| THAL JUTE
MILLS LIMITED |
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| Annual
Reports 2002 |
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| Contents |
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| Company Information |
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| Vision and Mission Statements |
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| Notice of Annual General
Meeting |
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| Directors' Report |
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| Statement of
Compliance & Auditors' Review Report |
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| Auditors' Report |
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| Balance Sheet |
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| Profit
& Loss Account |
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| Statement
of Changes in Financial Position |
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| Statement
of Changes in Equity |
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| Notes to the Financial
Statements |
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| Pattern
of Shareholdings |
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| Distribution
of Revenue |
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| Ten
Years at a Glance |
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| |
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| Company
Information |
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| Board of Directors : |
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| Chairman |
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Mr. Rafiq M. Habib |
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| Chief Executive |
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Mr. Sohail P. Ahmed |
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| Directors |
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Mr. Ali S. Habib |
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Mr. Mohamedali R. Habib |
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Mr. S. A. Q. Haqqani |
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Mr. Mazhar Valjee |
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| Executive Director |
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Mr. Muhammad Jamil
Hussain |
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| Company Secretary |
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Mr. Ali Asghar Moten |
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| Board
Audit Committee : |
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| Chairman |
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Mr. Ali S. Habib |
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| Members |
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Mr. S. A. Q. Haqqani |
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Mr. Mazhar Valjee |
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| |
Mr. Muhmmad Jamil Hussain |
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| Internal Auditors : |
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Noble Computer Services
(Pvt.) Ltd. |
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| External Auditors : |
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Hyder Bhimji & Co. |
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Chartered Accountants |
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| Legal Advisers : |
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A. K. Brohi & Co.,
Karachi. |
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K. A. Wahab & Co.,
Karachi. |
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| Tax Adviser: |
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Sidat Hyder Qamar &
Co. |
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| Bankers: |
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Emirates Bank
International Ltd. |
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Habib BankAG Zurich |
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Habib Bank Limited |
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Hongkong Shanghai Banking
Corporation |
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Metropolitan Bank Limited |
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National Bank of Pakistan |
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Standard Chartered Bank |
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United Bank Limited |
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| Registered Office : |
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4th Floor, Siddiqsons
Tower, |
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3-Jinnah Cooperative
Housing Society, |
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Sharea Faisal, Karachi. |
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Tel : 4312030, 4312185
Fax :4312318 |
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E-mail : tjml@hoh.net |
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| MILLS
/ FACTORY : |
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| Jute Division : |
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D. G. Khan Road,
Muzaffargarh. |
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| Engineering
Division : |
Plot No. 1 & 2,
Sector 22, |
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| |
Korangi Industrial Area,
Karachi. |
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| Sales
& Service Centre : |
14, BangloreTown, Sharea
Faisal, Karachi. |
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Tel:4520122 |
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| Corporate Vision |
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| Our
mission is to set up and operate viable businesses in sectors, identified by
the Executive Committee and |
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| Board
of Directors, in a manner that: |
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| • They are either #1 & 2 in turnover
& returns in their industry ; |
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| • Service all the stake holders in a
market-competitive manner; |
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| • Have an export portfolio of products. |
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| |
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| Mission
- Jute Division |
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| Our
mission is to be the # 1 Jute products manufacturers in Pakistan in terms of
turnover, efficiencies and |
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| margins.
We will search out new technologies, products and markets to maintain our
position of most efficient |
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| producer,
highest turnover and sustained good returns. |
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| |
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| Mission
- Engineering Division |
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| Our
mission is to earn recognition as a world-class auto parts manufacturer,
producing parts with high entry |
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| barriers,
primarily for OEM market. |
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| |
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| It
is our strategy to introduce one new product or do business with one new
client or enter one new market |
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| every year. |
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| NOTICE
OF MEETING |
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| NOTICE
is hereby given that the thirty-sixth Annual General Meeting of the
Shareholders of the |
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| Company
will be held at the Auditorium of the Finance & Trade Centre, Sharea
Faisal, Karachi on Saturday, |
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| October
26, 2002 at 4:30 P.M. to transact the following business : - |
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| |
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| 1.
To receive and adopt the Audited Accounts for the year ended June 30, 2002
together with the |
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| reports
of the Directors and Auditors thereon. |
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| |
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| 2.
To approve cash dividend at 80% i.e. Rs. 4/- per share for the financial year
ended June 30, 2002 |
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| as
recommended by the Board of Directors. |
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| |
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| 3.
To appoint Auditors for the year 2002-2003 and fix their remuneration. |
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| By
Order of the Board, |
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| Karachi:
September 10, 2002. |
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| |
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| (ALI
ASGHAR MOTEN) |
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| Secretary |
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| NOTES: |
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| |
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| i)
The Share Transfer Books of the Company will remain closed from Saturday,
October 19, 2002 to Saturday, |
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| October
26, 2002 (both days inclusive). Shares may be lodged for transfer with our
Registrar M/s. Noble |
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| Computer
Services (Pvt) Limited, 14, Banglore Town, Sharea Faisal, Karachi. The
Shareholders are |
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| advised
to notify the Registrar of any change in their addresses. |
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| |
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| ii)
A member entitled to attend and vote at this meeting may appoint another
member as his/her proxy to attend |
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| and
vote for him/her. Proxies in order to be effective must be received at the
Registered Office of the |
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| Company
not less than 48 hours before the time of holding the meeting. A proxy must
be a member of the |
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| Company. |
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| |
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| iii)
CDC shareholders desiring to attend the meeting are requested to bring their
original National Identity Card, |
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| Account
and Participant's ID numbers, for identification purpose and in case of
proxy, to enclose an attested |
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| copy
of his/her National Identity Card. |
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| Directors' Report to the
Shareholders |
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| for
the year ended June 30, 2002. |
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| Dear Shareholders, |
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| |
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| The
Directors of your Company are pleased to place before you their Report and
the audited accounts for the year ended |
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| June
30, 2002. The Report discusses the operations in three parts : Consolidated
Operations, Jute Operations and |
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| Engineering
Operations. By the Grace of Allah, your Company has achieved record profit
before tax of Rs. 162 million, a |
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| remarkable
increase of 55% over last year's Rs. 104 million. |
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| |
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2001-2002 |
2000-2001 |
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(Rs. 000's) |
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| |
| Sales Revenue |
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1,552,384 |
1406419 |
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| Gross Profit |
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224,784 |
184062 |
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| Net
profit before taxation |
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161,772 |
104,233 |
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| Provision
for taxation |
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49,742 |
35403 |
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| Net
profit after taxation |
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112,030 |
68,830 |
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| Appropriations : |
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| Final
Dividend - proposed @ 80% (2001 : 40%) ... |
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55,653 |
27,826 |
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| Transfer
to General Reserve |
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58,000 |
40000 |
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| Production : |
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| Production
touched its highest peak ever at 26,125 tons, crossing the bar set at |
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| 22,698
tons. The production capacity was rationalized in the current year after |
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| addition
of 96 S4A looms last year. |
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| |
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| Cost
of Manufacture : |
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| The
cost of manufacture during the year escalated because of increase in the
rate |
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| of
raw jute in the international market. The salaries and wages increased due
to |
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| increase
in production and due to increase in the minimum wage as announced by |
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| the
Federal Government effective from August 2001. The manufacturing |
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| overheads
also witnessed an increase due to increased production. |
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| |
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| ISO Certification : |
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| The
jute division worked on the systems during the year and received ISO |
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| 9001
: 2000 Certification from SGS International Services, Belgium in August |
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| 2002.
This will provide extra assurance to our customers about quality of our |
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| products. |
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| ENGINEERING
OPERATIONS : |
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| Sales Turnover: |
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| Though
the sales turnover of the engineering operations went up marginally by |
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| Rs.
6 million to Rs. 627 million, the sales volume of auto air conditioners
declined |
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| due
to some changes in car market from 19,828 units to 16,585 units. It was
the |
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| wiring
harness division, which came to support, as its sales went up to 15,710
from |
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| 3,030
units last year. During the year, we successfully introduced HVAC
system, |
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| which
is the latest technology in car environment control, in Toyota Corolla
and |
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| Heater
Blowers in Daihatsu Cuore. |
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| |
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| Cost
of Manufacture: |
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| The
cost of manufacture witnessed a decline to Rs. 508 million from Rs. 541 |
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| million
during last fiscal. The cost of raw materials declined from Rs.466 million
to |
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| Rs.
420 million mainly due to reduction in sales volume of air conditioners. |
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| Salaries
and wages went up during the current year due to increase in manpower |
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| for
wire harness. The charge on depreciation was higher due to additional |
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| investment
of new corolla's jigs and fixtures. The charge under rent, rates &
taxes |
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| of
Rs. 9.4 million is a provision for additional sales tax for a case, which is
with the |
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| Appellate
Tribunal. The Company is reasonably confident of winning the case. |
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| |
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| Administration
& Selling Expenses (Consolidated): |
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| The
administrative expenses witnessed a marginal decline at Rs. 43 million |
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| from
Rs. 44.1 million during the last fiscal year. However, the selling
expenses |
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| increased
to Rs. 16.1 million during the year from Rs. 14.1 million last year |
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| mainly
because of increase in manpower and overseas travelling to export |
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| market. |
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| Financial
Expenses (Consolidated): |
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| The
financial expenses reduced from Rs. 26.5 million to Rs. 20.2 million
during |
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| the
current year, because of the benefit accrued due to reduction in the rates
of |
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| mark-up
and better cash flow management. |
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| Other
Income (Consolidated): |
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| The
income from other sources realized during the year was from the sale of |
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| property
consisting of land and building (Unit 3) @ Rs. 17.2 million to Messers.
GM |
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| Tractors
(Private) Ltd. |
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| FUTURE
PROSPECTS: |
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| Jute: |
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| Local
demand of jute goods is largely dependant upon the size of wheat crop and
procurement of Wheat by the |
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| Government.
We are focusing on export of jute goods but facing tough competition from
Bangladesh, which is paying |
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| 10%
cash subsidy to exporters of jute goods. This has seriously prejudiced our
exports to Iran, Syria and African |
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| countries
like Sudan, etc. The Pakistan Jute Mills Association (PJMA) has requested the
Government to allow local jute |
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| industry
export subsidy of 10% to counter the cash subsidy paid by Bangladesh
Government by following the procedure |
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| as
laid down in Article 6 of WTO Agreement on Subsidies and Countervailing
Measures. |
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| |
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| The
Government has reduced maximum tariff on imports from 30% to 25% in June
2002. Last year the Government |
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| removed
the 20% regulatory/excise duty on import of jute goods, which was imposed few
years back on the |
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| recommendation
of NTC. This has exposed the local industry to cheap subsidized imported jute
goods from Bangladesh. |
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| PJMA
has filed an application for Countervailing Duty with the National Tariff
Commission of Pakistan. A similar |
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| application
for Antidumping Duty will soon be filed by the PJMA. |
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| |
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| It
is thus difficult to predict the future. We will continue our endeavours for
amelioration. |
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| Engineering : |
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| The
car market is bullish and so are our plans. We Look towards growth in both,
car air conditioners and wiring harness. |
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| We
also have received orders from Pak Suzuki to supply heater blower for some of
their car models. |
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| |
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| SAFETY,
HEALTH AND ENVIRONMENT : |
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| Your
Company has laid down policy of Occupational Safety, Health and Environment.
Safety, health and environmental |
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| considerations
are given a high priority in our planning for all existing and new
operations, products, processes. We are |
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| fully
aware that the commitment and responsible conduct of all our employees are
vital for achieving our objectives. |
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| Commitment
is based on awareness, understanding and involvement. |
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| |
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| HUMAN
RESOURCE TRAINING AND DEVELOPMENT : |
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| The
basic assumption underlying increased emphasis on training and development of
human resource is that we have an |
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| obligation
to utilize our employees' abilities to the fullest and to give all employees
a chance to grow and to realize their |
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| full
potential and to develop successful careers. It is Company policy to provide
career oriented training and development |
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| opportunities,
offer career information and career programs. Through career development
programmes, we help |
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| employees
to analyse their abilities and interests to better match personnel needs for
growth and development with the |
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| needs
of the organization. We believe that when employees expand their abilities,
they complement organisation's |
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| objectives.
By offering careers, not just jobs, we nurture a pool of talent that allows
the Company to staff senior |
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| management
positions internally. |
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| |
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| On
Succession Planning, it is policy of the Company to fill open positions by
promotions-from-within whenever possible |
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| other
than entry-level-jobs. Promotion-from-within policy gives present employees
the first opportunity for job openings. |
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| New
hires are considered only after efforts to promote from within have been
exhausted. We are providing the |
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| educational
and training resources needed to help employees identify and develop their
promotion potential. By |
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| identifying
successors to key jobs and high-potential employees, we assure a steady flow
of internal talent to fill important |
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| openings. |
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| |
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| AUDITORS : |
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| The
present auditors of the Company Messers Hyder Bhimji and Company, Chartered
Accountants retire and being |
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| eligible
offer their services for re-appointment. |
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| |
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| PATTERN
OF SHAREHOLDINGS : |
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| The
pattern of shareholdings as at June 30, 2002 is attached to this report. |
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| |
| BOARD
AUDIT COMMITTEE : |
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| The
Board of Directors has constituted a Board Audit Committee, which is
responsible for reviewing reports of the |
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| Company's
financial results, audits and adherence to standards of system of management
controls. The committee will |
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| recommend
to the Board the selection of the Company's auditor and review the procedures
for ensuring their |
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| independence
with respect to the services performed for the Company. |
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| |
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| The
majority of the members of the Committee are composed of the non-executive
Directors of the Company. |
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| |
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| Members: |
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| |
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| Mr. Ali S. Habib |
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Director |
(Chairman) |
Non-Executive Director |
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| Mr. S. A. Q. Haqqani |
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Director |
(Member) |
Non-Executive Director |
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| Mr. Mazhar Valjee |
|
Director |
(Member) |
Non-Executive Director |
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| Mr.
Muhammad Jamil Hussain |
Executive Director |
(Member) |
Executive Director |
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| |
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| STATEMENT
ON CORPORATE GOVERNANCE PRACTICE : |
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| |
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| The
Company has already taken steps to initiate the best practices for the
corporate governance : |
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| • The audit committee stands constituted and
would start to play an effective role. |
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| • The internal audit function has been
outsourced. |
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| • The vision and mission statement are in
place and code of ethics and business practices are under preparation. |
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| • The accounting policies defined are being
consistently applied in the preparation of financial statements. |
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| • The international accounting standards are
being followed for the preparation of the accounts. |
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| • The system of internal control is
regularly reviewed and changes required are suitably incorporated. |
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| • There is no doubt upon the company's
ability to continue as a going concern. |
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| • The key operating & financial data for
the last 10 years are annexed to the report. |
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| • The value of investments based on the
audited accounts of provident fund stand at Rs. 105.2 million. |
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| • During the year under review the Board
convened 3 times and the attendance of the respective Directors was as |
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| under:- |
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| |
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| 1.
Mr. Rafiq M. Habib |
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3 |
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| 2. Mr. Ali S. Habib |
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3 |
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| 3.
Mr. Mohamedali R. Habib |
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2 |
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| 4.
Mr. S. A. Q. Haqqani |
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2 |
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| 5.
Mr. Sohail P. Ahmed |
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3 |
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| 6. Mr. Mazhar Valjee |
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3 |
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| 7.
Mr. Muhammad Jamil Hussain |
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3 |
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| |
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| APPRECIATION : |
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| On
behalf of the Board of Directors, I would like to place on record our
appreciation for the support and confidence of our |
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| Customers,
Dealers and Suppliers. I am also grateful to all our Bankers for their
continued support. We also wish to |
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| record
thanks to our Overseas Technical Collaborators for their technical help and
advice. The Board also acknowledges |
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| the
commitment of all our Executives, Staff and Workers who worked untiringly in
achieving the Company's Objectives. |
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| |
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| On
behalf of the Board |
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| Karachi,
September 10, 2002. |
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| |
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| SOHAIL P. AHMED |
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| Chief Executive |
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| |
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| 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 |
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| Karachi
and Lahore Stock Exchanges of Pakistan, whereon the Company is quoted and the
Board of |
|
| Directors
of the Company feel pleasure in stating that provisions of the Code, relevant
for the year ended |
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| June
30, 2002 have been duly complied with. |
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| |
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| REVIEW
REPORT TO THE MEMBERS ON STATEMENT OF COMPLIANCE WITH BEST PRACTICES OF CODE
OF |
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| 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 of Thai Jute Mills Limited to comply with
the Listing |
|
| Regulation
No. 37 of the Karachi Stock Exchange and Listing Regulation No. XIII of the
of the Lahore Stock |
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| Exchange
where the Company is listed. |
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| |
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| The
responsibility for compliance with the Code of Corporate Governance is that
of the Board of Directors of |
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| 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 |
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| with the Code. |
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| |
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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
effectiveness of such internal controls. |
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| |
|
| 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 |
|
| practices
contained in the Code of Corporate Governance. |
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| |
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| AUDITORS'
REPORT TO THE MEMBERS |
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| We
have audited the annexed Balance Sheet of Thai Jute Mills Limited as at June
30, 2002 and the related |
|
| Profit
and 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
purpose of our audit. |
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| |
|
| 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: |
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| |
|
| a) in our opinion, proper books of account
have been kept by the Company as required by the |
|
| Companies
Ordinance, 1984; |
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| |
|
| b) in our opinion; |
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| |
|
| 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; |
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| |
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| and |
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| |
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| ill) the business conducted, investments made
and the expenditure incurred during the year |
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| were
in accordance with the objects of the Company; |
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| |
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| c) in our opinion and to the best of our
information and according to the explanations given to us, the |
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| Balance
Sheet and Profit and 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 Profit, and its cash flows and changes in equity
for the year then |
|
| ended;and |
|
| |
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| d) in our opinion, Zakat deductible at
source, under the Zakat and Ushr Ordinance, 1980, was |
|
