| Zulfeqar Industries Limited |
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| Annual
Report 1999 |
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| Contents |
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| ZULFEQAR
INDUSTRIES LIMITED |
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| BOARD
OF DIRECTORS |
|
| NOTICE
OF MEETING |
|
| REPORT
OF DIRECTORS |
|
| AUDITORS'
REPORT |
|
| BALANCE
SHEET |
|
| PROFIT
AND LOSS ACCOUNT |
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| NOTES
TO THE ACCOUNTS |
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| FORM - 34 |
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| HI-LANDER
SOAPS (PVT) LIMITED |
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| REPORT
OF DIRECTORS |
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| AUDITORS'
REPORT |
|
| BALANCE
SHEET |
|
| PROFIT
AND LOSS ACCOUNT |
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
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| NOTES
TO THE ACCOUNTS |
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|
| ZULFEQAR
INDUSTRIES LIMITED |
|
| CONSOLIDATED
ACCOUNTS |
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|
| AUDITORS'
REPORT |
|
| BALANCE
SHEET |
|
| PROFIT
AND LOSS ACCOUNT |
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
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| NOTES
TO THE ACCOUNTS |
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| Board
of Directors |
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| SYED
WAJID ALl |
Chairman |
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| S.
FERIEL RIFAAT ALl |
Managing Director |
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| SYED
SHAHID ALl |
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| KARAM
ELLAHI SHAIKH |
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| BEHRAM
HASAN |
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| NASIM BEG |
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| SARA
JAWAID |
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| COMPANY
SECRETARY |
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| MUHAMMAD
RASHEED |
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| AUDITORS |
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| TASEER
HADI KHALID & CO. |
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| CHARTERED
ACCOUNTANTS |
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| KARACHI. |
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| REGISTERED
OFFICE |
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| KANDAWALA
BUILDING |
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| M.A.
JINNAH ROAD |
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| KARACHI-74400 |
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| BANKERS |
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| HABIB
BANK LIMITED - KARACHI. |
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| LEGAL
ADVISOR |
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| HUSSAIN
AND HAlDER- KARACHI. |
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| FACTORY |
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| LINK
HALl ROAD, HYDERABAD-71900 |
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| Notice
of Meeting |
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| NOTICE
IS HEREBY GIVEN THAT the Thirty Nineth Annual General Meeting of Zulfeqar
Industries |
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| Limited
will be held at Beach Luxury Hotel, Moulvi Tamizuddin Khan Road, Karachi on
Monday, 27th |
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| December,
1999 at 8.30 a.m. to transact the following business: |
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| 1.
To confirm the minutes of the Annual General Meeting held on 25th January,
1999. |
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| 2.
To receive, consider and adopt the audited Balance Sheet and Profit and Loss
Account of |
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| the
Company for the year ended 30th June 1999, the report of Auditors and
Directors |
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| thereon. |
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| 3.
To appoint Auditors and to fix their remuneration. |
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| 4.
To transact any other ordinary business with the permission of the Chair. |
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By order of the Board |
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| Karachi. |
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|
( Muhammad Rasheed ) |
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| 24
November, 1999 |
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Company Secretary |
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| NOTES: |
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| i)
The Share Transfer Books of the Company for the purpose of this Annual
General Meeting |
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| will
remain closed from 18/12/1999 to 27/12/1999 (both days inclusive). |
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| ii).
A member entitled to attend and vote at the Annual General Meeting is also
entitled to |
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| appoint
another member as proxy to attend and vote instead of him. |
|
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| iii)
The instrument appointing proxy must be received at the Registered Office of
the |
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| Company
not less than 48 hours before the time appointed for the meeting. |
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| iv)
Members are requested to notify change in their addresses, if any,
immediately to the |
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| Registrar
of the company, Messrs, THK Associates (Pvt.) Limited, Ground Floor, Sheikh |
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| Sultan
Trust Building No. 2, Beaumont Road, Karachi. |
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| REPORT
OF DIRECTORS TO THE SHAREHOLDERS |
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| The
members of the Board of Directors are pleased in presenting to you the
Company's Audited Account |
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| for
the year ended on 30 June 1999, together with the Auditors report, thereon. |
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| Overview: |
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| Not
only the year under review had been a difficult year for the Country, but for
your Company as well. |
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| The
reason being the depressed economic conditions, which further worsened,
consequent upon |
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| Pakistan's
Nuclear Test,. freezing of Dollar Accounts, resulting into a general hike /
escalations in prices |
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| of all items. |
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| The
depressed economic conditions together with many other unforeseen factors /
changes, bearing huge |
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| adverse
financial implications on the Industries in Pakistan and your Company was not
an exception to |
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| above.
To mention a few, the year has seen the most volatile World Oil and Fat
Market, an increase in |
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| Sales
Tax from 12.5 % to 15 % on the duty paid value. Moreover the GST issue
continued unresolved for |
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| three
quarters, bearing some negative impact on the Company's Sales volume and
revenue. |
|
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| Further,
your company had not only to deal with the above uncertainties, but at the
same time, had to fight |
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| with
the smuggled Toilet Soaps available all over the Country at comparatively
cheaper prices. To counter |
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| that
the multinationals carried out extra ordinary promotions, which further
worsen the performance of |
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| your
Company. The reason being the Consumer with the lower disposable income
coupled with the lower |
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| purchasing
power of Rupee, had no choice but to switch over to lower quality products. |
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| Operating
Results: |
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| The
Company's Operating Results are detailed hereunder:-- |
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(Rupees
in'000') |
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|
Year ended |
Year ended |
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|
June 30,1999 |
June 30,1998 |
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| Operating
Profit / (Loss) |
|
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|
(13,569,) |
(6,616) |
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| Add:
Other Income |
|
|
|
210 |
599 |
|
| Loss
before Taxation |
|
|
|
(13,359) |
(6,017) |
|
| Provision
for Taxation |
|
|
|
2,3 85 |
1,033 |
|
| Loss
after Taxation |
|
|
|
(15,744) |
(7,050) |
|
| Accumulated
Loss brought forward |
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|
(17,772) |
(10,722) |
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| Accumulated
Loss carried forward |
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|
(33,516) |
(l 7,772) |
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| The
impact of the high priced oils and fats, together with other uncertainties,
that mostly appeared / |
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| implemented
in the second half of the year, bearing huge adverse financial implications,
in-fact have |
|
| distorted
the Operating Results for the year under review. |
|
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| The
Gross Profit at 12 % recorded an improvement over the 11% in the previous
year. The Net Before |
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| Tax
Loss of Rs. 3.6 Million posted for the First half of the year ended on
December 31, 1998, increase to |
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| a
Net Before Tax Loss of Rs. 13.3 million, due to the reasons stated above. |
|
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| To,
minimize the adverse financial impact, your Company this year, had carried
out intensive marketing |
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| activities
against the most volatile and aggressive competition, to maintaining and
further strengthening |
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| the
premium image of your brand "CAPRI" and as such the Marketing,
Selling and Distribution |
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| Expenses
have recorded an increase of Rs. 6.2 million. Further, the utilization of the
Local Credit at a |
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| comparatively
much higher Markup, caused an increase of Rs. 5.6 million in the Financial
Expenses. |
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| There
was no activity at the Hi-Land Soaps (Pvt.) Limited. Land and Building at
Mirpur Azad Kashmir |
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| were
sold. Efforts are being made to dispose off the remaining assets consisting
of Plant and Machinery, |
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| but
as yet no success due to the prevailing depressed economic conditions. |
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| Future
Prospects: |
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| The
management of your Company, with the blessing of Allah the Almighty who is
the most gracious and |
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| merciful,
has successfully set its Corporate Objectives, the Vision and Mission
"To turn around the |
|
| Company
and to regain the lost market share" through well planned Sales and
Marketing strategy. |
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| To
manifest the above objective, the management of your Company has taken
several corrective |
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| measures.
These includes the removal of organization fatigue through restructuring,
induction of the most |
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| professionally
qualified, dynamic and aggressive personnel, adjustment in the distribution
net work and a |
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| total
change in working environment "Ownership and Team Working". |
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| Development
and Diversification: |
|
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| The
improvement in the existing products and the development of the new products
remained apace. |
|
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| Based
on a comprehensive study of potential market requirements, a new product
range has been |
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| developed
and is being launched to broaden the product portfolio. |
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| Further,
the management of your Company has also considered it advisable to diversify
in some related |
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| Personal
Care products, explore the potential Export Markets for the Toilet Soaps, and
some progress in |
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| these
direction has since been noticed. |
|
|
| ISO--9000: |
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| Another
encouraging news is that the management of your Company has also considered
it advisable to |
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| obtain
ISO-9000 Certification, by modifying and developing the Production Processes
and Factories, in |
|
| order
to classify Zulfeqar Industries Limited as one of the Best Quality
Manufacturer of Toilet Soaps. |
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| Right Issue: |
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| In
view of the extremely tight funds liquidity position and the enormously
higher financing Cost, the |
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| members
of the Board of Directors, after a critical evaluation of the situation, have
decided the issuance |
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| of
one Right share for each share held by the existing shareholders of the
Company. This will slightly case |
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| the
Company's liquidity position, together with some saving in the financing
cost. |
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| Membership
to Central Depository Company (CDC): |
|
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| As
per the requirement of the Central Depository Act 1997, your Company has
taken the membership of |
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| the
"Central Depository Company of Pakistan Ltd." and has also
appointed THK Associates (Pvt.) Ltd. |
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| as
Registrar of the Company. |
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| Y2K
Compliance: |
|
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| The
Company has made all necessary arrangements for the compliance of Y2K, at all
operational levels |
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| and
there would be no problem while entering to the New Millennium. |
|
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| Change
in the Board of Directors: |
|
|
| Syed
Asad All, the Ex-Managing Director, served the Company for more than 35 years
and expired after a |
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| long
protracted illness on February 13, 1999, May Allah the Almighty, rest his
soul in peace, the Board of |
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| Directors,
recorded their appreciation for the valuable Contribution. Mr. Shahid Nazir
Ahmed, who later |
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| resigned
and was succeeded by Mr. Karam Ellahi Shaikh. Messers Nasim Beg and Sara
Jawaid were |
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| taken
on board in place of Messers Razi-ur-Rehman Khan and Wusooq Khaleeli on their
resignation. |
|
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| The
Board congratulates Messers Nasim Beg, Sara Jawaid and Karam Ellahi Shaikh on
their appointment |
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| as
director and record its appreciation for the valuable services rendered by
the outgoing directors |
|
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| Auditors: |
|
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| The
present Auditors, Taseer Hadi Khalid & Company Chartered Accountants, due
to retirement and |
|
| being
eligible, offer themselves for reappointment for the next financial year
ending on June 30, 2000. |
|
|
| Pattern
of Shareholding: |
|
|
| Tim
statement of the Pattern of Shareholder is given on page 28. |
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| Acknowledgement: |
|
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| The
directors place on record their recognition and appreciation for the valuable
contribution made by all |
|
| employees
in the progress and development of the Company. Further the relationship
between the workers |
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| and
the staff remained cordial. |
|
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| Karachi |
|
S. Feriel Rifaat Ali |
|
|
Sara Jawaid |
|
| 24
November, 1999. |
Managing Director |
|
|
Director |
|
|
|
| AUDITOR'S
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of Zulfeqar
Industries Limited as at 30 June 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 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 ture and fair view of
the state |
|
| of
the company's affairs as at 30 June 1999 and of the loss and the changes in
financial position |
|
| for
the year then ended; and |
|
|
|
|
| d)
in our opinion, no zakat was deductible at source under Zakat and Ushar
Ordinance, 1980. |
|
|
| Karachi. |
|
|
Taseer Hadi Khalid & Co. |
|
| 24
November, 1999 |
|
Chartered Accountants. |
|
|
|
| Balance
Sheet As at 30 June 1999 |
|
|
|
|
30 June |
30 June |
|
|
|
Note |
1999 |
1998 |
|
|
|
|
(Rupees in
'000) |
|
|
|
|
| FIXED
CAPITAL EXPENDITURE |
|
3 |
24,981 |
25,711 |
|
| TRADE
MARK - at cost |
|
|
471 |
471 |
|
| LONG
TERM DEPOSITS |
|
4 |
845 |
870 |
|
|
|
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
|
|
|
| Stores
and spares |
|
5 |
5,326 |
5,531 |
|
| Stock-in-trade |
|
6 |
72,045 |
98,308 |
|
| Short
term investment |
|
7 |
3,000 |
3,000 |
|
| Trade
debtors-unsecured, considered good |
|
|
10,338 |
8,205 |
|
| Advances,
deposits, prepayments and other receivables |
8 |
27,779 |
26,695 |
|
| Cash
Bank balances |
|
9 |
4,190 |
3,779 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
122,678 |
145,518 |
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Current
maturity of finance lease |
|
|
398 |
315 |
|
| Finance
under mark-up arrangements- secured |
|
10 |
77,139 |
64,026 |
|
| Due
to associated company |
|
11 |
15,297 |
18,425 |
|
| Creditors,
accrued expenses and other liabilities |
|
12 |
30,778 |
49,802 |
|
| Provision
for taxation |
|
13 |
2,232 |
2,005 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
125,844 |
134,573 |
|
|
|
|
------------------ |
------------------ |
|
| NET
CURRENT ASSETS |
|
|
(3,166) |
10,945 |
|
|
|
|
|
------------------ |
------------------ |
|
| NET ASSETS |
|
|
23,131 |
37,997 |
|
|
|
|
========== |
========== |
|
|
|
|
| FINANCED BY: |
|
|
|
|
| SHARE
CAPITAL |
|
14 |
20,000 |
20,000 |
|
| REVENUE
RESERVES |
|
|
6,000 |
6,000 |
|
| ACCUMULATED
LOSS |
|
|
(33,516) |
(17,772) |
|
|
|
|
------------------ |
------------------ |
|
| SHARE
HOLDER'S EQUITY |
|
15 |
(7,516) |
8,228 |
|
|
|
|
|
|
| SURPLUS
ON REVALUATION OF FIXED ASSETS |
|
3.1.2 |
16,519 |
16,519 |
|
| LONG
TERM DEPOSITS |
|
|
50 |
-- |
|
| DEFERRED
GRATUITY |
|
|
13,728 |
12,502 |
|
| LIABILITIES
AGAINST ASSETS SUBJECT TO |
|
|
|
| FINANCE
LEASE |
|
16 |
350 |
748 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
17 |
------------------ |
------------------ |
|
|
|
23,131 |
37,997 |
|
|
|
========== |
========== |
|
|
| These
accounts should be read in conjunction with the attached notes. |
|
|
| Karachi. |
|
S. Feriel Rifaat Ali |
|
Sara Jawaid |
|
| 24
November, 1999 |
Chief Executive |
|
Director |
|
|
|
| Profit
and Loss Account |
|
| For
the year ended 30 June 1999 |
|
|
|
|
Note |
1999 |
1998 |
|
|
|
|
|
(Rupees in
'000) |
|
|
|
|
| Sales - Net |
|
18 |
436,588 |
391,362 |
|
| Cost
of goods sold |
|
19 |
387,405 |
348,532 |
|
|
|
|
------------------ |
------------------ |
|
| Gross profit |
|
|
49,183 |
42,830 |
|
|
|
|
|
|
| Administrative
expenses |
|
20 |
10,147 |
8.68 |
|
| Selling
and distribution expenses |
|
21 |
35,085 |
28,895 |
|
| Financial
expenses |
|
22 |
17,520 |
11,873 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
62,752 |
49.45 |
|
|
|
|
------------------ |
------------------ |
|
| Operating
profit/(loss) |
|
|
(13,569) |
(6,616) |
|
|
|
|
|
|
|
| Other
income - net |
|
23 |
210 |
599 |
|
|
|
|
------------------ |
------------------ |
|
| Loss
before taxation |
|
|
|
(13,359) |
(6,017) |
|
|
|
|
|
|
|
| Provision
for taxation |
|
|
|
|
| Current |
|
|
|
2,239 |
2,005 |
|
| Prior |
|
|
|
146 |
(972) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
2,385 |
1,033 |
|
|
|
|
------------------ |
------------------ |
|
| Loss
after taxation |
|
|
(15,744) |
(7,050) |
|
|
|
|
|
| Accumulated
loss brought forward |
|
|
(17,772) |
(10,722) |
|
|
|
|
------------------ |
------------------ |
|
| Accumulated
loss carried forward |
|
|
(33,516) |
(17,772 |
|
|
|
|
========== |
========== |
|
|
|
|
|
| Earning
/ (loss) per share |
|
24 |
(7.87) |
(3.53) |
|
|
|
|
========== |
========== |
|
|
| These
accounts should be read in conjunction with the attached notes. |
|
|
|
S. Feriel Rifaat Ali |
|
Sara Jawaid |
|
|
Chief Executive |
|
Director |
|
|
|
|
| Statements
of changes in Financial Position |
|
| For
the year ended 30 June 1999 |
|
|
|
|
|
|
1999 |
1998 |
|
|
|
|
|
(Rupees in
'000) |
|
|
|
|
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
|
| (Loss)
before taxation |
|
|
|
(13,359) |
(6,017) |
|
|
|
|
| Adjustment for: |
|
|
|
| Mark-up
expense |
|
|
13,586 |
9,718 |
|
| Depreciation |
|
|
3,153 |
3,037 |
|
| Provision
for gratuity |
|
|
2,082 |
2,226 |
|
| Gain
on disposal of fixed assets |
|
|
(113) |
(223) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
18,708 |
14,758 |
|
|
|
|
------------------ |
------------------ |
|
| Operating
profit/(loss) before working capital changes |
|
5,349 |
8,741 |
|
|
|
|
| (Increase)
/ decrease in operating assets |
|
|
| Stores
and spares |
|
205 |
(204) |
|
| Stock in trade |
|
26,263 |
7,894 |
|
| Trade debtors |
|
(2,133) |
4,130 |
|
| Advances,
deposits, prepayments and other receivables |
|
3,601 |
5,151 |
|
|
|
------------------ |
------------------ |
|
|
|
27,936 |
16,971 |
|
|
|
|
|
| Increase/(decrease)
in operating liabilities |
|
|
| Creditors,
accrued expenses and other liabilities |
|
|
(22,092) |
(10,687) |
|
| Due
to associated company |
|
(3,128) |
(1,307) |
|
|
|
------------------ |
------------------ |
|
|
|
|
(25,220) |
(11,994) |
|
|
|
|
------------------ |
------------------ |
|
| Cash
generated from operations |
|
|
8,065 |
13,718 |
|
|
|
|
| Income tax paid |
|
(6,843) |
(2,436) |
|
| Gratuity paid |
|
(856) |
(1,018) |
|
| Mark-up paid |
|
(10,518) |
(9,718) |
|
|
|
------------------ |
------------------ |
|
|
|
|
(18,217) |
(13,172) |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash (used) / flows from operating activities |
|
|
(10,152) |
546 |
|
|
|
|
|
|
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
|
| Fixed
capital expenditure |
|
|
(2,467) |
4,072 |
|
| Sale
proceeds of fixed assets |
|
|
157 |
504 |
|
| Trade Marks |
|
|
-- |
(100) |
|
| Long
term deposits |
|
25 |
(171) |
|
|
|
------------------ |
------------------ |
|
| Net
cash out flows from investing activities |
|
(2,285) |
(3,839) |
|
|
|
|
|
|
|
|
|
|
|
1999 |
1998 |
|
|
|
|
|
(Rupees in
'000) |
|
|
|
|
| CASH
FLOWS FROM FINANCING ACTIVITIES |
|
|
| Morabaha
financing |
|
|
-- |
(3,000) |
|
| Repayment
of lease liability - net |
|
|
(315) |
(157) |
|
| Long
term deposits |
|
|
50 |
-- |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash outflows from financing activities |
|
|
(265) |
(3,157) |
|
|
|
|
------------------ |
------------------ |
|
| Net
decrease in cash and cash equivalents |
|
|
(12,702) |
(6,450) |
|
|
|
|
| Cash
and cash equivalents at the beginning of the year |
|
(60,247) |
(53,797) |
|
|
|
|
------------------ |
------------------ |
|
| Cash
and cash equivalents at end |
