| Suraj Cotton Mills Limited |
|
|
|
|
|
|
|
|
| Annual
Report 1999 |
|
|
|
| CONTENTS |
|
|
|
|
| Company
Information |
|
|
| Notice
of Meeting |
|
|
| Chief
Executive's Review |
|
|
| Financial
Highlights |
|
| Directors'
Report |
|
| Auditors'
Report |
|
| Balance Sheet |
|
|
| Profit
and Loss Account |
|
| Statement
of Changes in Financial Position |
|
| Notes
to the Accounts |
|
| Pattern
of Holding of Shares |
|
|
|
| COMPANY
INFORMATION |
|
|
| Board
of Directors |
|
| Khalid Bashir |
|
(Chairman) |
|
| Nadeem
Maqbool |
(Chief Executive) |
|
|
| (In
Alphabetic Order) |
|
|
| Ahsan Bashir |
|
| Ahsan
M. Saleem |
|
| Amjad
Mehmood |
|
| Asif Bashir |
|
| Humayun
Maqbool |
|
| Nasim Beg |
|
|
| Auditors |
|
| Riaz
Ahmed & Co. |
|
| Chartered
Accountants |
|
|
| Bankers |
|
| National
Bank of Pakistan |
|
| Prime
Commercial Bank Limited |
|
| United
Bank Limited |
|
| Pakistan
Industrial Credit and Investment Corporation Limited |
|
| Crescent
Investment Bank Limited |
|
|
| Registered
Office |
|
| 83, Babar Block, |
|
| New
Garden Town, |
|
| Lahore. |
|
| Tel
+92 (42) 588 1974 - 75 |
|
| Fax
+92 (42) 588 1976 |
|
| email
rashid.sadiq@cressoft.com.pk |
|
|
| Profile |
|
| Suraj
Cotton Mills Limited is a Public Limited Company incorporated on 18 December
1984 and is listed on Karachi |
|
| and
Lahore stock exchanges of Pakistan. The Company is engaged in the
manufacturing and trading of high quality |
|
| yarn
and woven fabrics. |
|
|
| Suraj
Cotton Mills Limited is a member of the Crescent Group one of the largest and
most dynamic conglomerates of |
|
| Pakistan.
The Group has grown steadily and presently comprises over thirty public and
private companies. The Group |
|
| has
the distinction of being associated with several prestigious foreign firms.
The modern yet conservative policies of |
|
| the
Group helped in attracting investment from overseas in the form of joint
ventures, equity participation and loans. |
|
|
| Operating
Units |
|
| The
company has three operating units located at Nooriabad (Sindh) and Shahkot
(Punjab). The Company initially |
|
| setup
up its spinning project with the capacity of 16,320 spindles at Nooriabad in
1985, which came into commercial |
|
| production
in 1986. The second unit of 18,240 spindles was set up at Shahkot in 1990.
These two spinning units with |
|
| a
combined spindlage of 34,560 has a capacity to produce 10 Million kgs of
knitting and weaving yarns. |
|
|
| The
third unit comprising of 96 Air jet looms was set up in 1995 at Shahkot along
with existing spinning unit. |
|
| The
weaving unit is equipped with the most modern, sophisticated,
state-of-the-art machinery and has a collective |
|
| capacity
exceeding 12 Millions meters of Gray cloth annually. |
|
|
| Being
the part of a largest and well-known industrial group in Pakistan
"Crescent Group" Suraj Cotton Mills Limited |
|
| enjoys
the sound market reputation in local market as well as in International
Market. |
|
|
| The
Company is fully conscious of the emerging challenges and' has accordingly
taken up re-orientation of business |
|
| strategy
and has devised suitable measures to maintain a progressive level of
operations and profitability. At Suraj |
|
| Cotton
Mills Ltd., we hold strong conviction that in order to remain amongst the
market leaders, it is vital to be |
|
| dynamic
and aggressive but to survive prudence is the key word, so we have developed
an aggressive, yet prudent |
|
| and
conservative business strategy. |
|
|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
|
| NOTICE
IS HEREBY GIVEN THAT the 15th Annual General Meeting of the shareholders of
Suraj Cotton Mills |
|
| Limited
will be held on Saturday the March 25, 2000 at 9:30 a.m. at the Registered
Office, 83-Babar Block, New |
|
| Garden
Town, Lahore to transact the following business: |
|
|
| 1.
To receive, consider and adopt the Audited Accounts of the Company for the
year ended September 30, |
|
| 1999
together with the Directors' and Auditors' Reports thereon. |
|
|
| 2.
To approve as recommended by Directors, the payment of Cash Dividend @ 10%
i.e. Rs. 1.00 per share for |
|
| the
year ended September 30, 1999. |
|
|
|
|
|
| To
appoint Auditors and fix their remuneration. |
|
|
|
| SPECIAL
BUSINESS: |
|
|
| 4.
To consider and approve increase in authorised capital of the Company from
Rs. 100 million to Rs. 250 |
|
| million. |
|
|
|
|
| STATEMENT
UNDER SECTION 160(1)(B) OF THE COMPANIES ORDINANCE, 1984: |
|
| This
statement sets out the material facts concerning the special business to be
transacted at the 15th Annual |
|
| General
Meeting of the Company to be held on March 25, 2000. |
|
|
| INCREASE
IN AUTHORISED CAPITAL: |
|
| The
present paid-up capital of the Company is Rs. 90 million as against
authorised capital of Rs. 100 million. In order |
|
| to
meet the future growth in the Company's capital, it is appropriate to
increase the authorised capital of the |
|
| Company
to Rs. 250 million. Accordingly the Memorandum & Articles of Association
are sought to be amended to |
|
| reflect
the increase in the amount of authorised capital appearing therein. The
Directors of the Company are not |
|
| interested
in this business. The following resolution is proposed to be passed as
Special Resolution: |
|
|
| Resolved: |
|
| That
the authorised capital of the Company be increased from Rs. 100 million
(Rupees hundred million) to Rs. 250 |
|
| million
(Rupees two hundred and fifty million) by creation of 15 million additional
ordinary shares of Rs. 10/- each |
|
| ranking
in dividend and in all other respects pari passu with the existing 9 million
ordinary shares of Rs. 10/- each in |
|
| the
capital of the Company and the capital clauses of the Memorandum and Articles
of Association be and are hereby |
|
| altered
accordingly to read as under: |
|
|
| Clause
V of the Memorandum of Association: |
|
| The
Capital of the Company is Rs. 250,000,000 (Rupees Two hundred and fifty
million) divided into 25,000,000 |
|
| (Twenty
five million) ordinary shares of Rs. 10/- (Rupees Ten) each with the rights,
privileges and conditions |
|
| attaching
thereto as are provided by the regulations of the Company for the time being,
with power to increase or |
|
| reduce
the capital and to divide the shares in the capital for the time being into
several classes and to attach thereto |
|
| respectively
such special rights, privileges or conditions as may be determined by or in
accordance with the |
|
| regulations
of the Company, and to vary, modify or abrogate any such rights, privileges
or conditions in such manner |
|
| as
may for the time being be provided by the regulations of the Company in
accordance with law, provided however, |
|
| that
rights as between various classes of ordinary shares, if any, as to profits,
votes and other benefits shall strictly |
|
| proportionate
to the paid up value of the shares. |
|
|
| Article
5 of Articles of Association: |
|
| The
authorised capital of the Company for the time being is Rs. 250,000,000
(Rupees Two hundred and fifty million) |
|
| divided
into 25,000,000 (Twenty five million) ordinary shares of Rs. 10/- each with
power to increase, decrease, |
|
| consolidate,
or otherwise re-organise the share capital of the Company in accordance with
the provisions of the |
|
| Ordinance. |
|
|
| Resolved
Further: |
|
| That
Corporate Secretary of the Company be and is hereby authorised to do all
necessary arrangements including of |
|
| all
documents in this regard to alter the capital clauses of the Memorandum and
Articles of Association. |
|
|
|
|
On behalf of the Board |
|
|
|
|
|
|
|
RASHID SADIQ |
|
|
|
Corporate Secretary |
|
| Registered
Office: |
|
| 83-Babar
Block, New Garden Town, Lahore. |
|
| Telephone
No. (042) 5881974-75 |
|
| Fax
No. (042) 5881976 |
|
| E-Mail:
rashid.sadiq@cressoft.com.pk |
|
| Dated:
March 01, 2000. |
|
|
| NOTE: |
|
|
| 1.
The Directors of the Company in their Board Meeting held on March 01, 2000
have recommended the issue |
|
| of
Right shares @ 100% at par. |
|
|
|
|
|
|
| 2.
The Member's Register will remain closed from March 22, 2000 to March 28,
2000 (both days inclusive). |
|
| Transfer
received in order at the Registered Office by the close of business hours on
March 21, 2000 will be |
|
| treated
in time for the entitlement of right shares as well as dividend payment. |
|
|
|
|
| 3.
A member eligible 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 effective must be
received by the Company at the |
|
| Registered
Office not later than 48 hours before the time for holding the Meeting. |
|
|
|
|
| 4.
Shareholders are requested to immediately notify the change in their address,
If any. |
|
|
| Chief
Executive's Review |
|
| Although
the country's economic situation did not show any improvement during the
period under review, your |
|
| company
was able to maintain its profitability. By focusing on product quality, niche
marketing and strict cost |
|
| controls,
the company was able to increase sales and report earnings per share of Rs.
7. |
|
|
| Operating
Results |
|
| During
the period under review, the Company reported a net profit of Rs. 62 million
clearing all accumulated losses |
|
| and
attaining a strong financial position. |
|
|
| Inspire
of a difficult environment, sales increased to a level of Rs. 1.4 billion and
margins were maintained. This is |
|
| attributable
to controls on operating and administrative costs, reduction in financial
charges thorough prudent |
|
| financial
management, investment in new technology and improved marketing. During the
year, the company |
|
| invested
in state of the art combing equipment, which doubled the capacity of combed
yarn and improved product |
|
| quality. |
|
|
| Millennium
Bug |
|
| The
millennium bug did not affect any of your company's manufacturing and
management systems. |
|
|
| Future
Prospects |
|
| The
Management believes that the current cotton crop of 10.5 million bales has
brought prices to realistic levels and |
|
| will
allow the local industry to compete in the world textile market. In light of
the improved cotton situation and |
|
| positive
demand indicators, the Management is very optimistic about the prospects for
the textile industry. |
|
|
| The
company has positioned itself to take advantage of niche markets, which are
an integral part of our long-term |
|
| strategy.
We plan to focus on investments in new technology, development and marketing
of new products, |
|
| strengthening
of the existing management systems and enhancement of human resources. This
will enable the |
|
| company
to further its quality standards and gain market share in higher value added
products market. We believe |
|
| that
our strategy will allow us to show significantly better results in the
current year and further improve the return to |
|
| share
holders. With this in mind, your Company is planning an additional investment
in terms of modern and |
|
| technologically
proficient equipment, which will produce specialised products while achieving
economies of scale. For |
|
| this
investment, the Company is investigating various financial products including
additional equity. For this purpose, |
|
| a
detailed investment plan is being worked out and will be presented to the
Board of Directors. |
|
|
| Acknowledgements |
|
| The
Management would like to place on record its appreciation for the support of
the Board of Directors, |
|
| shareholders,
bankers, and suppliers, and the dedication and hard work of the staff and
workers. |
|
|
|
|
|
|
Nadeem Maqbool |
|
| 15
February 2000 |
|
Chief Executive |
|
|
|
|
| FINANCIAL
SUMMARY |
|
|
| Operating
Results: (Rs. 000's) |
|
1999 |
1998 |
1997 |
1996 |
|
|
|
|
| Net Sales |
|
1,410,874 |
1,376,256 |
1,329,844 |
1,288,034 |
|
| Cost of Sales |
|
1,192,523 |
1,133,045 |
1,095,852 |
1,159,593 |
|
| Administration |
|
17,382 |
18,251 |
16,632 |
14,958 |
|
| Selling |
|
32,855 |
34,736 |
26,798 |
28,982 |
|
| Financial Charges |
|
104,812 |
121,502 |
120,336 |
137578 |
|
| Other Income |
|
6,734 |
5,737 |
3,169 |
1,442 |
|
| Profit/(Loss)
before taxation |
|
70,036 |
74,459 |
73,395 |
(51,635) |
|
| Taxation |
|
7,269 |
7,100 |
6,900 |
8,500 |
|
| Profit/(Loss)
after taxation |
|
62,767 |
67,359 |
66,495 |
(60,135) |
|
|
|
|
|
|
| Per
Share Results and Returns |
|
|
| Earning/(Loss)
per share (Rupees) |
6.97 |
7.48 |
7.39 |
(6.68) |
|
| Net
Income/(Loss) to Sales (%) |
|
4.45 |
4.89 |
5.00 |
(4.70) |
|
| Return/(Loss)
on average assets (%) |
5.77 |
6.80 |
7.17 |
(6.54) |
|
|
|
|
| Financial
Position |
|
|
| Current Assets |
|
573,007 |
470,871 |
321,133 |
258,450 |
|
| Current
Liabilities |
|
438,408 |
373,926 |
297,114 |
324,333 |
|
| Operating
Fixed Assets |
|
531,168 |
553,334 |
597,635 |
648,401 |
|
| Total Assets |
|
1,126,238 |
1,047,257 |
933,649 |
920,869 |
|
| Long
Term Debts |
|
442,125 |
473,085 |
514,729 |
498,152 |
|
| Shareholders'
Equity |
|
157,223 |
94,456 |
27,097 |
50,314 |
|
| Break-up
Value per share (Rupees) |
17.46 |
10.50 |
3.01 |
5.59 |
|
|
|
|
| Financial
Ratios |
|
|
| Current
Assets to Current Liabilities |
1.31 |
1.26 |
1.08 |
0.80 |
|
| Debt
Equity Ratio |
|
64:36 |
72:28 |
81:19 |
91:09 |
|
| Inventory
Turnover (Times) |
|
7.90 |
10.60 |
12.26 |
1,332 |
|
| Fixed
Assets Turnover (Times) |
|
2.65 |
2.49 |
223 |
1.99 |
|
| Total
Assets Turnover (Times) |
|
1.25 |
1.31 |
1.42 |
140 |
|
|
|
|
|
|
|
|
|
|
|
| DIRECTORS'
REPORT |
|
|
| The
Directors are pleased to present Fifteenth Annual Report of your Company,
along with financial statements for |
|
| the
year ended 30 September 1999 and the auditors report thereon. |
|
|
| During
the year the company was able to report the operating profit of Rs. 168.114
million for the year. Profit before |
|
| tax
of Rs. 70.036 million after accounting for financial charges of Rs. 104.812
million. |
|
|
| Financial
results for the year are as follows: |
|
|
|
|
(Rupees in thousands) |
|
|
| Operating
profit for the year |
|
|
168,114 |
|
| Add:
Other income |
|
|
6,734 |
|
|
|
|
------------------ |
|
|
|
|
174,848 |
|
| Less:
Financial and other charges |
|
|
104,812 |
|
|
|
|
------------------ |
|
| Profit/(loss)
before tax |
|
|
70,036 |
|
| Less: Taxation |
|
|
|
7,269 |
|
|
------------------ |
|
| Profit
for the year after tax |
|
62,767 |
|
| Accumulated
loss brought forward |
|
(24,544) |
|
|
|
|
------------------ |
|
| Accumulated
Profit/(loss) carried over to Balance Sheet |
|
38,223 |
|
|
========== |
|
|
|
| Auditors |
|
| Messrs.
Riaz Ahmed & Co., Chartered Accountants, retire and are eligible for
retire and being eligible for re- |
|
| appointment. |
|
|
| Review
of operations |
|
| Financial
position and future prospects for the company, as required under section
236(2) of the Companies |
|
| Ordinance,
1984, as stated in the Management Review which form part of this report. |
|
|
| We
are continuing our efforts for improvement in the operating results of the
Company. We appreciate for the |
|
| support
and co-operation extended by our shareholders, employees, customers and
suppliers. |
|
|
|
|
For and on behalf of the Board |
|
|
|
|
|
|
|
Nadeem Maqbool |
|
| 15
February, 2000 |
|
Chief Executive |
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of SURAJ COTTON MILLS LIMITED as at 30
September 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 purposes 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 purpose 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 30 September |
|
| 1999
and of the profit and the changes in financial position for the year then
ended; and |
|
|
| (d)
in our opinion, no Zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980. |
|
|
|
|
|
|
RIAZ AHI4AD AND COMPANY |
|
| Lahore:
15 February 2000 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT 30 SEPTEMBER, 1999 |
|
|
|
|
NOTE |
1999 |
1998 |
|
| EQUITY
AND LIABILITIES |
|
|
|
(RUPEES IN
THOUSAND) |
|
|
|
|
| SHARE
CAPZTAL AND RESERVES |
|
|
|
|
|
| Authorized
share capital |
|
|
|
| 10,000,000
ordinary shares of Rupees 10 each |
|
|
100,000 |
100,000 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| Issued,
subscribed and paid up share capital |
|
3 |
90,000 |
90,000 |
|
| Capital
reserve - Share premium |
|
|
29,000 |
29,000 |
|
| Revenue
reserve - General |
|
|
29,000 |
-- |
|
| Accumulated
profit/(loss) |
|
|
223 |
(24,544) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
148,223 |
94,456 |
|
| Surplus
on revaluation of operating fixed assets |
|
4 |
88,482 |
89,712 |
|
|
|
|
|
|
|
| NON-CURRENT
LIABILITIES |
|
|
| Redeemable
capital |
|
5 |
2,798 |
15,196 |
|
| Debentures
and long term loans |
|
|
|
| Custom
debentures |
|
6 |
543 |
1,085 |
|
| Long term loans |
|
7 |
425,928 |
456,804 |
|
| Liabilities
against assets subject to finance lease |
|
8 |
5,259 |
9,306 |
|
| Deferred
liability |
|
|
|
| Employee's
retirement gratuity |
|
|
7,597 |
6,772 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
442,125 |
489,163 |
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Current
portion of long term liabilities |
|
9 |
72,347 |
64,784 |
|
| Short
term running finances |
|
10 |
193,335 |
155,209 |
|
| Creditors,
accrued and other liabilities |
|
11 |
158,357 |
146,833 |
|
| Provision
for taxation |
|
|
14,369 |
7,100 |
|
| Proposed
dividend |
|
|
9,000 |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
447,408 |
373,926 |
|
| CONTINGENCTES
AND COMMITMENTS |
|
12 |
-- |
-- |
|
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
1,126,238 |
1,047,257 |
|
|
|
|
========== |
========== |
|
|
| ASSETS |
|
|
|
|
|
|
|
|
| NON-CURRENT
ASSETS |
|
|
|
|
|
|
| Tangible
fixed assets |
|
|
|
|
| Operating
fixed assets |
|
13 |
522,641 |
548,093 |
|
| Assets
subject to finance lease |
|
14 |
8,527 |
482 |
|
| Capital
work-in-progress |
|
|
-- |
4,759 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
531,168 |
553,334 |
|
| Equity
investments |
|
15 |
19,491 |
19,491 |
|
| Long
term security deposits and |
|
|
|
|
| deferred cost |
|
16 |
2,572 |
3,561 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
553,231 |
576,386 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
|
| Stores,
spare parts and loose tools |
|
17 |
17,971 |
13,513 |
|
| Stock-in-trade |
|
18 |
178,736 |
129,854 |
|
| Trade debts |
|
19 |
200,347 |
244,490 |
|
| Advances,
deposits, prepayments |
|
|
|
| and
other receivables |
|
20 |
107,959 |
76,549 |
|
| Cash
and bank balances |
|
21 |
67,994 |
6,465 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
573,007 |
470,871 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
1,126,238 |
1,047,257 |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
|
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED 30 SEPTEMBER 1999 |
|
|
|
|
NOTE |
1999 |
1998 |
|
|
|
|
(RUPEES IN
THOUSAND) |
|
|
|
|
| SALES |
|
22 |
1,410,874 |
1,376,256 |
|
| COST
OF GOODS SOLD |
|
23 |
1,192,523 |
1,133,045 |
|
|
|
|
------------------ |
------------------ |
|
| GROSS
PROFIT |
|
|
218,351 |
243,211 |
|
|
|
|
|
|
| OPERATING
EXPENSES |
|
|
|
| Administrative
and general |
|
24 |
17,382 |
18,251 |
|
| Selling
and distribution |
|
25 |
32,855 |
34,736 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
50,237 |
52,987 |
|
|
|
|
------------------ |
------------------ |
|
| OPERATING
PROFIT |
|
|
168,114 |
190,224 |
|
| OTHER
INCOME |
|
26 |
6,734 |
5,737 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
174,848 |
195,961 |
|
| FINANCIAL
AND OTHER CHARGES |
|
27 |
104,812 |
121,502 |
|
|
|
|
------------------ |
------------------ |
|
| PROFIT
BEFORE TAXATION |
|
|
70,036 |
74,459 |
|
| PROVISION
FOR TAXATION |
|
28 |
7,269 |
7,100 |
|
|
|
|
------------------ |
------------------ |
|
| PROFIT
AFTER TAXATION |
|
62,767 |
67,359 |
|
| LOSS
BROUGHT FORWARD |
|
(24,544) |
(91,903) |
|
| PROFIT/(LOSS)
AVAILABLE FOR |
|
------------------ |
------------------ |
|
| APPROPRIATION |
|
38,223 |
(24,544) |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
| APPROPRIATIONS |
|
|
|
