,644 |
|
| Stock-in-trade |
|
15 |
264,137 |
300,312 |
|
| Trade debts |
|
16 |
110,685 |
84,201 |
|
| Loans and advances |
|
17 |
1,364 |
1,578 |
|
| Trade
deposits and short-term prepayments |
|
18 |
1,067 |
384 |
|
| Other receivables |
|
19 |
70,025 |
63,870 |
|
| Cash and bank balances |
|
20 |
20,790 |
10,216 |
|
|
|
|
-------------------- |
-------------------- |
|
|
|
|
573,173 |
562,205 |
|
|
|
|
-------------------- |
-------------------- |
|
|
TOTAL |
1,392,413 |
1,445,634 |
|
|
|
============ |
============ |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
|
|
|
EBRAHIM HAJI KARIM |
UMER HAJI KARIM |
|
|
CHAIRMAN |
|
CHIEF EXECUTIVE |
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
1999 |
1998 |
|
|
Note |
(Rupees in thousand) |
|
|
|
|
| Sales |
|
|
1,012,985 |
1,170,292 |
|
| Less: sales tax |
|
|
124,658 |
130,032 |
|
| brokerage and discounts |
|
4,415 |
8,270 |
|
|
-------------------- |
-------------------- |
|
|
|
|
129,073 |
138,302 |
|
|
|
|
-------------------- |
-------------------- |
|
| Net sales |
|
|
883,912 |
1,031,990 |
|
| Cost of goods sold |
|
21 |
791,913 |
985,182 |
|
|
|
|
-------------------- |
-------------------- |
|
| Gross profit |
|
|
91,999 |
46,808 |
|
| Administration
and selling expenses |
|
22 |
27,140 |
25,382 |
|
|
|
|
-------------------- |
-------------------- |
|
| Operating profit |
|
|
64,859 |
21,426 |
|
| Other income |
|
23 |
586 |
537 |
|
|
|
|
-------------------- |
-------------------- |
|
|
|
|
65,445 |
21 ~963 |
|
| Financial charges |
|
24 |
52,401 |
29,898 |
|
| Other charges |
|
25 |
704 |
53 |
|
|
|
|
-------------------- |
-------------------- |
|
| Profit/(loss)
before taxation |
|
|
12,340 |
(7,988) |
|
| Taxation |
|
27 |
614 |
5,160 |
|
|
|
|
-------------------- |
-------------------- |
|
| Profit/(loss) after taxation |
|
|
11,726 |
(13,148) |
|
| (Accumulated
loss)/unappropriated profit brought forward |
|
(11,240} |
1,908 |
|
|
|
|
-------------------- |
-------------------- |
|
| Profit
available for appropriations/(loss) |
|
|
486 |
(11,240) |
|
| Transfer
from revenue reserve |
|
|
42,500 |
- |
|
|
|
|
-------------------- |
-------------------- |
|
|
|
|
42,986 |
(11,240) |
|
| Appropriation: |
|
| Proposed
final dividend @ Re. 0.75 per share |
|
| of Rs. 10/- each (1998: nil) |
|
|
42,030 |
- |
|
|
|
-------------------- |
-------------------- |
|
| Unappropriated
profit/(accumulated loss) carried forward |
|
956 |
(11,240) |
|
|
========== |
========== |
|
|
|
Re. |
Re. |
|
| Earnings per share |
|
|
28 |
0.21 |
(0.23) |
|
|
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
| EBRAHIM HAJI KARIM |
|
|
UMER HAJI KARIM |
|
| CHAIRMAN |
|
|
CHIEF EXECUTIVE |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
1999 |
1998 |
|
|
|
(Rupees in thousand) |
|
|
|
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
| Profit/(loss)before taxation |
|
|
12,340 |
(7,988) |
|
| Adjustments for: |
|
|
|
|
| Depreciation |
|
|
90,616 |
98,046 |
|
| Provision for staff gratuity |
|
|
1,698 |
3,810 |
|
| Profit
on disposal of fixed assets |
|
|
(501) |
(518) |
|
| Interest income |
|
|
(85) |
(19) |
|
| Financial charges |
|
|
52,401 |
29,898 |
|
|
|
|
-------------------- |
-------------------- |
|
|
|
|
156,469 |
123,229 |
|
| Movement in: |
|
|
|
|
| Working capital |
|
|
15,393 |
(243,470) |
|
| Long-term
loans and advances |
|
|
362 |
393 |
|
| Long-term deposits |
|
|
(603) |
2,914 |
|
|
|
|
-------------------- |
-------------------- |
|
| Cash
inflow/(out flow) from operations |
|
|
171,621 |
(116,934) |
|
| Payments for: |
|
|
|
|
| Staff gratuity |
|
|
(624) |
(838) |
|
| Financial charges |
|
|
(53,948) |
(25,041) |
|
| Taxes |
|
|
(16,201 ) |
(23,602) |
|
|
|
|
-------------------- |
-------------------- |
|
| Net
cash inflow/(out flow) from operating activities |
|
100,848 |
(1 |
