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| Annual
Report 1996 |
|
| ASIAN
STOCK FUND LTD. |
|
| 302
Clifton Centre, Main Clifton Road, Clifton, Karachi - 75600 |
|
| Pakistan.
Ph: 5863561. Fax: (92-21) 5863562 |
|
|
|
| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRYECTORS |
|
| Mr.
Ismail Abdul Shakoor. |
|
| Mr.
Farooq Ismail. |
|
| Mr.
Shabbir Ismall. |
|
| Mr.
Zaigham Mehmood Rizvi. |
|
| Mr.
Jamil Ahmed Siddiqi. |
|
| Ms.
Farzana Ismall. |
|
| Mr.
Iqbal Sumar. |
|
|
| CHIEF
EXECUTIVE |
|
| Mr.
Ismail Abdul Shakoor. |
|
|
| COMPANY
SECRETARY |
|
| Mr.
Jamil Ahmed Siddiqi. |
|
|
| MANAGEMENT
COMPANY |
|
| Asian
Capital Management (Pvt.) Limited. |
|
|
| BANKERS |
|
| Union
Bank Limited. |
|
| Muslim
Commercial Bank Limited. |
|
| National
Bank of Pakistan. |
|
|
| AUDITORS |
|
| M/s.
Yousuf Adil & Co. |
|
| Chartered
Accountants. |
|
|
| LEGAL
ADVISERS |
|
| M/s.
Mohsin Tayebaly & Co. |
|
|
|
| REGISTERED
OFFICE |
|
| 302,
Clifton Centre, |
|
| Khayaban-e-Roomi, |
|
| Main
Clifton Road, |
|
| Karachi. |
|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
| Notice
is hereby given that the Second Annual General Meeting of Asian Stocks Fund
Limited will be held |
|
| on
Tuesday, 24th December, 1996 at 3.00 p.m. at Hotel Holiday-Inn Crown Plaza
(formerly Taj Mahal |
|
| Hotel)
Karachi, to transact the following business: |
|
|
| To
confirm the Minutes of the First Annual General Meeting held on 25th
November, 1995. |
|
|
| To
receive, consider and adopt the Audited Accounts together with the Directors'
and Auditors' Report for |
|
| the
period ended 30th June, 1996. |
|
|
| To
appoint Auditors of Company and to fix their remuneration. The present
Auditors, Messrs Yousuf Adil |
|
| &
Co., Chartered Accountants, retire and being eligible, offer themselves for
re-appointment. |
|
|
| To
transact such other business as may be placed before the meeting with the
permission of the Chair. |
|
|
| By
order of the Board |
|
| Company
Secretary |
|
|
| Karachi:
14th November, 1996. |
|
|
| Notes: |
|
| 1.
A member entitled to attend and vote at the meeting may appoint a proxy to
attend and vote instead |
|
| of
him/her at the meeting. Proxies must be deposited at the Company's Registered
Office not less |
|
| than
48 hours before the time for holding the meeting. A proxy must be a member. |
|
|
| 2.
The Share Transfer Books of the Company will remain closed from 16th
December, 1996 to 23rd |
|
| December,
1996 (Both days inclusive). |
|
|
| 3.
The shareholders are advised to notify Shares Department, Asian Stocks Fund
Limited, 302 Clifton |
|
| Centre,
Main Clifton Road, Karachi, of any change in their addresses to ensure prompt
delivery of |
|
| mail.
Any shares for transfer etc. should be lodged with the Shares Department,
Asian Stocks Fund |
|
| Limited. |
|
|
|
| DIRECTORS'
REPORT |
|
| The
Directors are pleased to present the Second Annual Report of the Fund to the
shareholders, for the period |
|
| ended
June 30, 1996. |
|
|
| The
period under review witnessed another year of continued depression in the
capital market. The bearish trend |
|
| is
attributed to political instability, decline in industrial production,
macro-economic imbalances and inefficien- |
|
| cies.
The KSE index stood at 1703.06 points as on 30-06-1996 as against 1612.00
points the previous year. The |
|
| market
is in the continuous grip of the long recession. The index has been gradually
sliding down, with small bands |
|
| of
oscillation. The main trading activity however remained confined to five high
cap and liquid shares. |
|
|
| The
relief package announced by the then Government for the textile industry
could not be of much help to it. |
|
| This
sector, which once used to be trend setter on the stock market, continued to
suffer because of various negative |
|
| :factors
and textile share prices continued to decline. Similarly the cement sector
remained depressed due to over |
|
| supply
and stiff competition whereas the synthetic sector had to compete with
imports. The profitability of cement |
|
| sector
had also suffered due to impact of budget. |
|
|
| The
performance of Mutual Funds also remained marred due to imposition of various
kinds of taxes on this |
|
| industry
which defies the basic logic of neutrality between investment made by an
individual and a Mutual Fund. |
|
| Due
to this problem, the profitability of Mutual Funds has suffered a set back.
The Mutual Funds are currently |
|
| being
traded at substantial discounts to their Net Asset Values. The Mutual Funds
Association of Pakistan has |
|
| decided
to make available to the investors on regular basis the Net Asset Values
(NAV) of its members (Mutual |
|
| Funds).
We believe, the disclosure of Net Asset Values will help restore the
confidence of investors in the Mutual |
|
| Funds
since the Net Asset Values are generally higher than the share prices being
quoted on the Stock Exchanges. |
|
| This
development is likely to enhance the trading activity as well as appreciation
in the values of shares of Mutual |
|
| Funds. |
|
|
| The
Management is pleased to mention that inspite of this continued bearish spell
in the market, which started |
|
| in
the last quarter of 1994 and still persisting, the performance of your Fund
has been much better than the market's |
|
| performance.
For instance your Fund came into existence in November, 1994 when the
News-MCB composite |
|
| index
stood at 1000, while the same index as on June 30, 1996 stood at 500, thus
showing a 50% diminution in |
|
| the
index based shares. During the same period, the NAV of your Fund has fallen
by only 13.5% i.e. the NAV |
|
| as
on 30-06-1996 stood at Rs. 8.66 per share. The Management has been able to
outperform the market due to |
|
| judicious
switching over of decisions and buying/selling opportunities in attractive
scrips. The Management feels |
|
| comfortable
that its portfolio has now been turned into strong shares which contains
promises of an upward trend |
|
| once
the market takes a positive turn. We hope that the next year will be a good
year in the market. |
|
|
| AUDITORS: |
|
| The
present auditors, M/s. M. Yousuf Adil & Co., Chartered Accountants, are
due for retirement and being |
|
| eligible,
offer themselves for reappointment for the financial year 1996-97. |
|
|
| For
and on behalf of the Board. |
|
| Ismail
A. Shakoor |
|
| Chief
Executive |
|
|
|
| Karachi:
14th November 1996 |
|
|
|
| PATTERN
OF HOLDING OF SHARES HELD BY |
|
| THE
SHAREHOLDERS |
|
| As
At June 30, 1996 |
|
|
|
| Serial |
|
No. of |
|
Share Holding |
|
Total Shares |
|
| Number |
|
Shareholders |
From |
|
To |
|
Held |
|
|
|
|
|
|
|
|
|
|
| 1 |
|
1,997 |
101 |
|
500 |
|
998,500 |
|
| 2 |
|
71 |
501 |
|
1000 |
|
71,000 |
|
| 3 |
|
56 |
1001 |
|
5000 |
|
180,000 |
|
| 4 |
|
11 |
5001 |
|
10000 |
|
96,000 |
|
| 5 |
|
1 |
10001 |
|
15000 |
|
15,000 |
|
| 6 |
|
5 |
15001 |
|
20000 |
|
95,500 |
|
| 7 |
|
2 |
20001 |
|
25000 |
|
50,000 |
|
| 8 |
|
7 |
25001 |
|
30000 |
|
206,500 |
|
| 9 |
|
18 |
35001 |
|
40000 |
|
718,000 |
|
| 10 |
|
4 |
45001 |
|
50000 |
|
200,000 |
|
| 11 |
|
1 |
135001 |
|
140000 |
|
135,500 |
|
| 12 |
|
1 |
195001 |
|
200000 |
|
200,000 |
|
| 13 |
|
3 |
245001 |
|
250000 |
|
750,000 |
|
| 14 |
|
2 |
435001 |
|
440000 |
|
871,000 |
|
| 15 |
|
1 |
585001 |
|
590000 |
|
585,500 |
|
| 16 |
|
1 |
695001 |
|
700000 |
|
700,000 |
|
| 17 |
|
1 |
995001 |
|
1000000 |
|
1,000,000 |
|
| 18 |
|
1 |
1195001 |
|
1200000 |
|
1,200,000 |
|
| 19 |
|
1 |
1925001 |
|
1930000 |
|
1,927,500 |
|
|
|
--------- |
|
|
|
--------- |
|
|
|
2,184 |
|
|
|
|
10,000,000 |
|
|
========= |
|
========= |
|
|
| CATEGORIES
OF SHAREHOLDERS |
|
|
|
|
Shares |
|
|
| Categories
of Shareholders |
|
Number |
Held |
Percentage |
|
| Individuals |
|
2172 |
2,630,500 |
26.30 |
|
| Investment
Companies |
|
2 |
1,135,500 |
11.36 |
|
| Joint
Stock Companies |
|
4 |
4,713,000 |
47.13 |
|
| Financial
Institutions |
|
5 |
1,385,500 |
13.86 |
|
| Modaraba
Companies |
|
1 |
135,500 |
1.35 |
|
|
|
--------- |
--------- |
--------- |
|
|
|
2184 |
10,000,000 |
100.00 |
|
|
========= |
========= |
========= |
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| We
have examined the annexed balance sheet of Asian Stocks Fund Limited as at
June 30, 1996 and the |
|
| related
profit and loss account and statement of changes in financial position (Cash
Flow Statement) together |
|
| with
the notes to the accounts for the year then ended. Our examination was made
in accordance with the |
|
| generally
accepted auditing standards and accordingly included such tests of the
accounting records and |
|
| such
other auditing procedures as were considered necessary in the circumstances
and we state that we have |
|
| obtained
all the informations and explanations which to the best of our knowledge and
belief were necessary |
|
| for
the purpose of the audit and, after due verification thereof, we report that: |
|
|
| (a)
in our opinion, proper books of account have been kept by the company as
required by the Companies |
|
| Ordinance,
1984, and Rule 16 of the Investment Companies and Investment Adviser's Rules,
1971; |
|
|
| (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 in accordance with the
provisions of |
|
| Investment
Companies and Investment Adviser's Rule, 1971 and are in agreement with the
books |
|
| of
accounts 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; |
|
|
| (iii)
the business conducted, investments made and the expenditure incurred during
the year were in |
|
| accordance with the investment policy of
the Company and Investment Companies and Invest- |
|
| ment Adviser' s Rule, 1971; and |
|
|
| (iv)
the company has not contravened the provisions of Rule 8 of the Investment
Companies and |
|
| Investment Adviser' s Rules, 1971; and |
|
|
| (c)
in our opinion and to the best of our information and according to the
explanations given to us, the |
|
| balance sheet, profit and loss account and
the statement of changes in financial position (Cash Flow |
|
| Statement) together with notes forming part
thereof, give the information required by the Companies |
|
| Ordinance, 1984 and Investment Companies
and Investment Adviser's Rule, 1971 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, |
|
| 1996 and of the loss and changes in the
financial position for the year ended on that date; |
|
|
| (d)
in our opinion, no Zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980. |
|
|
| M.
YOUSUF ADIL & CO., |
|
| CHARTERED
ACCOUNTANTS |
|
|
|
|
| Karachi:
10th November, 1996 |
|
|
|
| BALANCE
SHEET |
|
| As
At June 30, 1996 |
|
|
|
|
|
Note |
1996 |
1995 |
|
| SHARE
CAPITAL |
|
|
Rupees |
Rupees |
|
| Authorised |
|
| 10,000,000
Ordinary shares of Rs. 10/- each |
|
100,000,000 |
100,000,000 |
|
|
|
|
|
|
=========== |
=========== |
|
|
| Issued,
subscribed and paid up |
|
| 10,000,000
Ordinary shares of Rs. 10/- each fully |
|
| paid
in cash |
|
|
100,000,000 |
100,000,000 |
|
|
| Accumulated
Loss |
|
(13,418,889) |
(13,090,949) |
|
|
|
----------- |
----------- |
|
|
|
86,581,111 |
86,909,051 |
|
|
|
|
| DEFERRED
EXPENDITURE PAYABLE |
|
3 |
2,767,981 |
3,578,121 |
|
|
|
| CURRENT
LIABILITIES |
|
| Current
maturity of deferred expenditure payable |
|
810,140 |
472,582 |
|
|
|
|
| Due
to Investment Adviser - an associated |
|
| undertaking |
|
|
4 |
2,021,588 |
1,997,444 |
|
| Accounts payable, accrued
expenses |
|
|
|
|
| and
other liabilities |
|
|
5 |
58,463 |
12,829,745 |
|
| Taxation |
|
|
185,560 |
123,560 |
|
|
|
----------- |
----------- |
|
|
|
|
3,075,751 |
15,423,331 |
|
|
|
|
|
|
----------- |
----------- |
|
|
|
|
92,424,843 |
105,910,503 |
|
|
|
|
|
|
=========== |
=========== |
|
|
|
|
|
|
|
|
| DEFERRED
EXPENDITURE |
|
|
6 |
2,767,981 |
3,578,121 |
|
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
| Marketable
securities |
|
|
7 |
56,862,735 |
61,077,843 |
|
|
|
|
| Accounts
receivable - Considered good |
|
17,988,528 |
3,801,000 |
|
| Advance
income tax |
|
|
450,594 |
257,273 |
|
| Profit
/ dividend receivable - Considered good |
|
258,882 |
1,166,114 |
|
| Bank
balances: |
|
|
| In
current account |
|
|
5,641 |
375 |
|
| In
special deposits account |
|
|
14,090,482 |
36,029,777 |
|
|
|
----------- |
----------- |
|
|
|
|
89,656,862 |
102,332,382 |
|
|
|
|
|
|
|
|
|
----------- |
----------- |
|
|
|
|
92,424,843 |
105,910,503 |
|
|
|
|
=========== |
=========== |
|
|
|
|
|
|
| The
annexed notes from 1 to 10 form an integral part of these accounts. |
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| For
The Year Ended June 30, 1996 |
|
|
|
|
Dec. 13, 1994 |
|
|
|
|
|
to June |
|
|
|
|
1996 |
30, 1995 |
|
|
|
Note |
Rupees |
Rupees |
|
| Income |
|
|
| Dividend |
|
|
1,231,121 |
818,027 |
|
| Return
on deposits and certificates |
|
1,019,354 |
3,134,141 |
|
| Loss
on dealing in securities |
|
8 |
(66,465) |
(3,893,043) |
|
|
|
|
----------- |
----------- |
|
|
|
|
2,184,010 |
59,125 |
|
|
| Expenditure |
|
| Remuneration
to Investment Adviser |
|
(4.1) |
1,766,961 |
1,773,654 |
|
| Custodian
charges |
|
|
503,017 |
245,000 |
|
| Amortization
of deferred expenditure |
|
|
810,140 |
472,582 |
|
| Listing
fees |
|
|
32,500 |
- |
|
| Audit
fees |
|
|
25,000 |
15,000 |
|
| Financial
charges |
|
|
376,200 |
226,601 |
|
| Others |
|
|
3,500 |
- |
|
|
|
|
----------- |
----------- |
|
|
|
|
3,517,318 |
2,732,837 |
|
|
|
|
|
|
|
|
|
----------- |
----------- |
|
| Loss
for the year |
|
|
(1,333,308) |
(2,673,712) |
|
|
| Reversal / (Provision) for
diminution in |
|
| value of
marketable securities |
|
1,067,368 |
(10,293,677) |
|
|
|
|
----------- |
----------- |
|
| Loss
before taxation |
|
(265,940) |
(12,967,389) |
|
|
|
|
|
|
| Provision
for taxation |
|
(62,000) |
(123,560) |
|
|
|
|
----------- |
----------- |
|
| Loss
for the year after taxation |
|
(327,940) |
(13,090,949) |
|
| Accumulated
(loss) brought forward |
|
(13,090,949) |
- |
|
|
|
|
----------- |
----------- |
|
| Accumulated
(loss) carried forward |
|
(13,418,889) |
(13,090,949) |
|
|
|
|
=========== |
=========== |
|
|
|
|
|
|
| The
annexed notes from I to 10 |
|
| form
an integral part of these accounts. |
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| CASH
FLOW STATEMENT |
|
| For
The Year Ended June 30, 1996 |
|
|
1996 |
1995 |
|
|
|
|
Rupees |
Rupees |
|
| A.
CASH FLOW FROM OPERATING ACTIVITIES |
|
| (Loss)
before taxation |
|
|
|
(265,940) |
(12,967,389) |
|
| Adjustment
for items not involving movement of funds: |
|
|
| Amortization
of deferred expenditure |
|
810,140 |
472,582 |
|
| Provision
for diminution in value |
|
|
|
| of
marketable securities |
|
|
(1,067,368) |
10,293,677 |
|
|
|
|
----------- |
----------- |
|
|
|
|
(257,228) |
10,766,259 |
|
|
|
|
|
|
|
|
|
|
----------- |
----------- |
|
| Operating
loss before working capital changes |
|
(523,168) |
(2,201,130) |
|
|
|
|
| EFFECT
ON CASH FLOW DUE TO WORKING |
|
| CAPITAL
CHANGES |
|
|
| (Increase)
/ decrease in current assets |
|
| Marketable
securities |
|
|
5,282,476 |
(71,37 1,520) |
|
| Accounts
receivable |
|
|
(14,187,528) |
(3,801,000) |
|
| Profit
/ Dividend receivable |
|
|
907,232 |
(1,166,114) |
|
|
|
|
----------- |
----------- |
|
|
|
|
(7,997,820) |
(76,338,634) |
|
|
|
|
| Increase
/ (decrease) in current liabilities |
|
|
|
|
|
24,144 |
1,997,444 |
|
| Accounts
payable, accrued and other liabilities |
|
(12,771,282) |
12,829,745 |
|
|
|
|
----------- |
----------- |
|
|
|
|
(12,747,138) |
14,827,189 |
|
|
|
|
|
|
|
|
|
----------- |
----------- |
|
| Cash
used in operations |
|
|
(21,268,126) |
(63,712,575) |
|
| Taxes
paid |
|
|
(193,321) |
(257,273) |
|
|
|
|
----------- |
----------- |
|
| Net
cash used in operating activities |
|
|
(21,461,447) |
(63,969,848) |
|
|
|
|
----------- |
----------- |
|
|
|
|
| B.
CASH FLOW FROM FINANCING ACTIVITIES |
|
|
| Issuance
of Share Capital |
|
|
- |
100,000,000 |
|
| Deferred
liability repaid |
|
(472,582) |
- |
|
|
|
|
----------- |
----------- |
|
| Net
cash from financing activities |
|
|
(472,582) |
100,000,000 |
|
|
|
|
=========== |
=========== |
|
|
|
|
| Net
(decrease)/increase in cash and cash equivalents |
(21,934,029) |
36,030,152 |
|
| Cash
and cash equivalents at the beginning of year |
36,030,152 |
- |
|
|
|
|
----------- |
----------- |
|
| Cash
and cash equivalents at the end of the year |
|
14,096,123 |
36,030,152 |
|
|
|
|
=========== |
=========== |
|
|
| NOTES
TO THE ACCOUNTS |
|
| For
The Year Ended June 30, 1996 |
|
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
| 1.1
The Company was incorporated on June 13, 1994, as a Public Company Limited by
shares under |
|
| the
Companies Ordinance, 1984 and has been registered as an Investment Company
under the |
|
| Investment
Companies and Investment Adviser's Rules, 1971. The company is listed on |
|
| Karachi,
Lahore and Islamabad Stock Exchanges. |
|
|
| It
is a closed end mutual fund with an object to invest its assets in
securities. |
|
|
| 1.2
The fund has been approved by Corporate Law Authority under the Investment
Companies and |
|
| Investment
Adviser's Rules, 1971. |
|
|
| 1.3
Asian Capital Management (Pvt.) Limited are the approved Investment Adviser
and Union Bank |
|
| Limited
are the approved custodian of the company. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
| 2.1
Accounting Convention |
|
| These
accounts have been prepared under the historical cost convention. |
|
|
| 2.2
Deferred Expenditure |
|
| These
are amortized over a maximum period of five years from the year of
deferrment. |
|
|
| 2.3
Taxation |
|
| The
charge for current taxation is based on taxable income at the current tax
rates after taking |
|
| into
account tax credits and rebates available, if any. |
|
|
| The
company accounts for deferred taxation arising on major timing differences,
if any, by using |
|
| the
liability method. |
|
|
| 2.4
Marketable Securities |
|
| These
are valued at lower of moving average cost and market value on an aggregate
portfolio |
|
| basis. |
|
|
| 2.5
Revenue Recognition |
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| Sales
and purchases of securities are recorded on the date of the execution of
contract. Gains and |
|
| losses
on the sale of securities are accounted for in the year in which they arise. |
|
|
|
|
| Dividend
income is recognised at the time of closure of share transfer books of the
company |
|
| declaring
dividend and is recorded net off Zakat. |
|
|
|
|
| Return
on bank deposits and certificates of investment is recognised on accrual
basis. |
|
|
|
|
| 3.
DEFERRED EXPENDITURE PAYABLE |
|
1996 |
1995 |
|
|
|
Rupees |
Rupees |
|
|
|
|
| Opening
Balance |
|
|
|
4,050,703 |
- |
|
| Expenditure
incurred during the year |
|
|
- |
4,050,703 |
|
|
|
|
----------- |
----------- |
|
|
|
|
4,050,703 |
4,050,703 |
|
|
|
| Paid
during the year |
|
472,582 |
- |
|
| Payable
within one year |
|
| shown
under current liabilities |
|
810,140 |
472,582 |
|
|
|
|
----------- |
----------- |
|
|
|
|
(1,282,722) |
(472,582) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
----------- |
----------- |
|
|
|
|
2,767,981 |
3,578,121 |
|
|
|
|
============ |
============ |
|
|
| The
expenditure incurred on the incorporation and floatation of Asian Stocks Fund
Limited has |
|
| been
paid by the Asian Capital Management (Pvt.) Limited, the Investment Adviser. |
|
| These
expenses are to be repaid to Asian Capital Management (Pvt.) Limited over a
period of five |
|
| years
in equal annual instalments. It is subject to interest at the rate of 10% per
annum. |
|
|
| 4.
DUE TO INVESTMENT ADVISER |
|
| Two
percent |
