20000210

Brief recordings

BY SCANNER

Vanaspati & Allied

Fazal Vegetable Ghee Mills Limited

Year Ended June 30, 1999

Overview

During the year under review, the factory of the company remained inoperative so there was no sales. Hence the company suffered gross and operating losses. Despite no sales, the gross and operating losses were lower than the previous year's. After the balance sheet, the company succeeded in getting its loan liabilities rescheduled/restructured during the year, production stopped because of non-availability of L/C facilities. However "subsequent to the balance sheet date, the case was accepted (by the banker), previous loans along with mark-up had been restructured/rescheduled and fresh cash and L/C limits had been sanctioned" Ñ the directors reported. The auditors have recorded their observations for not providing depreciation on fixed assets which has been responded by directors. The company's loss per share for the year under review works out to Rs 1.63 (1997-98: Rs 16.06).

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More than three decades ago the company was incorporated in the federal capital Islamabad. The company is principally engaged in the manufacture and sale of vegetable ghee, cooking oil and laundry soap under the brands of Danish, Anarkali and Pakwan-e-Khas.

The designated annual production capacity of the plant of Fazal Vegetable Ghee Mills Limited is 19,000 metric tonnes. Last year the company had produced 4,060 metric tonnes which works out to a little more than one fifth of the plant capacity.

One of the notes annexed to the account, stated that during the year under review in the FY 1998-99, the company stopped production so the plant was not operative because of the non-availability of L/C facilities.

Chairman/Chief Executive of the company, Sheikh Iftikhar Ahmad, informed:

"The factory remained inoperative during the whole year under review. The reason being non-availability of funds and L/C facility. The case for rescheduling/restructuring of loans and request for fresh and enhanced limits was submitted to our Banker. Due to general economic crisis in the country and long negotiations with the bank, the case could not be finalised during the year. However, subsequent to balance sheet date, the case was accepted, previous loans along with mark-up had been restructured/rescheduled and fresh cash L/C limits had been sanctioned."

Last year total loan including in the current maturities A/C had amounted to Rs 41.5 million. During the year under review, the loan outstanding balance shot-up to Rs 99.13 million because of restructuring/rescheduling of loan liabilities.

The notes stated that as a result of loan rescheduling the long term loan together with FADB and accrued mark-up as on 31-03-99 have been converted into long term loan with mark-up at 17% per annum repayable in six years in equal monthly installments with seven months grace period from the date of arrival of oil in the factory.

The loan is secured by way of first charge on present and future fixed assets of the company, hypothecation of stock-in-trade and personal guarantees of the directors of the company.

The balance sheet carries outstanding balance amount of Rs 3.12 million in the current liabilities account which is "due to" Ghee Corporation of Pakistan (GCP).

It has been pointed out that GCP claimed Rs 22 million as on the privatisation date against which the company has issued Bank Guarantee. It is further stated in the notes, "the amount was subsequently adjusted to Rs 16.12 million by Ghee Corporation of Pakistan (Private) Limited on 26/4/1992.

As per accounts of the company Rs 3.1 million is payable. The company has approached for the appointment of arbitrator in accordance with privatisation agreement."

During the year under review the company's sales account showed nil amount as against Rs 155.86 million posted in the preceding year, 1997-98.

Since the company booked cost of sales against zero sales, so the operation turned gross and operating losses, during the year under review.

Despite posting of sales in the previous year, then the operating and gross losses were higher than the loss figures booked during the year under review.

The company booked loss for the year under review at Rs 3.26 million against the last year's net loss of Rs 32.12 million. The loss per share works out to Rs 1.63 as compared to the previous year's loss per share of Rs 16.06.

At present the share in the company is quoted Rs 18.91 per 10-rupee which has no relevance to the hard fundamentals of the company's accounts. Highest price of its share since 1994, was recorded at Rs 33 in 1994 and the yearly lowest prices have not been less than Rs 18.91 since 1995.

The company has not been able to announce dividend so far, at least since 1994.

The company shows surplus of Rs 52.21 million in its revaluation of fixed assets account. The equity base has completely busted due to the accumulated losses. Current ratio is 1.34, above "ONE." Even then the company has serious liquidity problem.

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Performance Statistics (Million Rupees)

June 30 1999 1998

Capital & LiabilitiesÉÉÉ

Paid-up Capital: 20.00 20.00

Reserves Share Premium: 7.80 7.80

Accumulated (Loss): (80.11) (76.85)

Equity: (52.31) (49.05)

Surplus on Rev. 7/A: 52.21 52.21

Directors Loan: 1.36 1.36

L.T. Debts (Bank): 99.13 33.50

Current Liabilities: 16.37 69.49

AssetsÉÉÉ

Operating Fixed Assets Ñ Tangible: 59.80 59.80

Deferred Cost: 34.73 23.79

Other Non Current Assets: 0.35 0.35

Current Assets: 21.88 23.57

Total Assets: 116.76 107.51

Sales, Profit & PayoutÉÉÉ

Net Sales: Ñ 155.86

Gross (Loss): (1.53) (11.46)

Operating (Loss): (3.26) (16.54)

Other Income: Ñ (0.11)

Depreciation: Ñ 1.39

Financial Charges: Ñ 14.91

(Loss) Before Taxation: (3.26) (31.34)

(Loss) After Taxation: (3.26) (32.12)

Financial RatiosÉÉÉ

Share Price (Rs) 20/1/2000: 18.91 Ñ

Book Value Per Share (Rs) (Negative): (26.15) 24.52

Price/Book Value Ratio: (Ñ) Ñ

Debt/Equity Ratio: 99:1 88:12

Current Ratio: 1.34 0.34

Asset Turnover Ratio: Ñ 1.45

Gross (Loss)/Sales (%): (Ñ) (7.35)

Operating (Loss)/Sales (%): (Ñ) (10.61)

Net (Loss)/Sales (%): (Ñ) (20.61)

Loss Per Share (Rs): (1.63) (16.06)

Price/Earning Ratio: (Ñ) (Ñ)

R.O.E. (%): (Ñ) (Ñ)

R.O.A. (%): (Ñ) (Ñ)

R.O.C.E. (%): (Ñ) (Ñ)

Plant Capacity & Production (M. Tonnes)ÉÉÉ

Capacity: 19,000 19,000

Actual Production: Ñ 4,060

Capacity Utilisation (%): Nil 21.37

"The plant did not during the year due to non-availability of L/C facilities."

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Company information: Chairman/Chief Executive: Sh. Iftikhar Ahmad. Company Secretary: Quaid-uz-Zaman. Registered Office & Mills: Sector-1-9, Industrial Area, Islamabad.