| AMIN FABRICS
LIMITED |
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|
|
|
|
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|
|
| Annual
Reports 2002 |
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| |
| Registered office : |
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| Ocean Centre |
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| 40, Talpur Road, |
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| Karachi. |
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| Phones :
2413271,2414087, 2414778-9 |
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| Cable
: "AMIN FAB" |
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| Telex
: 20466 AM IN PK |
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| Fax : (92-21)2411686 |
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| E-mail
: aminfb@paknet3.ptc.pk |
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| |
| Factory: |
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| |
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| Jute Division |
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| Aminabad |
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| Kotri |
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| Phones
870141 -870142 |
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| Telex 22287 Aminpk |
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| Fax 870594 |
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| |
| AI-Faisal Town, |
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| Bahar
Shah Road, Lahore. |
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| Tel :6668469 |
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| |
| Synthetics Division |
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| G-14.S.I.T.E., |
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| Kotri |
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| Phones
: 870575-870576 |
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| |
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| CORPORATE
INFORMATION |
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| |
|
| BOARD
OF DIRECTORS |
|
| Mr. Abdul Khaliq |
|
Managing Director / Chief
Executive |
|
| Mr.
Rahim Bakhsh Soomro |
Director |
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| Mr. Abdul Hafiz |
|
Director |
|
| Mir
Ghulam Muhammad Khan Talpur |
Director |
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| Mr. Abdul Baseer |
|
Director |
|
| Mr. Fahim Khan |
|
Director |
|
| Mr.
Stuart Fairweather |
Director } Rep :
Interfinco Ltd. |
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| |
| COMPANY
SECRETARY |
|
| Mr.
Muhammad Rafiq |
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| |
| AUDITORS |
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| Riaz
Ahmad, Saqib, Gohar & Company |
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| Chartered
Accountants, |
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| 5-Nasim
Cooperative Housing Society, |
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| Major
Nazir Bhatti Road, |
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| Off:
Shaheed-e-Millat Road, |
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| Karachi. |
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| |
| AUDIT
COMMITTEE |
|
| Mr.
Rahim Bakhsh Soomro |
|
| Mir
Ghulam Muhammad Khan Talpur |
|
| Mr. Abdul Baseer |
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| |
| SOLICITOR |
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| ORR,
DIGNAM & CO. |
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| 3rd Floor, |
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| State
Life Building No. 1-B, |
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| I.
I. Chundrigar Road, |
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| Karachi. |
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| |
| BANKERS |
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| Habib Bank Limited |
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| Bank
AI-Habib Limited |
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| |
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| NOTICE |
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| |
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| NOTICE
is hereby given that the THIRTY NINTH ANNUAL GENERAL MEETING of AMIN FABRICS |
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| |
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| LIMITED
will be held on Thursday the 31st October, 2002 at 3:00 P.M. at Raffia
Choudri Memorial . |
|
| Centre,
Ground Floor, Sidco Avenue Centre, Din Mohammad Wafaai Road / Strachen Road,
Karachi |
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| to
transect the following business. |
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| |
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| 1. To confirm the Minutes of Extra Ordianary
General Meeting held on 10th July, 2002 |
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| |
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| 2. To receive and adopt the Directors,
Report and Audited Accounts for the Year ended |
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| 30th June,2002 |
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| |
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| 3. To appoint Auditor for the current year
and fix their remuneration. |
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| |
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| 4. Any other business with the permission of
the Chair. |
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| |
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| By Order of the Board |
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| for AMIN FABRICS LIMITED |
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| MUHAMMAD RAFIQ |
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| Company Secretary |
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| |
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| KARACHI : 26th September, 2002 |
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| NOTES: |
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| |
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| 1. The Share Transfer Books of the Company
will remain closed from 21 st October, 2002 |
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| to
31st October, 2002 (both dates inclusive). |
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| |
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| 2. Shareholders are requested to notify
change of address immediately. |
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| |
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| 3. Minors will not be admitted to the
meeting. |
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| |
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| DIRECTORS'
REPORT TO SHAREHOLDERS |
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| |
|
| Gentlemen, |
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| |
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| Your
Directors have great pleasure in submitting Thirty Ninth Annual Report
alongwith |
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| Audited
Accounts for the year ended 30th June, 2002 |
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| |
|
| 1. FINANCIAL RESULTS: |
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| |
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| The
financial results for the current year are as follows : |
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| |
|
| |
2002 |
2001 |
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| |
RUPEES |
RUPEES |
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| |
|
|
| Gross Loss |
|
(2,193,448) |
(10,597,502) |
|
| Operating Expenses |
|
(14,998,650) |
(13,179,454) |
|
| Operating Loss |
|
(17,192,098) |
(23,776,956) |
|
| Other Income |
|
2,683,400 |
3,462,223 |
|
| Prior
years' Adjustment |
|
879,950 |
- |
|
| |
(15,388,648) |
(20,314,733) |
|
| Financial
Expenses & Other Charges |
|
(7,677,295) |
(15,782,210) |
|
| |
(23,065,943) |
(36,096,943) |
|
| Provision
for taxation |
|
(702,064) |
(664,411) |
|
| Loss after taxation |
|
(23,768,007) |
(36,761,354) |
|
| Accumulated
Loss brought forward |
|
(151,722,430) |
(114,961,076) |
|
| Accumulated
Loss carried forward |
|
(175,490,437) |
(151,722,430) |
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| |
|
| REVIEW
OF OPERATION |
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| |
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| Jute Division |
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| |
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| The
production for the year under review was 3356 M.T. as compared to 3407 M.T.
of |
|
| corresponding
period of last year. |
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| |
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| Quality-wise production are as
under- |
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| |
|
| |
2002 |
2001 |
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| |
|
|
| Hessian |
|
1,148 |
977 |
|
| Sacking |
|
1,514 |
1,913 |
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| Twine & Others |
|
694 |
517 |
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| |
3,356 |
3,407 |
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| |
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| Production
was restricted due to shortage of working capital. We could have produced
Sacking |
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| in
anticipation of Government demand and held it in stock for subsequent sale.
This could not be |
|
| done
because of restricted funds availability. Production was kept at the level of
current sales. |
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| |
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| The
buying policies of Provincial Government of Punjab & Sindh are erratic.
Last year we had piled |
|
| up
high inventories in the expectation that the Provincial Government would buy
Jute bags in |
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| January
and onward but they bought them in April, 2001 thus blocking our liquidity in
stock |
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| unnecessarily,
thereby increasing financial costs. This year also inspite of a commitment by
the |
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| Government
of Punjab, it started purchases in April. As a result financially weak mills
like ourselves, |
|
| who
could not hold stocks of finished goods were not able to make sufficient
sales. |
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| |
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| We
have started exporting Jute products and efforts are under way to increase
our export. We |
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| exported
Hessian worth Rs. 5.23 million during the year. |
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| |
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| The
management has decided to shift its weaving unit from Lahore to Muridkey. The
shifting will |
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| be
completed by the end of September, 2002. Rental costs at Muridkey are lower
than Lahore. |
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| Moreover,
this shifting will facilitate training of skilled workers. |
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| |
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| We
had entered into an agreement with HBL in December, 1997, for clearance of
all outstanding |
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| of
both parties. However, while Habib Bank Limited has been keen to receive the
moneys claimed |
|
| by
them or due to them, they have not responded positively to our requests for
simultaneous |
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| payment
to us of moneys due to us. As pointed out by the Auditors in the report that
the company |
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| has
claimed markup on TDR since 1994 deposited with HBL at matching the borrowing
rate of |
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| HBL.
This has been done as HBL has detained an amount of Rs. 403,000/= against
guarantees |
|
| which
had expired and had been cancelled. Therefore the management feels that the
claim should |
|
| be
acceptable to HBL on the basis of principle of just and equitable. Additional
sums of money are |
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| due
to the Company from the Bank amounting to Rs. 461,581.00 plus interest /
mark-up on other |
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| accounts. |
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| |
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| The
company has an advance Income Tax of Rs. 9,469,922/= out of which refund of
Rs. 4,131,4587= |
|
| has
been confirmed by the department. We have further claim of refund of Rs.
3,022,632/= for |
|
| which
rectification application under various legal provisions have been made. We
have already |
|
| filed
applications for mark-up for Rs. 2.00 millions on confirmed refund. We hope
the decision |
|
| regarding
the above matters will go in favor of the Company. |
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| |
|
| Operating
and Restructuring Plan |
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| |
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| We
had already put forward our Operating and Restructuring Plans in our
Chairman's Statement |
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| for
the year ended 30th June, 2000 |
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| |
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| Because
of Prudential Regulations the company could not avail credit facilities and
was thus |
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| restricted
to limited purchases of Raw Jute. |
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| |
|
| Although
we were able to increase Hessian production by 171 Tons lack of funds
prevented |
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| maintenance
of optimum levels of stocks of jute and finished goods. |
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| |
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| The
restructuring plan also suffered set back because of fire at our spinning
unit at Muridke and |
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| we
were forced to produce yarn at Korti for weaving unit at Lahore which
hampered production |
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| at increase level. |
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| |
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| It
has become possible to persuade Amin Agencies (Pvt) Ltd., an associated
company to provide |
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| land
and buildings on rent at Mruidke. The formal agreements are expected to be
finalized in the |
|
| next
2 months. The new buildings, comprising a weaving unit are expected to be
available by |
|
| March
2003 or earlier. A complete weaving unit will also come into operation by
that time. The |
|
| agreement
to purchase land from Bari Rice Mills Limited reported in the report for 2000
has been |
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| assigned
to Amin Agencies (Pvt) Limited to enable them to start construction. |
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| |
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| No
progress has been possible in respect of sale of surplus jute mill machinery,
as more jute mills |
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| have
come into the market to sell their own surplus machinery. |
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| |
|
| Your
company has reached an agreement to sell part of its machinery and related
spare parts of |
|
| its
synthetics units. Your company has received down payment of Rs. 1.00 million.
The selling |
|
| price
for the selected machinery and spare part is Rs. 15.00 millions. Delivery of
machinery and |
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| spare
parts will Inshallah start soon. |
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| |
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| Effort
to minimise loss have borne fruits and the management expect to turn the
gross loss into |
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| gross
profit in the ensuing years and we will be able to convert the Company into a
profitable unit. |
|
| We
have started exporting Jute products. Efforts are being made to increase our
export and we |
|
| expect
to increase export substantially in the ensuing year, which will help us in
getting better |
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| results. |
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| |
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| Corporate
Governance: |
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| |
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| As
required by the Code of Corporate Governance the Board of Directors hereby
declares that, |
|
| |
|
| the
financial statement for the year ended June 30, 2002 present fairly its state
of affairs, |
|
| the
results of its operations, cash flow and changes in equity; |
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| |
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| proper
books of accounts have been maintained; |
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| |
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| appropriate
accounting policies have been consistently applied in preparation of
financial |
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| statements
for the year ended June 30, 2002 and accounting estimates are based on |
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| reasonable
and prudent judgment; |
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| |
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| International
Accounting Standards (IAS) as applicable in Pakistan, have been followed
in |
|
| preparation
of financial statements. |
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| |
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| The
system of internal control is sound in design and has been effectively
implemented and |
|
| monitored. |
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| |
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| There
are no doubts about the company's ability to become as a going concern;
provided no |
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| material
changes take place in Government policies. |
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| |
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| There
has been no material departure from the best practices of the corporate
governance, as |
|
| detailed
in the listing regulations of the Karachi and Lahore Stock Exchange. |
|
| |
|
| The
value of Provident Fund investments based on respective account for the year
ended 30th |
|
| June
2002. was Rs. 10,260,000/= |
|
| |
|
| The
company has formed an Audit Committee as required by the Code of Corporate
Governance. |
|
| The
establishment of Internal Audit Department is under process. |
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| |
|
| Key
Operating & Financing Data |
|
| |
|
| A
statement summarizing key operating and financial data for the last six years
is attached to the |
|
| Annual Report. |
|
| |
|
| Board
of Directors Meetings |
|
| |
|
| During
the year under review five meetings of the Board of Directors were held. A
statement |
|
| showing
number of meeting each of the Director attended is attached to the Annual
Report. |
|
| |
|
| Pattern
of Share Holding |
|
| |
|
| A
statement reflecting the pattern of holding of the shares as on 30th June,
2002 is attached to |
|
| the Annual Report. |
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| |
|
| Auditors |
|
| |
|
| The
Auditors M/s. Riaz Ahmad, Saqib, Gohar & Co., Chartered Accountants
retire and offer |
|
| themselves
for re-appointment. |
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| |
|
| Karachi
:26th September, 2002 |
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| |
|
| For and on behalf of the Board |
|
| Chief Executive |
|
| |
|
| STATEMENT
OF COMPLIANCE WITH BEST PRACTICES OF CORPORATE |
|
| GOVERNANCE |
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| |
|
| The
Company is in process of implementing all facets of the Code of Corporate
Governance issued |
|
| by
the Karachi and Lahore Stock Exchanges and the Board feel pleasure in stating
that provisions |
|
| of
the code, relevant for the year ended June 30, 2002, have been duly complied
with. |
|
| |
|
| REVIEW
REPORT TO THE MEMBERS ON STATEMENT OF COMPLIANCE |
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| WITH
BEST PRACTICES OF CODE OF CORPORATE GOVERNANCE. |
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| |
|
| We
have reviewed the Statement of Compliance with the best practices contained
in the Code of |
|
| Corporate
Governance prepared by the Board of Directors ofAmin Fabrics Limited to
comply with |
|
| the
relevant Listing Regulations of the Karachi and Lahore Stock Exchanges where
the Company |
|
| is Listed. |
|
| |
|
| The
responsibility for compliance with the Code of Corporate Governance is that
of the Board of |
|
| Directors
of the Company. Our responsibility is to review, to the extent where such
compliance can |
|
| be
objectively verified, whether the Statement of Compliance reflects the status
of the Company's |
|
| compliance
with the provisions of the Code of Corporate Governance and report if it does
not. A |
|
| review
is limited primarily to inquiries of the Company personnel and review of
various documents |
|
| prepared
by the Company to comply with the Code. |
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| |
|
| As
part of our audit of financial statements we are required to obtain an
understanding of the |
|
| accounting
and internal control systems sufficient to plan the audit and develop an
effective audit |
|
| approach.
We have not carried out any special review of the internal control system to
enable us |
|
| to
express an opinion as to whether the Board's statement on internal control
covers all controls |
|
| and
the effectivenest of such internal controls. |
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| |
|
| The
Board in its meeting held on September 26, 2002 has approved the
establishment of Internal |
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| Audit
Department and the company is in the process of implementing the decision of
the Board. |
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| |
|
| Based
on our review except for the matter noted in the previous paragraph nothing
has come to |
|
| our
attention which causes us to believe that the Statement of Compliance does
not appropriately |
|
| reflect
the Company's compliance in the material respects, with the best practices
contained in |
|
| the
Code of Corporate Governance effective as at 30th June, 2002 |
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| |
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| Karachi
:26th September, 2002 |
|
| |
|
| Riaz Ahmad, Saqib, Gohar &
Co. |
|
| Chartered
Accountants |
|
| |
|
| AUDITORS7
REPORT TO THE MEMBERS |
|
| |
|
| We
have audited the annexed balance sheet ofAmin Fabrics Limited as at June 30,
2002 and the related profit & loss account, |
|
| cash
flow statement and statement of changes in equity 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 |
|
| |
|
| It
is the responsibility of the company's management to establish and maintain a
system of internal control, and prepare and |
|
| present
the above said statements in conformity with the approved accounting
standards and the requirements of the Companies |
|
| Ordinance,
1984. Our responsibility is to express an opinion on these statements based
on our audit. |
|
| |
|
| We
conducted our audit in accordance with the auditing standards as applicable
in Pakistan. These standards require that we |
|
| plan
and perform the audit to obtain reasonable assurance about whether the above
said statements are free of any material |
|
| misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the above said |
|
| statements.
An audit also includes assessing the accounting policies and significant
estimates made by management, as well |
|
| as,
evaluating the overall presentation of the above said statements. We believe
that our audit provides a reasonable basis for |
|
| our
opinion and, after due verification, we report that; |
|
| |
|
| As
fully explained in note no. 8.1 to the financial statements, the company has
accrued mark-up amounting to Rs. 1,619,357/= |
|
| since
1994 on T.D.R. deposited with Habib Bank Limited (H.B.L.) at the rate
matching the borrowing rate of H.B.L. This amount |
|
| has
been adjusted with the outstanding loan of H.B.L. This amount remained
unconfirmed by H.B.L. As a result and in the |
|
| absence
of any agreement, we are unable to determine whether the above mark-up is
recoverable / adjustable from the H.B.L. |
|
| and
whether mark-up should have been recorded in the books of account. |
|
| |
|
| Moreover,
due to the dispute the final installment of the loan has not been paid and no
mark up amounting to Rs. 843,000 as |
|
| claimed
by H.B.L. has been accrued on the overdue installment. |
|
| |
|
| Had
the above mark-up on TDR not accrued by company and provisions for mark-up as
claimed by HBL been made the loss |
|
| for
the year would have been Rs. 22,992,650/= instead of Rs. 23,768,007/= and
accumulated loss would have been Rs. |
|
| 174,715,080/=
instead of Rs. 175,490,437/= |
|
| |
|
| (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; excepts
for change as stated in |
|
| note
1.1 (i) to the financial statements, with which we concur; |
|
| |
|
| (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 except for the
effects |
|
| of
such adjustment, if any, as might have been determined to be necessary had we
been able to satisfy ourselves |
|
| as
to the matters stated above, the balance sheet, profit & loss account,
cash flow statement and statement of |
|
| changes
in equity together with the notes forming part thereof conform with approved
accounting standards as |
|
| applicable
in Pakistan, and 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 June 30, 2002 and |
|
| of
the loss, its cash flows and changes in equity for the year then ended; and |
|
| |
|
| (d) in our opinion, no zakat was deductible at
source under the Zakat and Ushr ordinance, 1980. |
|
| |
|
| Without
qualifying our opinion we slate that the company, during the year, has
incurred after tax loss of Rs. 23.77 million. The |
|
| company
has also recorded accumulated losses amounting to Rs. 175.49 million as at 30
June, 2002 and as of that date, |
|
| company's
current liabilities exceeded its current assets by Rs. 62.05 million and its
total liabilities exceeded its total assests |
|
| by
Rs. 34.78 million. Therefore, aforesaid events have created considerable
doubt as to whether the company would be able |
|
| to
continue as a going concern. Management has assured us that despite the
accumulated losses and other factors, the company |
|
| will
continue to raise funds through it's own sources. No adjustments, if any,
have been made in the accounts, that may be |
|
| necessary
should the company be unable to continue as a going concern. |
|
| |
|
| Karachi :26th September, 2002 |
|
| |
|
| Riaz
Ahmad, Saqib, Gohar & Co. |
|
| |
|
| Chartered
Accountants |
|
| |
|
| BALANCE
SHEET AS |
|
| |
|
| |
NOTE |
2002 |
2001 |
|
| |
|
RUPEES |
RUPEES |
|
| SHARE
CAPITAL AND RESERVES |
|
| Share Capital |
|
| Authorised |
|
| 20,000,000
(2001 : 20,000,000) Ordinary |
|
| shares of Rs. 10 each |
|
2 |
200,000,000 |
200,000,000 |
|
| Issued,
subscribed & paid-up |
|
3 |
113,969,400 |
113,969,400 |
|
| Reserves |
|
4 |
26,741,847 |
26,741,847 |
|
| Accumulated loss |
|
(175,490,437) |
(151,722,430) |
|
| |
(34,779,190) |
(11,011,183) |
|
| LONG
TERM LOANS & DEFERRED LIABILITIES |
5 |
5,261,079 |
4,935,427 |
|
| LONG
TERM DEPOSITS |
|
6 |
1,600,000 |
1,600,000 |
|
