20000201

Brief recordings

BY SCANNER

Auto & Allied Engineering

Bela Engineers Limited

Year Ended June 30, 1999

Overview

The Board of Directors of this, State Enterprise in Balochistan, have recommended to consider the company's liquidation and have proposed to the shareholders in the 28th AGM to pass Special Resolution to this effect. The company was incorporated in 1970 as Gandhara Diesel Limited but subsequently nationalised under the Economic Reforms Order of 1972.

The External Auditors have in the present report have expressed doubts whether the company will be able to continue as going concern due to the fact that the company's accumulated loss have amounted to Rs 205.81 million and its total liabilities exceeded its total assets by Rs 159.39 million. The company had practically no business since 30-5-1991. However, subsequently, started assembling of engines for Sind Engineering Ltd. at their premises. During the year the company turned pre-tax loss at Rs 13.25 million but after tax profit of Rs 50.71 million was due to non cash fund prior years' adjustment.

--------------

Bela Engineers Limited is a quoted public limited company in the public sector. The Chairman of PIDC is the Chairman of the Company. In the shareholding profile, at the last count of shareholders on 30th June 1999, the largest stake in the equity of Bela Engineers was of Pakistan Industrial Development Corporation (Pvt) Limited (PIDC) which is also an State Enterprise. PIDC held 36.97% of the company's total 3.4 million shares of Rs 10 each.

After that there were 1,290 individual shareholders out of total 1,302 shareholders in the company their aggregate holding comprised 25.27% stock of Bela Engineers Ltd. There were 1,290 small shareholders with maximum holding of 10,000 shares each and their aggregate stake in the equity of the company was to the extent of 1.94% only.

Among the other institutional investors 3 financial institutions (ABL, NBP and NI Co-op Finance Co.) owned 16.2% of the company's stock.

Investment Corporation of Pakistan (ICP) another public sector enterprise held 5.86% of the company's stock.

Four joint stock companies (National Motors Ltd., Fateh Textile Mills Ltd., Fikree Development Corporation and Republic Motors Ltd.), owned 15.5% of the company's stock.

EFU General Insurance owned 0.15% of the company's stock.

The Company was initially incorporated as a private limited company in 1970 as Gandhara Diesels Limited and subsequently converted into Public Limited Company in 1971 in the private sector. It was nationalised in 1972. The company has been engaged in the manufacture and sale of diesel engines.

The company is incorporated in the province of Sindh as its registered office is located in the port city of Sindh, Karachi. But its manufacturing facilities are located in the province of Balochistan at Hub Chowki in District Lasbella.

Total fixed assets of the company was recorded in the sum of Rs 70.15 million at cost on 30-6-1999. Its book value was posted at Rs 9.93 million. This includes free-hold land at Rs 0.6 million only and building on free-hold land at cost is Rs 10.105 whose book value is only Rs 1.13 million. Since 1970, the market value of the property must have appreciated several times.

The Board of Directors has recommended to the shareholders of the company to consider liquidation.

The forthcoming 28th AGM of the shareholders of the company was scheduled to be held on 28th January year 2000. High on the agenda was, the following special business as notified by the Company Secretary Syed Abrar Hussain Razvi.

"The Auditors of the Company in their report to the members have expressed doubt whether the company will be able to continue as a going concern due to the fact that the Company's accumulated loss was Rs 205.807 million and the total liabilities exceeded total assets by Rs 159.389 million as on 20th June 1999.

The Board of Directors discussed the affairs of the Company in the meeting held on 26th November, 1999. It was of the opinion that the Company's operations are no longer viable and to continue its operations or its existence will further deteriorate, the Company's financial position. The Company is no longer able to continue as a 'going concern' in view of the huge accumulated losses, negative net worth of Rs 159.389 million against the paid-up capital of Rs 34.0 million and its inability to discharge its liabilities, including the Decreed amount of Rs 6.6 million arising out of a Decree granted by the Hon'able High Court of Sindh against the Company in favour of commercial banks viz; Habib Bank Limited and United Bank Ltd. As such the Board has recommended to consider company's liquidation-----."

The Chairman and the Chief Executive stated in the Directors Report, since the closure of assembly of Bedford/Isuzu engines for National Motors w.e.f. 30-5-1991, the company practically had no business. However, subsequently, the company started assembling engines for Sind Engineering Ltd. at their premises.

During the financial year under review in FY 1998-99, the company generated sales revenue in the sum of Rs 6.1 million (FY 1997-98: Rs 5.41 million) and posted gross profit at Rs 2.12 million as compared to Rs 1.47 million recorded in the preceding year.

Operating loss declined to Rs 13.32 million from Rs 16.15 million is in the previous year and pre-tax loss stood at Rs 13.24 million as compared to the preceding year's pre-tax loss of Rs 16.15 million.

But the company recorded net profit at Rs 50.71 million as against preceding year's net loss of Rs 16.10 million.

It was reported that due to the adjustments amounting to Rs 62.85 million, pursuant to the Order dated 9-9-1998 of the Hon'able High Court of Sindh, wherein short term borrowings from banks have been reduced, the company posted profit of Rs 50.71 million after taxation.

However this adjustment did not generate cash funds or improved liquidity position of the company. Only the loan liabilities to be settled as a result of Decree granted by the Hon'able High Court of Sindh, to the bank will reduce.

--------------

Performance Statistics (Million Rupees)

June 30 1999 1998

Capital & LiabilitiesÉÉÉ

Paid-up Capital: 34.00 34.00

Reserves: 12.42 12.42

Accumulated (Loss): (205.81) (256.52)

Equity (Negative): (159.39) (210.10)

Gratuity & Leave Salary: 5.29 6.71

Current Liabilities: 210.40 261.70

AssetsÉÉÉ

Fixed Assets: 9.93 10.94

L.T. Loans & Advances: 0.18 0.18

Other Non Current Assets: 0.18 0.68

Current Assets: 46.01 46.51

Total Assets: 56.30 58.31

Sales, Profit & PayoutÉÉÉ

Sales: 6.10 5.41

Gross Profit: 2.12 1.47

Operating (Loss): (13.32) (16.15)

Other Income: 0.08 Ñ

Depreciation: 1.07 1.18

(Loss) Before Taxation: (13.24) (16.15)

Prior Period Adjustments: 63.98 0.08

Profit/(Loss) After Taxation: 50.71 (16.10)

Financial RatiosÉÉÉ

D-Share Price (Rs) 21/1/2000: 0.90 Ñ

Book Value Per Share (Rs) (Negative): (46.88) (61.79)

Debt/Equity Ratio: (Ñ) (Ñ)

Current Ratio: 0.22 0.18

Asset Turnover Ratio: 0.10 0.09

Gross Profit/(Loss) to Sales (%): 34.75 27.17

Operating (Loss) to Sales (%): (218.03) (298.52)

Net Profit/(Loss) to Sales (%): 831.31 (297.59)

EPS/(LPS) Rs: 14.91 4.73

Plant Capacity & Production (Units)ÉÉÉ

A) EnginesÉÉÉ

Capacity: 9,000 9,000

Actual Production: Ñ Ñ

B) Actual Mazda Engines Assembly: 1,095 981

C) Actual Engines Re-Assembly: 1 Ñ

--------------

Company information: Chairman: Zahid Hussain (Chairman PIDC (Pvt) Ltd). Chief Executive: Mohammad Saeed. Company Secretary: Syed Abrar Hussain Razvi. Registered Office: 2nd Floor, PIDC House, Dr. Ziauddin Ahmed Road, Karachi-75530 (Sindh). Factory: Hub Chowki Road, Village Baroot, Distt. Lasbella, Balochistan.