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PLASTOBAG LIMITED
Annual Reports 2002
CONTENTS
Company Information
Notice of Meeting
Director's Report
State of Compliance
Auditor's Report
Balance Sheet
Profit & Loss Account
Cashflow Statement
Statement of Changes in Equity
Notes to the Accounts
COMPANY INFORMATION
BOARD OF DIRECTORS
	Mr. Hussain Jamil • Chairman / Executive Director
	Mr. Ahsan Jamil Chief Executive Officer
	Mr. Ali Jamil
	Mr, Shahid Jamil
	Mrs. Deborah Jamil
	Mrs. Ayesha Khan
	Mr. Ashiq Hussain Qureshi
AUDIT COMMITTEE
	Mr. Hussain Jamil Chairman
	Mrs. Ayesha Khan ' Member Non-Executive Director
	Mr. Ashiq Hussain Qureshi Member Non-Executive Director
COMPANY SECRETARY
	Mr. Habib Ur Rehman Siddiqui
	ACMA
BANKERS
	Askari Commercial Bank Ltd.
	Prime Commercial Bank Ltd.
	Muslim Commercial Bank Ltd.
	Emirates Bank International
	The Bank of Khyber
AUDITORS
	Khalid Majid Rehman Sarfaraz
	Rahim Iqbal Rafiq
	Chartered Accountants
LEGAL ADVISOR
	Abdul Ghaffar Khan
	Advocate
FACTORY
	1. Plot No. 112, Phase 5, Industrial Estate Hattar, District Haripur,
	N.W.F.P. Tel: (0995) 617682-3 Fax: (0995) 617074
	E-mail: pbLhattar@plastobag.com
	2. F-248, Near Fire Brigade S.l.T.E., Karachi.
	Tel, No. (021) 2569550 - 2, Fax No. (021) 2569436
	E-mail: pbLheadoffice@plastobag.com
REGISTERED & CORPORATE OFFICE
	F-248, Near Fire Brigade S.l.T.E., Karachi.
	Tel. No. (021) 2569550 - 2, Fax No. (021) 2569436
	E-mail: pbLheadoffice@plas1obag.com
DIRECTOR'S REPORT
The board of Directors of Plastobag Ltd. is pleased to present the audited financial statements for the year.
ended 30th June 2002.
OVERVIEW
The period under review was very challenging for your company especially in the backdrop of our significant
previous year loss. This was also the first year of operations after our doubling of production capacity and
was, therefore, that much more crucial. Your company showed its resilience by achieving robust sales-
revenue growth of 68.5% and quantitative growth of 73% during a period of unusually high economic volatility
and reduced business activity.
The period under review marks the beginning of your company's turnaround reducing its loss after taxation to
Rs.(19.19) million from Rs.(27.98) million last year. This is particularly encouraging as the current year opera
tions has yielded a healthy operating profit of Rs. 22.64 million, which also constitutes a dramatic swing of
around Rs.33 million from previous years operating loss of Rs.(10.49) million. The strong operating results
were, however, swept away by the increase in financial charges of Rs.21.56 million over previous year. This
enormous increase in financial charges was mainly on account of the lease-financing burden taken on for the
plant capacity expansion.
SALES & OPERATIONS:
The PET bottle demand has continued to grow quite fast, what with bottle prices sinking due to increased
competition, to historically low levels. As a result of your company's timely expansion we were in a good
position to get the lion's share of this growth of around 73%. Superior quality and strong after sales through a
newly built-up sales team further reinforced our old customer relations particularly in the beverage industry
and mainly contributed to this high growth. Diversification efforts were somewhat hampered by investment
constraints but nevertheless some progress in the non-carbonated soft drink (CSD) sector was achieved and
this will continue to feature as a key priority. Preforms sales, however, more than trippled albeit on a small
base sale of the previous year,
The Karachi factory continues to operate below break-even although the operating loss was somewhat re
duced 10% from Rs. (10.50) million last year to Rs. (9.0) million this year. Sales fell quantitatively by 8% but
fierce competition has meant a greater drop in value sales by 15%. However, some northern market sales
that our Hattar plant could not supply prior to the expansion and were supplied out of our Karachi factory last
year reverted back to Hattar after our expansion and to some extent this conceals some of the gains of the
Karachi operation. Moreover, savings from northward freight helped reduce its operating loss compared to
previous year.
Operations as a whole for the company showed significant improvements with gross margins jumping from
5% last year to 18% this year and operating profit margins swinging back in to the profit from (7%) last year
to 8.5% this year. The main contributing factors were efficient raw material procurement, wastage reduction
and most importantly economies of scale achieved through much higher sale and production.
FINANCIAL CHARGES:
The main reason for the bottom line loss is the more than doubling of financial charges, from Rs. 18.87 million
last year to Rs. 40.40 million. The financial plan for our expansion last year was originally based on NDFC
financing that was pending final approval when it's sudden closure and subsequent merger with National
Bank of Pakistan took place. This plan was both sustainable from a cash-flow perspective due to a longer
grace period and repayment tenor as well as much lower mark-up rates especially compared to the leasing
we had to resort to at the last minute. We are now arranging to swap our leasing obligation with long-term
commercial debt at the prevailing lower rates while also extending our loan repayment tenor to suit our cash
flows. We are also in negotiation with Bankers Equity Limited, which is under liquidation to refinance and
repay their outstanding and overdue debt. Our proposal is, however, still pending with them for early finaliza-
tion.
FUTURE OUTLOOK:
The PET market annual growth continues in double digits and we are quite encouraged by the increasing
switchover to PET from other traditional packaging forms like glass and tin. In 2002 - 03 we are looking to
continue this trend of recovery and consolidate our business through product diversification and preform
sales. With lower financial charges and increasing sales & production while ensuring low-cost production at
all times we are confident to achieve an accounting break-even next year.
COMPLIANCE WITH CODE OF CORPORATE GOVERNANCE:
The management is fully aware of the code of corporate Governance and steps are being taken for its
effective implementation within the allowed time frame. The various statements, as required by the Code, are
given below:
1. Presentation of Financial statements. The financial statement prepared by the management
present fairly its state of affairs, the results of its operations, cash flows and changes in equity.
2. Books of Accounts. Proper books of accounts have been maintained.
3. Accounting Policies. Appropriate accounting policies have been consistently applied in prepa
ration of the financial statements and accounting estimates are based on reasonable and pru
dent judgment.
4. Compliance with International Accounting Standard. International Accounting standard, as
applicable in Pakistan, have been followed in the preparation of financial statement and any
departure there from has been adequately disclosed.
5. Internal Control System. The system of internal control is sound in design and has been effec
tively implemented and monitored.
6. Going Concern. There is no significant doubt on PLASTOBAG LIMITED's ability to continue as
a going concern.
7. Compliance with Corporate Governance. There has been no material departure from the best
practice of corporate governance, as detailed in the listing regulations.
8. Financial Data of last six years. Key operating and financial date for the last six years in
summaries form is attached (see annexure A).
9. Dividend. As a consequence of the large accumulated financial loss, coupled with increase in
the requirements of working capital to cope with future business requirements no dividend is
recommended by the Board for the period under review.
10. Outstanding statutory payments. There are no outstanding statutory payments on account of
taxes, levies and charges except of normal and routine nature which are given in note #11 .
11. Significant plans and decisions. Last year we did an expansion whereby the capacity in
creased by 100 percent. Now we are looking for debt restructuring whereby the new leases for
Hatter plant will be swapped by new debt thereby reducing mark-up by 5% approximately.
12. Gratuity Fund. Statement as to the value of gratuity fund on the basis of actuarial valuation as
on 30.6.2002 is included in note No. 20 to the accounts.
13. • Board Meetings. During the year 5 board meeting were held and the attendance by each director
is given below:
Name of Director		No of Meetina Attended
Mr. Ahsan Jamil		5
Mr. Hussain Jamil		5
Mrs. Deborah Jamil		5
Mrs. Ayesha Khan		5
Mr. Shahid Jamil		2
Mr. Ali Jamil		1
Mr. Ashiq Hussain Qureshi		0
14. Pattern of shareholding The pattern of shareholding and additional information regarding pat
tern of shareholding is attached annexure B.
15. Trading of shares. Trading of shares by director of the Company during the period under review
is as under:
Name		Designation		No of Shares
				acquired/(Sold)
Mr. Hussain Jamil		Chairman/Executive Director		28,000
Mr. Ahsan Jamil		Chief Executive Officer		27,850
Mrs. Ayesha Khan		Director		221,242
AUDITORS.
The present Auditors, M/s. Khalid Majid Rehman Sarfraz Rahim Iqbal Rafiq, Chartered Accountants.
retire and being eligible, offer themselves for re-appointment for the year 2002-2003.
ACKNOWLEDGEMENT.
We would like to place on record our appreciation for the untiring efforts, teamwork and dedication by the
company's management and employees during the year under review.
We would also like to express our gratitude to our valued shareholders, customers, suppliers and finan
cial institutions for their co-operation, constant support and trust reposed in your company.
For and on behalf of the board of Directors
Karachi.
Dated: 27th September, 2002
(Ahsan Jamil)
Chief Executive Officer.
Seven Years at a Glance
		2002	2001	2000	1999	1998	1997	1996
Assets Employed
Fixed Assets (including WIP)		295,110	302,442	207,604	205,250	187,771	194,468	194,657
Long Term deposit		7,753	7,140	4,140	4,018	693	693	670
Defered Cost		-	-	-		409	921	1,381
Current Assets		98,935	77,620	80,181	69,702	49,914	38,227	31,161
Total Assets Employed		401,798	387,201	291,925	278,970	238,787	234,308	227,868
Financed by
Shareholder's Equity		31,165	50,358	78,346	77,830	60,825	46,284	42,094
Revaluation surplus		92,520	92,520	92,520	92,520	92,520	92,520	92,520
Long Term loans and leasing		111,578	144,561	45,542	53,195	42,233	36,148	49,227
Deferred Liabilities		3,029	6,213	-	-	-	.	-
Current Liability		163,506	93,550	75,518	55,425	43,208	59,357	44,027
		401,798	387,201	291,925	278,970	238,787	234,308	227,868
Sales & Profits
Sales		250,541	148,671	126,832	143,991	131,088	122,025	138,606
Gross Profit		46,043	7,479	27,419	48,413	31,390	35,680	29,818
Operatig profit		22,326	-10,434	14,696	32,010	17,639	21,188	16,387
Profit / (Loss) before taxation		-18,110	-29,364	677	17,005	19,096	2,652	4,008
Profit / (Loss) after taxation		-19,192	-29,552	515	17,005	19,096	4,190	3,315
Dividend		-	-	7,446	4,099	4,554		-
Retained Eamings/(Loss)		-25,920	-6,728	21,260	28,191	15,284	743	-3,447
Financial Ratios
Gross Profit as % of sales		18.38%	5.03%	21.62%	33.62%	23.95%	29.24%	21.51%
Operating Profit / (Loss) as % of sales		8.91%	-7.02%	11.59%	22.23%	13.46%	17.36%	11.82%
Net Profit / (Loss) as % of sales		-7.66%	-19.88%	0.41%	11.81%	14.57%	3.43%	2.39%
Current ratio		0.82	1.05	1.22	1.53	1.34	1.02	1.1
Long term debt %		43.43%	50.29%	21.04%	23.80%	21.59%	20.66%	26.78%
Equity % / (Loss)		52.57%	49.71%	78.96%	76.20%	78.41%	79.34%	73.22%
Earnings per share		-3.36	-5.18	0.1	3.73	1.76	0.58	0.88
Dividend (%)		0.00%	0.00%	0.00%	0.00%	10.00%	0.00%	0.00%
Bonus Shares (%)		0.00%	0.00%	15.00%	9.00%	0.00%	0.00%	0.00%
PATTERN OF SHAREHOLDING (FORM 34) AS AT JUNE 30, 2002
Annexure"B"
SERIAL	NO. OF	SHAREHOLDING		TOTAL
NUMBER	SHARE			SHARES
	HOLDERS	FROM	TO	HELD
1	333	1	100	17,539
2	133	101	500	28,073
3	1594	501	1000	995,002
4	105	1001	5000	214,770
5	30	5001	10000	195,337
6	6	10001	15000	75,528
7	3	15001	20000	53,899
8	2	20001	25000	44,283
9	8	25001	30000	209,023
10	1	45001	50000	46,000
11	1	55001	60000	57,159
12	1	60001	65000	64,469
13	1	90001	95000	91,062
14	1	100001	105000	100,280
15	1	120001	125000	120,336
16	0.1	140001	145000	143,324
17	1	150001	155000	151,798
18	1	195001	200000	196,684
19	1	200001	205000	201,437
20	1	220001	225000	223,975
21	1	235001	240000	238,791
22	1	285001	290000	286,650
23	1	345001	350000	346,592
24	1	690001	695000	694,160
25	1	910001	915000	912,393
	2330			5708564
Categories of shareholders
Name			Shareholder	Share	Percentage
1. Associated Companies, undertaking and related parties			NIL	NIL	NIL
2. NIT/ICP
National Bank of Pakistan			1 .	120,336	2.11
Invstment Corp of Pakistan			1	8,212	0.15
			2	128,548	2.26
3. Directors, Chief Executive , their spouse and minor children
3.a. Mr. Hussain Jamil Chairman / Executive Director			1	912,393	15.98
3.b. Mr. Ahsan Jamil Chief Executive officer			1	694,160	12.16
3.c. Mr. Shahid Jamil Director			1	238,791	4.18
3.d. Mr. All Jamil Director			1	223,975	3.92
3.e. Mrs. Deborah Jamil Director			1	286,650	5,02
3.f. Mrs. Ayesha Khan Director			1	346,592	6.07
3.g. Mr. Ashiq Hussain Qureshi Director			1	626	0.01
			7	2,703,187	47.35
4. Executives			NIL	NIL	NIL
5. Public Sector Companies and Corporations.
5,a Habib Brothers (Pvt) Ltd.			1	626	0.01
5.b Ali Hussain Rajab All (Pvt.) Ltd.			1	5,117	0.09
			2	5,743	0.1
6. Banks, Development Finance Institutions, Non-Banking Finance Institutions, Insurance Companies,
Modarbas and Mutual Funds.
6.a Somer's Nominee(Far East) Ltd C/0 Citi Bank N.A			1	12,785	0.22
6.b State Life Insurance Corp of Pakistan			1	201,437	3.52
6.c. National Development Finance Corp			1	3,915	0.07
			3	218,137	3.82
7. Shareholding ten percent or more voting interest.			NIL	NIL	NIL
8. Individuals			2,216	2,652,949	46.47
Total			2,230	5,708,564	100
STATEMENT OF COMPLIANCE WITH CODE OF
CORPORATE GOVERNANCE
The Board of Directors of PLASTOBAG LIMITED feels pleasure in stating that the Company has complied
: with all the provisions, relevant for the year ended June 30, 2002, of the Code of Corporate Governance as
contained in the Listing Regulations of the Karachi Stock Exchange. Moreover, the implementation of other
provisions of the Code is currently in process. • ;
For and on behalf of the Board
AHSANJAMIL
Cheif Executive Officer
Karachi:
Dated : September 27,2002
REVIEW REPORT TO THE MEMBERS ON STATEMENT OF
COMPALIANCE WITH BEST PRACTICES OF
CODE OF CORPORATE GOVERNANCE
We have reviewed the Statement of Compliance with the best practices contained in the Code of Corporate
Governance prepared by the Board of Directors of Plastobag Limited to comply with the Listing Regulation
No. 37 of the Karachi Stock Exchange 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.
As part of the 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 Boards' statement on internal control covers all controls and the effectiveness of such internal controls.
Based on our review, 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 all material respects, with the best