| Pakistan PVC Limited |
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| Annual
Report 1999 |
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| CONTENTS |
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| Company
Information |
|
| Notice
of Meeting |
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| Director's
Report to the Shareholders |
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| Auditors'
Report |
|
| Balance Sheet |
|
|
| Profit
& Loss Account |
|
| Cash
Flow Statement |
|
| Notes
to the Accounts |
|
| Pattern
of Shareholding |
|
|
|
|
| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
|
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| CHAIRMAN & |
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| CHIEF
EXECUTIVE |
Reyaz Shaffi |
|
|
|
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| DIRECTORS |
|
Arif Shaffi |
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|
|
Asif Shaffi |
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|
Irshad Ahmad |
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|
Naseem Malik |
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|
Mahmood-ur-Rehman |
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|
Miss Naila Shaffi |
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| SECRETARY |
|
Mohammad Younus |
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| AUDITORS |
|
Riaz Ahmad, Saqib, Gohar
& Co., |
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|
Chartered Accountants |
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|
|
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| BANKERS |
|
United Bank Limited |
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|
|
Habib Bank Limited |
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|
National Bank of Pakistan |
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|
|
Muslim Commercial Bank
Limited |
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|
Prime Commercial Bank
Limited |
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| REGISTERED
OFFICE |
Shaffiabad, Gharo, Distt,
Thatta. |
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| FACTORY |
|
Shaffiabad, Gharo, Distt,
Thatta. |
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|
Sector I - 9, Industrial
Area, Islamabad. |
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| NOTICE
OF ANNUAL GENERAL MEETING |
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| Notice
is hereby given that 36th Annual General Meeting of the Company will be held
on Tuesday, |
|
| February
29, 2000 at the registered office of the company at Pakistan PVC Limited,
Shaffiabad, Gharo, |
|
| Distt.
Thatta at 1000 a.m. to transact the following business. |
|
|
| 1.
To confirm the minutes of the 35th Annual General Meeting of the Company held
on |
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| December
31, 1998. |
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|
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| 2.
To receive, consider and adopt the audited accounts of the company for the
year ended |
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| June
30, 1999 together with the reports of the Director's and Auditors' thereon. |
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|
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| To
appoint auditors of the company for the year ending June 30, 2000 and fix
their |
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| remuneration. |
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|
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| To
transact any other business of the company with the permission of the chair. |
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|
By Order of the Board |
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|
(MOHAMMAD YOUNUS) |
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| Karachi:
February 3, 2000 |
|
Company Secretary |
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|
| Notes: |
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|
|
| 1.
A Member entitled to attend and vote at this meeting may appoint another
member as |
|
| his/her
Proxy to attend and vote instead of him/her. Proxies in order to be valid
must be |
|
| received
by the company not later than 72 hours before the scheduled time for the
meeting. |
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|
|
|
| 2.
The share transfer books of the company will remain closed from February 24,
2000 to |
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| February
29, 2000 (both days inclusive). |
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|
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| 3.
Shareholders are requested to notify the company promptly changes in their
address (if any). |
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| DIRECTOR'S
REPORT TO THE SHAREHOLDERS |
|
|
| On
behalf of my colleagues on the Board, I welcome you to the 36th Annual Genera
Meeting of the company |
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| and
present the audited accounts for the year ended June 30, 1999 alongwith the
auditors' report thereon. |
|
|
| The
financial position of your company during the year ended June 30, 1999 was
further deteriorated due |
|
| to
financial expenses incurred on previous loans, ideal cost and depreciation.
As reported previously, Gharo |
|
| Plant
remains closed through out the year and there was no production during the
year from Gharo Plant. |
|
| Machinery
of Pipe Plant shifted from Gharo to Islamabad are still under installation. |
|
|
| During
the year under review your management arranged the revaluation of Fixed
Assets and for this purpose |
|
| the
services of an independent valuer was hired which resulted a surplus of Rs.
667.424 million over the |
|
| book
value. Production of PVC Pipes at Islamabad was 513,84,1 meters as against
675,882 meters last |
|
| year.
Reason for lower production is due to frequent electric failure and stoppage
of machines for repairs. |
|
| Your
company sustained huge loss of Rs. 65,305 million as compared to a loss of
45.806 million during the |
|
| previous year. |
|
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| FINANCIAL
RESULTS |
|
|
(Rs. In Millions) |
|
|
|
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|
|
| Loss
for the year before taxation |
|
|
65.266 |
|
| Provision
for taxation - Turnover |
|
|
0.039 |
|
|
|
|
------------------ |
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| Loss
after taxation |
|
|
65.305 |
|
| Accumulated
loss brought forward |
|
367.291 |
|
|
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|
------------------ |
|
| Accumulated
loss carried forward |
|
432.596 |
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|
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|
========== |
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| AUDITORS'
REPORT |
|
| The
auditors have qualified their opinion, since your company has prepared the
accounts on the going |
|
| concern
basis. The reason given in their qualification is the continued losses
sustained by your company |
|
| and
closure of operations at Gharo Plant. |
|
|
| DIVIDEND |
|
| Due
to poor financial result and huge accumulated losses, the Directors of your
company have decided to |
|
| pass
over the Dividend. |
|
|
| AUDITORS |
|
| The
present auditors M/s. Riaz Ahmad, Saqib, Gohar & Company, Chartered
Accountants, the retiring |
|
| auditors
have offered themselves for appointment as auditors of the company for the
year ending June 30, |
|
| 2000. |
|
|
| PATTERN
OF SHAREHOLDING |
|
| The
pattern of shareholding is annexed to this report. |
|
|
|
|
REYAZ SHAFFI |
|
| Karachi:
03 February, 2000 |
|
Chairman & Chief Executive |
|
|
|
| AUDITOR'S
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of Pakistan PVG Limited as at June 30,
1999 and the related |
|
| profit
and loss account and the statement of cash flow, 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 state that: |
|
|
| The
Company, during the year, has incurred after tax loss of Rs. 65.305 million.
The Company |
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| has
also recorded accumulated losses amounting to Rs. 432.596 million as at June
30, 1999 |
|
| and,
as of that date, the Company's current liabilities exceeded its current
assets by Rs. 448,367 |
|
| million.
The Company has ceased all its operation at Gharo and therefore aforesaid
events |
|
| have
created considerable doubt as to whether the Company would be able to
continue as a |
|
| "going-conern".
No adjustments, if any, have been made in the accounts, that may be necessary |
|
| should
the Company be unable to continue as a "going-concern". |
|
|
| Subject
to the foregoing, we report: |
|
|
| (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; |
|
|
|
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| i)
the balance sheet and profit and loss account together with the notes thereon |
|
|
| have
been drawn up in conformity with the Companies Ordinate, 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 |
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| business; and |
|
|
| iii)
the business conducted, investments made and the expenditure incurred during |
|
| the
year were in accordance with the object of the Company; |
|
|
|
| c)
in our opinion and to the best of our information and according to the
explanations given |
|
| to
us subject to the eventual outcome of the matters stated in note 7.1 and
adjustments, |
|
| if
any, that may be required when these matters are resolved and determined, the
balance |
|
| sheet,
profit and loss account and the notes forming part thereof, give the
information |
|
| required
by the Companies Ordinance, 1984, in the manner so required and Company's |
|
| affairs
as at June 30, 1999 and of the loss and the statement of cash flow for the
year |
|
| then
ended ;and |
|
|
| (d)
In our opinion, no Zakat was deductible at source under the Zakat and Ushr
Ordinance, |
|
| 1980. |
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|
|
|
|
RIAZ AHMAD, SAQIB, GOHAR & CO. |
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| Karachi:
03 February, 2000 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1999 |
|
|
|
|
|
1999 |
1998 |
|
|
Note |
Rupees |
Rupees |
|
|
|
|
| CAPITAL
AND LIABILITIES |
|
|
|
|
|
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
|
|
|
|
| Authorised
Capital |
|
|
|
| 15,000,000
(1998: 15,000,000) of Rs. 10 each |
|
|
150,000,000 |
150,000,000 |
|
|
|
|
========== |
========== |
|
|
|
|
| Issued,
Subscribed & paid-up capital |
|
3 |
49,860,000 |
49,860,000 |
|
| Accumulated
Profit/(Loss) |
|
(432,596,347) |
(367,291,335) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
(382,736,347) |
(317 431,335) |
|
|
|
|
| SURPLUS
ON REVALUATION |
|
|
|
| OF
FIXED ASSETS |
|
4 |
667,424,060 |
-- |
|
|
|
|
|
|
|
| LONG
TERM LOANS & LIABILITIES |
|
5 |
86,583,333 |
-- |
|
|
|
|
|
|
|
| DEFERRED
LIABILITY FOR GRATUITY |
|
5,944,361 |
5,944,361 |
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Current
maturity of long term loans & liabilities |
|
|
100,829,718 |
83,513,051 |
|
| Finance
utilized under mark-up |
|
|
| arrangement
- secured |
|
6 |
51,496,560 |
42,671,587 |
|
| Creditors,
accrued & other liabilities |
|
7 |
341,113,177 |
306,997,839 |
|
| Provision
for taxation |
|
|
179,996 |
141,075 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
493,619,451 |
433,323,552 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
8 |
-- |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
870,849,181 |
121,836,578 |
|
|
|
|
|
========== |
========== |
|
|
| PROPERTY
AND ASSETS |
|
|
|
| TANGIBLE
FIXED ASSETS |
|
9 |
824,980,819 |
59,274,227 |
|
| LONG
TERM INVESTMENTS |
|
10 |
203,000 |
203,000 |
|
| LONG
TERM LOANS, ADVANCES |
|
|
|
| AND
DEPOSITS |
|
11 |
412,593 |
412,593 |
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
|
| Stores,
spare parts and |
|
|
|
|
| loose tools |
|
12 |
8,113,459 |
8,140,045 |
|
| Stock-in-trade |
|
13 |
10,843,373 |
25,861,364 |
|
| Materials-in-transit |
|
|
1,756,681 |
17,561,681 |
|
| Trade
debtors - unsecured - |
|
|
|
| considered
good |
|
14 |
3,748,677 |
3,831,120 |
|
| Advances,
deposits, prepayments |
|
|
|
| and
other receivables |
|
15 |
21,023,637 |
23,518,635 |
|
| Cash
and bank balances |
|
16 |
(233,058) |
(1,161,087) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
4,5,252,769 |
61,946,758 |
|
|
|
|
------------------ |
------------------ |
|
|
|
870,849,181 |
121,836,578 |
|
|
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
| Auditor's
report annexed. |
|
|
|
|
|
REYAZ SHAFFI |
|
ASIF SHAFFI |
|
| Karachi:
February 03, 2000 |
|
Chief Executive |
|
Director |
|
|
|
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
|
|
|
1999 |
1998 |
|
|
Note |
Rupees |
Rupees |
|
|
|
|
| Sales (Net) |
|
17 |
7,784,118 |
13,430,962 |
|
| Cost of sales |
|
18 |
13,959,192 |
20,418,902 |
|
|
|
|
------------------ |
------------------ |
|
| Gross
profit/(loss) |
|
|
(6,175,074) |
(6,987,940) |
|
|
|
|
| Less;
Operating Expenses |
|
|
|
| Administrative
expenses |
|
19 |
8,105,780 |
6,950,454 |
|
| Selling
& distribution expenses |
|
20 |
1,790,345 |
2,054,938 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
9,896,125 |
9,005,392 |
|
|
|
|
------------------ |
------------------ |
|
| Operating loss |
|
|
(16,071,199) |
(15,993,332) |
|
| Other
income / (loss) |
|
21 |
106,880 |
173,188 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
(15,964,319) |
(15,820,144) |
|
|
|
|
| Financial
and other charges |
|
22 |
49,301,772 |
30,342,679 |
|
|
|
|
------------------ |
------------------ |
|
| Profit/(loss)
before taxation |
|
|
(65,266,091) |
(46,162,823) |
|
|
|
|
|
| Provision
for taxation |
|
|
|
| Current |
|
38,921 |
67,155 |
|
| Prior year |
|
|
|
-- |
(423,357) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
38,921 |
(356,202) |
|
|
|
|
------------------ |
------------------ |
|
| Loss
after taxation |
|
|
(65,305,012) |
(45,806,621) |
|
| Accumulated
loss brought forward |
|
|
(367,291,335) |
(321,484,714) |
|
|
|
|
------------------ |
------------------ |
|
| Accumulated
loss carried forward |
|
|
(432,596,347) |
(367,291,335) |
|
|
|
|
|
|
========== |
========== |
|
|
|
|
| Basic
earnings per share |
|
23 |
(13.10) |
(9.19) |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
REYAZ SHAFFI |
|
|
ASIF SHAFFI |
|
|
Chief Executive |
|
|
Director |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
|
1999 |
1998 |
|
|
|
|
|
Note |
Rupees |
Rupees |
|
|
|
|
|
| CASH
FLOW FORM OPERATING ACTIVITIES |
|
|
|
|
|
| Cash
generated from operations |
|
1 |
1,031,370 |
1,539,691 |
|
|
|
|
|
|
|
|
|
|
| CASH
FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
| Fixed
capital expenditure |
|
|
(105,841) |
(18,056) |
|
|
|
| Payment
of Gratuity |
|
|
-- |
(1,257,830) |
|
|
|
| Proceed
from sale of fixed assets |
|
|
2,500 |
-- |
|
|
|
|
------------------ |
------------------ |
|
| Net
Cash from investing activities |
|
(103,341) |
(1,275,886) |
|
|
|
------------------ |
------------------ |
|
| Net
Decrease in cash and cash equivalents |
|
928,029 |
263,805 |
|
| Cash
and cash equivalents at the beginning of the year |
|
(1,161,087) |
(1,424,892) |
|
|
|
------------------ |
------------------ |
|
| Cash
and cash equivalents at the end of the year |
|
(233,058) |
(1,161,087) |
|
|
|
|
========== |
========== |
|
|
|
|
| 1.
CASH GENERATED FROM OPERATIONS |
|
|
| Loss
before taxation |
|
|
|
(65,266,091) |
(46,162,823) |
|
|
| Adjustments
for non cash charges and other items |
|
|
|
|
| Depreciation |
|
|
|
5,723,308 |
6,352,165 |
|
|
| Profit
on sale of fixed assets |
|
|
|
(2,499) |
-- |
|
|
| Provision
for gratuity |
|
|
|
14,324 |
169,449 |
|
|
| Working
Capital changes |
|
|
2 |
60,562,328 |
41,180,900 |
|
|
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
66,297,461 |
47,702,514 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
1,031,370 |
1,539,691 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
|
| 2.
WORKING CAPITAL CHANGES |
|
|
| Decrease/(Increase)
in current assets |
|
|
| Stores & Spares |
|
|
26,586 |
73,772 |
|
|
| Stock in trade |
|
|
15,017,990 |
2,158,922 |
|
|
| Trade debts |
|
|
82,443 |
(124,241) |
|
|
| Advances,
prepayments, deposits and |
|
|
|
|
| other
receivables |
|
2,494,998 |
(1,547,922) |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
17,622,017 |
560,531 |
|
|
| Increase
in current liabilities |
|
|
|
|
|
| Creditors,
accrued and other liabilities |
|
|
34,115,338 |
33,307,493 |
|
|
| Finance
utilized under markup arrangement |
|
|
8,824,973 |
7,312,876 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
42,940,311 |
40,620,369 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
60,562,328 |
41,180,900 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
REYAZ SHAFFI |
|
|
ASIF SHAFFI |
|
|
Chief Executive |
|
|
Director |
|
|
|
|
|
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
| 1.
STATUS AND NATURE OF THE COMPANY |
|
| The
company was incorporated in Pakistan and is listed on the two stock exchanges
of Pakistan. |
|
| The
company is engaged in the production and sale of PVC resin, PVC pipes &
fittings, PVC |
|
| compound
and caustic soda. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES: |
|
|
| 2.1
Accounting Convention: |
|
| These
accounts have been prepared under the historical cost convention except that |
|
| certain
fixed assets have been included at revalued amount referred in sub para (2.3) |
|
| and (9). |
|
|
|
|
| 2.2 Gratuity: |
|
|
|
| Provision
approximating the amount required to cover the company's obligations is |
|
| made
annually including for employees who have not completed the initial
qualifying |
|
| period. |
|
|
|
|
| 2.3
Fixed Assets and Depreciation: |
|
| Freehold
Land, Factory Building and Plant & Machinery at June 99, was revalued by |
|
| an
independent valuer as of that date and are shown at such revalued figures. |
|
|
| All
other fixed assets are stated at cost less accumulated depreciation.
Depreciation |
|
| is
charged to income applying the reducing balance method. These rates used are |
|
| stated
in note 9 to the accounts. In respect of additions during the year, full
year's |
|
| depreciation
is charged and no depreciation is charged on assets in the year of |
|
| disposal. |
|
|
|
|
|
|
| Maintenance
and normal repairs are charged to income as and when incurred. Major |
|
| renewals
and improvements are capitalised and the assets so replaced, if any, are |
|
| retired. |
|
|
|
|
| Gains
and losses on disposal of assets are included in current income. |
|
|
| 2.4
Investments: |
|
| Investments
are stated at cost less provision for diminution in value. |
|
|
|
|
| 2.5
Store, Spare Parts and Loose Tools: |
|
| These
are stated at the lower of average cost and net realizable value arrived at
after |
|
| making
provisions for estimated loss on realization. |
|
|
| 2.6
Stock-in-Trade: |
|
| Raw
and packing materials and finished goods are valued at lower of average cost |
|
| determined
annually and net realizable value arrived at after making provisions for |
|
| estimated
loss on realization. |
|
|
| 2.7
Materials-in-Transit: |
|
|
| These
are valued at cost accumulated upto the balance sheet date. |
|
|
| 2.8
Revenue recognition: |
|
|
|
| Sales
are recognized when goods are delivered to customers and invoices raised. |
|
| Income
on investment is accounted for on receipt basis. |
|
|
| 2.9 Taxation: |
|
|
| Provision
for income tax is made on the basis of taxable income after taking into |
|
| account
any credit, unabsorbed depreciation and tax losses of prior years. |
|
|
|
|
| 2.10
Deferred Taxation: |
|
|
|
| Deferred
taxation is provided on timing differences using the liability method,
excluding |
|
| the
tax effects of those timing difference which are not likely to reverse in the
foreseeable |
|
| future. |
|
|
|
|
|
|
1999 |
1998 |
|
|
|
Rupees |
Rupees |
|
|
|
|
|
| 3.
ISSUED, SUBSCRIBED AND PAID-UP CAPITAL |
|
| Ordinary
Shares of Rs. 10 each: |
|
|
|
|
|
|
| 2,603,335
(1998: 2,603,335) issued for cash |
|
26,033,350 |
26,033,350 |
|
|
|
|
| 2,396,665
(1998: 2,396,665) issued as fully |
|
|
| paid
in consideration of amounts |
|
|
| outstanding
as secured loans |
|
|
23,966,650 |
23,966,650 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
50,000,000 |
50,000,000 |
|
|
|
|
| Amount
due in respect of 14,000 |
|
|
|
| shares
(1998: same) allotted to |
|
|
|
| Federal
Chemical and Ceramics |
|
|
|
| Corporation
(Private) Limited |
|
140,000 |
140,000 |
|
|
|
------------------ |
------------------ |
|
|
|
