| Sapphire Fibres Limited |
|
|
|
|
|
|
|
|
|
| Annual
Report 1999 |
|
|
| CONTENTS |
|
| Board
of Directors |
|
| Notice
of Meeting |
|
| Directors Report |
|
| Auditor's
Report |
|
| Balance Sheet |
|
| Profit
& Loss Account |
|
| Cash
Flow Statement |
|
| Notes
to Accounts |
|
| Pattern
of Share Holdings |
|
|
|
| BOARD
OF DIRECTORS |
|
|
| Chairman |
|
Mr. Mohammad Abdullah |
|
|
|
| Chief Executive |
|
Mr. Shahid Abdullah |
|
|
|
| Directors |
|
Mr. Nadeem Abdullah |
|
|
Mr. Amer Abdullah |
|
|
Mr. Yousuf Abdullah |
|
|
Mr. Mohammad Younus |
|
|
|
| Secretary |
|
Mr. S.W.A. Warsi |
|
|
| Auditors |
|
Mushtaq & Company |
|
|
Chartered Accountants |
|
|
| Management
Consultants |
M. Yousuf Adil Saleem
& Company |
|
|
|
Chartered Accountants |
|
|
| Tax
Consultants |
Mushtaq & Company |
|
|
|
Chartered Accountants |
|
|
| Bankers |
|
ABN Amro Bank |
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|
CITI Bank N.A. |
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|
Habib Bank Limited |
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|
National Bank of Pakistan |
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|
| Registered
Office |
212, Cotton Exchange
Building, |
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|
I.I. Chundrigar Road,
Karachi. |
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|
| Mills |
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*Kharianwala, |
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|
Tehsil and District
Sheikhupura, |
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|
*Feroze Watwan, |
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Tehsil and District
Sheikhupura, |
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*Raiwind, Lahore. |
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| NOTICE
OF ANNUAL GENERAL MEETING |
|
|
| Notice
is hereby given that the 20th Annual General Meeting of Sapphire Fibres
Limited will be held |
|
| on
Wednesday the 29th day of March 2000 at 11.00 a.m. at 212, Cotton Exchange
Building I.I. |
|
| Chundrigar,
Road, Karachi to transact the following business. |
|
|
| 1.
To confirm the minutes of last General Meeting. |
|
|
| 2.
To receive, consider and adopt the report of the Directors and Auditors and
Audited |
|
| Accounts
of the Company for the year ended 30th September, 1999. |
|
|
| 3.
To approve the dividend as recommended by the Board of Directors. |
|
|
| 4.
To appoint auditors for the year ended 30th September, 2000 and to fix their |
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| remuneration.
The retiring auditors' M/s. Mushtaq & Company, Chartered |
|
| Accountants,
being eligible, offered themselves for re-appointment. |
|
|
| 5.
To transact any other business with the permission of the Chair. |
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|
|
By order of the Board |
|
|
|
|
| Karachi, |
|
(S.W.A. Warsi) |
|
| Dated:
06 March, 2000. |
|
Secretary |
|
|
| NOTE: |
|
|
| 1.
A member entitled to attend and vote at this meeting may appoint another
member |
|
| as
his/her proxy to attend and vote on his/her behalf. Proxies in order, to be
valid |
|
| must
be deposited at the Registered Office of the Company not less than 48 hours |
|
| before
the time of the meeting. |
|
|
| 2.
The share transfer books of the company shall remain closed from 24th March, |
|
| 2000
to 31st March, 2000, (both days inclusive). |
|
|
| 3.
Shareholders are requested to notify the company of any change in their
addresses. |
|
|
| 4.
Shareholders who have deposited their shares into the Central Depository
Company |
|
| of
Pakistan Limited, are advised to bring their original National Identity Cards
or |
|
| original
Passport along with CDC account numbers at the meeting venue. |
|
|
|
| DIRECTORS
REPORT TO THE SHAREHOLDERS |
|
|
| The
Directors have pleasure in presenting their report along with audited
accounts of the Company for the year |
|
| ended
30th September 1999 for your consideration and approval. |
|
|
| OPERATING
REVIEW: |
|
| By
the Grace of Almighty Allah, this year the results of the Company remained
satisfactory. The Company |
|
| earned
net profit of Rs. 213.430 million after provision for taxation. |
|
|
| The
Directors recommend payment of cash dividend of 62% i.e. Rs. 6.20 (Rupees six
paisa twenty only) for |
|
| each
ordinary share of Rs. 10/- to be paid to the shareholders. |
|
|
| APPROPRIATION
OF PROFITS: |
|
|
Rs. in '000' |
|
|
| Net
Profit after Tax |
|
213,430 |
|
| Un-appropriated
Profit brought forward |
|
278,455 |
|
| Additional
dividend for 1997-98 32.5% |
|
(45,500) |
|
|
------------------ |
|
| Profit
available for appropriation |
|
446,385 |
|
|
|
|
| Appropriations: |
|
| Proposed
to the General Reserve |
|
100,000 |
|
| Proposed
dividend @62% (1998: 20%) |
|
86,800 |
|
|
------------------ |
|
| Un-appropriated
Profit carried forward |
|
259,585 |
|
|
========== |
|
|
| BMR
AND EXPANSION: |
|
| The
Management of the Company is well aware that the Spinning Industry has become
highly competitive and |
|
| continued
its policy of balancing, modernization and replacement of its spinning
facilities. To stabilize its |
|
| production,
the Directors have planned to invest about Rs. 200 million during the current
year on Balancing, |
|
| Modernization
and replacement of machinery and expansion by adding 5040 Spindles to the
existing Plant. |
|
| Financial
arrangements are under negotiation for a part of the Investment. |
|
|
| YEAR
2000 COMPLIANCE: |
|
| The
Directors have the pleasure to state that the Computers and Software used by
the Company proved to be |
|
| year
2000 compliant due to the timely measures. The Company did not face any
problem in this regard at the |
|
| advent
of the Year 2000. |
|
|
| FUTURE
OUTLOOK: |
|
| Despite
of tough competition the Company has attained satisfactory performance of new
Dyeing and Finishing |
|
| unit
and the Knitted Fabrics by optimum utilization of plant and machinery and
development of quality products |
|
| to
the satisfaction of our International customers. The management is making its
best efforts to attain more |
|
| value
addition with growth focus and market orientation. |
|
|
| The
Company has positioned itself to take advantage of niche markets, which are
an integral part of our long- |
|
| term
strategy. Management plan to focus on investment in new technology,
development and marketing of new |
|
| products,
strengthening of the existing management system and enhancement of human
resources. This will |
|
| enable
the Company to further its standards and gain market share in higher value
added products market. |
|
| With
this in mind, your Company has planned an additional investment in terms of
modern and technologically |
|
| proficient
equipment, which will produce specialized products while achieving economics
of scale. |
|
|
| AUDITORS: |
|
| The
present Auditors M/S Mushtaq & Company, Chartered Accountants, retires
and being eligible, offer themselves |
|
| for
reappointment for the next year. |
|
|
| ACKNOWLEDGEMENTS: |
|
| The
Management would like to place on record its appreciation for the support of
the Board of Directors, |
|
| Shareholders,
Bankers, Suppliers and the dedication and hard work of the Staff and Workers. |
|
|
|
| Karachi. |
|
SHAHID ABDULLAH |
|
|
| Dated:
06 March, 2000 |
|
CHIEF EXECUTIVE |
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed Balance Sheet of SAPPHIRE FIBRES LIMITED as at
September |
|
| 30,
1999 and the related profit and loss account and statement of changes in
financial position |
|
| 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
accounting policies consistently applied; |
|
|
| ii)
the expenditure incurred during the year was for the purposes of the |
|
| 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, 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 |
|
| September
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 the Ordinance. |
|
|
| Without
qualifying our opinion we report that direct expenses incurred on sales have
been |
|
| classified
as explained in note 2.10. |
|
|
| Place: Karachi |
|
MUSHTAQ & CO. |
|
| Date:
March 06, 2000 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT SEPTEMBER 30, 1999 |
|
|
|
|
Note |
1999 |
1998 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
|
|
|
| Authorised
Capital |
|
|
|
| 15,000,000
Ordinary Shares of Rs. 10/- each |
|
|
150,000,000 |
150,000,000 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| Issued,
subscribed and paid-up capital |
|
3 |
140,000,000 |
140,000,000 |
|
|
|
|
| RESERVES |
|
|
|
| General reserve |
|
|
|
550,000,000 |
450,000,000 |
|
| Share premium |
|
|
4 |
58,240,000 |
58,240,000 |
|
| Unappropriated
profit |
|
|
|
259,585,726 |
278,455,026 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
867,825,726 |
786,695,026 |
|
|
|
|
------------------ |
------------------ |
|
| Share
holders' equity |
|
|
|
1,007,825,726 |
926,695,026 |
|
|
|
|
| LONG
TERM LIABILITIES |
|
|
|
|
| Loans
from banks and financial institutions |
|
5 |
88,654,827 |
122,561,827 |
|
| Custom
duty payable |
|
|
6 |
727,597 |
1,455,194 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
89,382,424 |
124,017,021 |
|
|
|
|
|
| DEFERRED
LIABILITIES |
|
|
|
| Gratuity payable |
|
|
7 |
32,261,256 |
26,180,231 |
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
|
| Short
term bank borrowings |
|
|
8 |
586,907,112 |
454,743,849 |
|
| Current
maturity of long term liabilities |
|
9 |
34,634,597 |
30,151,597 |
|
| Creditors,
accrued and other liabilities |
|
10 |
121,007,249 |
139,607,022 |
|
| Proposed
dividend |
|
|
|
86,800,000 |
28,000,000 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
829,348,958 |
652,502,468 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
1,958,818,364 |
1,729,394,746 |
|
|
|
|
========== |
========== |
|
|
| TANGIBLE
FIXED ASSETS |
|
|
|
| Operating
assets |
|
|
11 |
737,990,279 |
638,199,271 |
|
| Capital
work in progress |
|
|
12 |
6,097,116 |
51,585,584 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
744,087,395 |
689,784,855 |
|
|
|
|
| LONG
TERM INVESTMENT |
|
|
13 |
149,503,593 |
144,177,828 |
|
| LONG
TERM DEPOSITS |
|
|
14 |
1,209,078 |
858,078 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores,
spares and loose tools |
|
|
15 |
76,005,744 |
76,318,508 |
|
| Stock in trade |
|
|
16 |
262,418,005 |
104,367,088 |
|
| Trade debtors |
|
|
17 |
558,785,496 |
560,193,227 |
|
| Loans
and advances |
|
|
18 |
10,665,662 |
8,389,454 |
|
| Deposit,
prepayments and other receivables |
|
19 |
52,312,173 |
61,147,276 |
|
| Short
term investments |
|
|
20 |
6,374,630 |
11,726,653 |
|
| Cash
and bank balances |
|
|
21 |
97,456,588 |
72,431,779 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
1,064,018,298 |
894,573,985 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
1,958,818,364 |
1,729,394,746 |
|
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
SHAHID ABDULLAH |
|
AMER ABDULLAH |
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR ENDED SEPTEMBER 30, 1999 |
|
|
|
|
Note |
1999 |
1998 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| Sales |
|
|
22 |
2,261,038,495 |
2,327,555,683 |
|
| Cost of sales |
|
|
23 |
1,870,220,825 |
1,897,024,785 |
|
|
|
|
|
------------------ |
------------------ |
|
| Gross Profit |
|
|
|
390,817,670 |
430,530,898 |
|
|
|
|
|
| Operating
expenses |
|
|
|
| Administrative |
|
|
24 |
31,912,904 |
33,810,496 |
|
| Selling
and distribution |
|
|
25 |
5,995,316 |
4,882,819 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
37,908,220 |
38,693,315 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
352,909,450 |
391,837,583 |
|
|
|
|
| Operating
profit |
|
|
|
| Add:
Other income |
|
|
26 |
25,928,341 |
13,882,746 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
378,837,791 |
405,720,329 |
|
|
|
|
|
| OTHER
CHARGES |
|
|
|
|
| Financial |
|
|
27 |
128,673,987 |
145,020,557 |
|
| Other charges |
|
|
28 |
7,171,337 |
64,633,018 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
135,845,324 |
209,653,575 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
242,992,467 |
196,066,754 |
|
|
|
|
| Net
Profit before taxation |
|
|
|
242,992,467 |
196,066,754 |
|
|
|
|
|
| TAXATION |
|
|
|
|
|
| Current year |
|
|
|
26,746,262 |
20,746,610 |
|
| Prior year |
|
|
|
2,815,505 |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
29,561,767 |
20,746,610 |
|
|
|
|
------------------ |
------------------ |
|
| Net
Profit after taxation |
|
|
|
213,430,700 |
175,320,144 |
|
| Add:
Unappropriated profit brought forward |
|
|
278,455,026 |
131,134,882 |
|
|
|
|
------------------ |
------------------ |
|
| PROFIT
AVAILABLE FOR APPROPRIATION |
|
|
491,885,726 |
306,455,026 |
|
|
|
|
| APPROPRIATIONS |
|
|
|
|
|
| Transfer
to general reserve |
|
|
|
100,000,000 |
-- |
|
| Dividend
prior year @ 32.5% paid out of the profit |
|
|
|
|
| of
the year ended September 30, 1998 in compliance |
|
|
|
|
| with
section 12(9-A) of the Income Tax Ordinance 1979. |
|
45,500,000 |
-- |
|
| Proposed
dividend @ 62% (1998: @ 20%) |
|
|
86,800,000 |
28,000,000 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
232,300,000 |
28,000,000 |
|
|
|
|
------------------ |
------------------ |
|
| UNAPPROPRIATED
PROFIT CARRIED FORWARD |
|
259,585,726 |
278,455,026 |
|
|
|
|
========== |
========== |
|
| EARNING
PER SHARE |
|
|
29 |
15.25 |
12.52 |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these account. |
|
|
|
SHAHID ABDULLAH |
|
AMER ABDULLAH |
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1999 |
|
|
|
|
Note |
1999 |
1998 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| CASH
FLOW FROM OPERATIONS |
|
|
|
|
|
|
|
| Cash
generated from operations |
|
|
A |
272,597,395 |
121,439,700 |
|
|
|
|
|
|
| Financial
charges paid |
|
|
|
(149,335,494) |
(136,410,984) |
|
| Income tax paid |
|
|
|
(26,318,890) |
(21,913,059) |
|
| Gratuity paid |
|
|
|
(1,485,629) |
(1,508,965) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(177,140,013) |
(159,833,008) |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash inflow/(outflow) from operating activities |
|
|
95,457,382 |
(38,393,308) |
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
| Fixed
capital expenditure |
|
|
|
(132,676,421) |
(76,954,757) |
|
| Sale
proceed of short term investments - net |
|
|
4,765,138 |
12,810,379 |
|
| (Increase)/decrease
in long term deposits |
|
|
(351,000) |
2,070 |
|
| Sale
proceeds of fixed assets |
|
|
|
2,306,000 |
388,000 |
|
| Decrease/(increase)
in advance for purchase of land and shares |
|
5,200,000 |
13,800,000 |
|
| Decrease
in lease deposits |
|
|
|
-- |
1,333,289 |
|
| Dividend,
interest and other income |
|
|
21,770,105 |
11,909,239 |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash (outflow) from investing activities |
|
|
(98,986,178) |
(36,711,780) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(3,528,796) |
(75,105,088) |
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
|
|
| Repayment
of long term loans |
|
|
|
(29,424,000) |
(40,538,000) |
|
| Repayment
of supplier's credit |
|
|
|
-- |
(15,324,882) |
|
| Repayment
of finance lease |
|
|
|
-- |
(3,115,683) |
|
| Repayment
of custom duty |
|
|
|
(727,597) |
(727,597) |
|
| Dividend paid |
|
|
|
(73,458,061) |
(27,804,122) |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash inflow/(outflow) from financing activities |
|
|
(103,609,658) |
(87,510,284) |
|
|
|
|
------------------ |
------------------ |
|
| Net
increase/(decrease) in cash and cash equivalent |
|
(107,138,454) |
(162,615,372) |
|
| Cash
and cash equivalents at the beginning of the year |
|
(382,312,070) |
(219,696,698) |
|
|
|
|
------------------ |
------------------ |
|
| Cash
and cash equivalents at the end of the year |
|
B |
(489,450,524) |
(382,312,070) |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
1999 |
1998 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| A.
CASH GENERATED FROM OPERATIONS |
|
|
|
|
|
| Profit
before taxation |
|
|
|
242,992,467 |
196,066,754 |
|
|
|
|
| Adjustments
for non-cash charges and other items: |
|
|
|
|
|
| Depreciation |
|
|
|
76,222,681 |
65,946,758 |
|
| Provision
for gratuity |
|
|
|
7,566,654 |
7,082,531 |
|
| Provision
for diminution in value of short term investments |
|
2,351,717 |
5,831,685 |
|
| (Appreciation)/diminution
in value of long term investments |
|
|
|
| in
listed companies |
|
|
|
(5,325,765) |
47,561,644 |
|
| (Gain)/loss
on sale of fixed assets |
|
|
|
(154,800) |
86,125 |
|
| (Gain)/loss
on disposal of investments |
|
|
(1,764,832) |
903,706 |
|
| Dividend,
interest and other income |
|
|
(21,770,105) |
(11,909,239) |
|
| Financial
charges |
|
|
|
128,673,987 |
145,020,557 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
185,799,537 |
260,523,767 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
before working capital changes |
|
|
428,792,004 |
456,590,521 |
|
|
|
|
|
|
| WORKING
CAPITAL CHANGES |
|
|
| (Increase)/decrease
in current assets: |
|
|
| Stores,
spares and loose tools |
|
|
|
312,764 |
(32,892,242) |
|
| Stock in trade |
|
|
|
(158,050,917) |
(362,567) |
|
| Trade debtors |
|
|
|
1,407,731 |
(309,524,250) |
|
| Loans
and advances |
|
|
|
(1,476,208) |
1,155,917 |
|
| Deposits,
prepayments and other receivables |
|
|
(10,816,328) |
(4,302,649) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(168,622,958) |
(345,925,791) |
|
| Increase/(decrease)
in current liabilities: |
|
|
|
|
| Creditors,
provisions and accrued charges |
|
|
12,428,349 |
10,774,970 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
272,597,395 |
121,439,700 |
|
|
|
|
========== |
========== |
|
|
|
|
| B.
CASH AND CASH EQUIVALENTS AT THE END OF THE |
|
| YEAR
COMPRISING FOLLOWING BALANCE SHEET ITEMS |
|
| Cash
and bank balances |
|
|
|
97,456,588 |
72,431,779 |
|
| Short
term borrowings |
|
|
|
(586,907,112) |
(454,743,849) |
