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Zulfeqar Industries Limited
	(Annual Report for the period 18 months
	ended June 30, 1996)
Contents
BOARD OF DIRECTORS			2
NOTICE OF MEETING			3
REPORT OF DIRECTORS			4
AUDITORS' REPORT			6
BALANCE SHEET			7
PROFIT AND LOSS ACCOUNT			8
STATEMENT OF CHANGES IN FINANCIAL POSITION			9
NOTES TO THE ACCOUNTS			11
FORM - 34			26
HI-LANDER SOAPS (PVT) LIMITED
REPORT OF DIRECTORS			27
AUDITORS' REPORT			28
BALANCE SHEET			29
PROFIT AND LOSS ACCOUNT			30
STATEMENT OF CHANGES IN FINANCIAL POSITION			31
NOTES TO THE ACCOUNTS			33
PROXY FORM
Board of Directors
SYED WAJID ALl		Chairman
SYED ASAD ALl		Managing Director
SYED SHAHID ALl
BEHRAM HASAN
SHABBIR A. FEROZPURWALA
S. QAMAR ALl ZAIDI
S. FERIEL RIFAAT ASAD ALl
COMPANY SECRETARY
MUHAMMAD RASHEED
AUDITORS
TASEER HADI KHALID & CO.
CHARTERED ACCOUNTANTS
KARACHI
REGISTERED OFFICE
KANDAWALA BUILDING
M.A. JINNAH ROAD
KARACHI-74400
BANKERS
MUSLIM COMMERCIAL BANK LTD. - KARACHI
ANZ GRINDLAYS BANK p.l.c. - KARACHI
LEGAL ADVISOR
HUSSAIN AND HAlDER - KARACHI
FACTORY
HALl ROAD, HYDERABAD-71900
	Notice of Meeting
NOTICE IS HEREBY GIVEN that the Thirty-sixth Annual General Meeting of Zulfeqar
Industries Limited will be held at Hotel Holiday Inn, Crowne Plaza, Shahrah-e-Faisal,
Karachi, on Saturday 21st December 1996 at 3.00 p.m. to transact the following business.
1. To confirm the minutes of the Thirty-fifth Annual General Meeting held on 28th June
1995.
2. To receive and consider the statement of accounts for the period of 18 months
ended 30th June 1996, the report of Auditors and Directors thereon.
3. To declare a dividend.
4. To appoint Auditors and fix their remuneration.
5. To transact any other business with the permission of the Chair.
		By Order of the Board
Karachi
28th November 1996		(Muhammad Rasheed)
		Company Secretary
NOTES:
i) The Share Transfer Books of the Company will remain closed from 12th December
1996 to 21st December 1996 (both days inclusive).
ii) A member entitled to attend and vote at the Annual General Meeting is also entitled
to appoint another member as proxy to attend and vote instead of him.
iii) The instrument appointing proxy must be received at the Registered Office of the
Company not less than 48 hours before the time appointed for the meeting.
	Report of Directors to the Members
The Directors of your Company feel pleasure in placing before you the Audited Accounts
and Audit report for the of 18 months period ended 30 June 1996.
The period under review is an improvement over previous year mainly because the
company came out to a great degree from the financial crunch, it was facing prior to sale
of Karachi Factory. The operations were re-sussicated with emergent consolidating and
economizing measures at Hyderabad where the plant and Machinery of Karachi Factory
was also transferred.
The company earned a pre-tax profit of Rs. 16.061 million in the 18 months period
against Rs. 7.827 million in the previous year. The Gross Profit margin increased by 7%
and turn over modestly increased by 4%. The Company had to spend more on
advertising in view of the growing competition in the market with multi-nationals
aggressively advertising their products. Continued decline in rupee value against main
foreign currencies, inflationary trend and imposition of regulatory duty were the major
factors responsible for the increase in cost of production. The company successfully
launched revamped premium brand soap "Capri". Initially it was well received, however,
full results will be available next year.
Excise Duty exemption available to Hi-Lander Soaps (Pvt) Limited at Mirpur, Azad
Kashmir has virtually been withdrawn by levying another tax in the name of Education
Cess equivalent to Excise Duty from August 1996. The company has made strong
representation to the Govt. of Azad Kashmir against this decision. We are optimistic for
the withdrawal of the decision otherwise the operations are endangered to become un-
economical.
Mr. Mushtaq H. Khwaja resigned from the Board and was replaced by Miss S. Feriel
Rifaat Asad Ali.
The Board wishes to place on record appreciation for the useful services rendered by
Mr. Mushtaq H. Khwaja during his tenure as Director of the Company.
We would like to express our appreciation for the efforts and dedication of all employees
of the company which enabled us to run the company efficiently during the period.
The profit and appropriation for the year are as follows:
			(Rupees in '000)
Operational profit for the year			14,486
Add: Other Income			1575
			---------
Profit before tax			16,061
Less: Provision for taxation			2,795
			---------
Profit after taxation			13,266
Less: Proposed Cash Dividend at 15%			(3,000)
			---------
			10,266
Accumulated (Loss) Brought Forward			(14,735)
			---------
Accumulated (Loss) Carried Forward			(4,469)
			==========
The present auditors Taseer Hadi Khalid & Co., Chartered Accountants, retire and being
eligible offer themselves for re-appointment as auditors of the company on a
remuneration to be fixed by you.
A statement showing the pattern of shareholding in the Company as at June 30, 1996 is
attached.
	Auditors' Report to the Members
We have audited the annexed balance sheet of Zulfeqar Industries Limited as at 30 June
1996 and the related profit and loss account and statement of changes in financial position,
together with the notes forming part thereof, for the eighteen months period 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 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;
(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;
(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, the balance sheet, profit and loss account and the statement of changes in
financial positions, together with the notes forming part thereof, 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 30 June 1996 and of
the profit and the changes in financial position for the year then ended; and
(d) in our opinion, no zakat was deductible at source under the Zakat and Ushr Ordinance,
1980.
	Balance Sheet
	As at 30 June 1996
			Note	30-Jun	31-Dec
				1996	1994
				(Rupees in '000)
FIXED CAPITAL EXPENDITURE			3	22,137	26,381
TRADE MARK - At cost				371	371
LONG TERM DEPOSITS AND PREPAYMENTS			4	918	2,404
LONG TERM INVESTMENT			5	3,000	-
CURRENT ASSETS
Stores and spares			6	5,331	4,682
Stock-in-trade			7	59,208	65,132
Trade debtors - unsecured considered good			8	19,921	11,870
Advances, short term prepayments
and other receivables			9	38,111	18,314
Cash and bank balances			10	5,828	6,633
				---------	---------
				128,399	106,631
CURRENT LIABILITIES
Current maturity of finance lease				966	992
Finances under
mark-up arrangements - secured			11	42,579	30,277
Short term Morabaha finance - secured			12	8,000	7,500
Due to holding company			13	19,069	6,616
Creditors, accrued expenses and other liabilities   14				32,158	51,710
Provision for taxation			15	2,550	2,428
Dividend Payable				3,000	-
				---------	---------
				108,322	99,523
				---------	---------
NET CURRENT ASSETS				20,077	7,108
				---------	---------
NET ASSETS				46,503	36,264
				=========	=========
FINANCED BY:
SHARE CAPITAL			16	20,000	20,000
REVENUE RESERVE				6,000	6,000
ACCUMULATED (LOSS)				(4,469)	(14,735)
				---------	---------
SHAREHOLDER'S EQUITY				21,531	11,266
SURPLUS ON REVALUATION OF FIXED ASSETS			17	16,519	16,519
LIABILITIES AGAINST ASSETS
SUBJECT TO FINANCE LEASE			18	-	1,067
DEFERRED LIABILITIES			19	8,453	7,413
				---------	---------
				46,503	36,264
				=========	=========
These accounts should be read in conjunction with the attached notes.
	Profit and Loss Account
	For the eighteen months period ended 30 June 1996
			Note	Six	Twelve	Eighteen	Year
				months	months	months	ended 31
				period	period	period	December
				ended 30	ended 30	ended 30	1994
				Jun-95	June 1996	June1996
				(Rupees in '000)		(Rupees in '000)
Sales - Net			20	252,247	500,099	752,346	478,856
Cost of Goods Sold			21	223,384	440,941	664,325	455,619
Gross profit				---------	---------	---------	---------
				28,863	59,158	88,021	23,237
Administrative expenses			22	3,709	7,493	11,202	6,501
Selling and distribution expenses			23	18,292	25,698	43,990	23,715
Financial expenses			24	6,938	10,560	17,498	11,670
Workers' profit participation fund				12	833	845	412
				---------	---------	---------	---------
				28,951	44,584	73,535	42,298
				---------	---------	---------	---------
Operating profit/(loss)				(88)	14,574	14,486	(19,061)
Other income/(charges) - net			25	311	1,264	1,575	(125)
				---------	---------	---------	---------
				223	15,838	16,061	(19,186)
Profit on disposal of Karachi factory
land and building				-	-	-	27,013
				---------	---------	---------	---------
Profit before taxation				223	15,838	16,061	7,827
Taxation
Current - minimum tax				1,274	2,550	3,824	2,428
Prior year's				-	-	-	10
Deferred				(454)	(575)	(1,029)	(181)
				---------	---------	---------	---------
				820	1,975	2,795	2,257
				---------	---------	---------	---------
Profit/(Ioss) after taxation				(597)	13,863	13,266	5,570
Accumulated (loss) brought forward				(14,735)	(15,332)	(14,735)	(23,303)
				---------	---------	---------	---------
				(15,332)	'(1,469)	(1,469)	'(17,733)
Less: Transfer from surplus on
revaluation of fixed assets on assets
disposed during the year.				-	-	-	2,998
Proposed Dividend @ 15%				-	-	(3,000)	-
				---------	---------	---------	---------
Accumulated (loss)				(15,332)	(1,469)	(4,469)	'(14,735)
				=========	=========	=========	=========
These accounts should be read in conjunction with the attached notes.
	Statement of Changes in Financial Position
	For the eighteen months period ended 30 June 1996
				Eighteen	Year ended
				months period	31 December
				ended 30 June	1994
				1996
				(Rupees in '000)
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxation				16,061	10,825
Adjustments for:
Mark-up expense				11,965	9,136
Revaluation reversed				-	(2,998)
Depreciation				4,025	2,918
Provision for gratuity				2,308	997
Gain on sale of fixed assets				(424)	(26,726)
				---------	---------
				17,874	'(16,673)
				---------	---------
Operating profit/(Ioss) before working charges				33,935	'(5,848)
(Increase)/decrease in operating assets
Stores and spares				(649)	282
Stock in trade				5,924	13,934
Trade debtors				(8,051)	(1,727)
Advances, short term prepayments
and other receivables				(11,723)	(3,627)
				---------	---------
				14,499	8,862
Increase/(decrease ) in operating liabilities
Creditors, accrued expenses and other liabilities				(19,882)	18,486
Due to holding company				12,453	(6,814)
				---------	---------
				(7,429)	11,672
				---------	---------
Cash (used)/generated from operations				12,007	14,686
Income tax paid				(11,776)	(3,936)
Gratuity paid				(239)	(580)
Mark-up paid				(11,635)	(11,183)
				---------	---------
				(23,650)	(15,699)
				---------	---------
Net cash flows from operating activities				(11,643)	(1,013)
				Eighteen	Year ended
				months period	31 December
				ended 30 June	1994
				1996
				(Rupees in '000)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment				(3,000)	-
Fixed capital expenditure				(2,257)	(2,610)
Sale proceeds of fixed assets				3,645	30,768
Long term deposits and pre-payments				1,486	(976)
				---------	---------
Net cash flows from investing activities				(126)	27,182
CASH FLOWS FROM FINANCING ACTIVITIES
Morabaha financing				500	(2,500)
Repayment of lease liability - net				(1,838)	(1,076)
Net cash flows from financing activities				(1,338)	(3,576)
				---------	---------
Net increase in cash and cash equivalents				(13,107)	22,593
Cash and cash equivalents at the beginning of the period				(23,644)	(46,237)
				---------	---------
Cash and cash equivalents at end of the period				(36,751)	(23,644)
				=========	=========
NOTE:
CASH AND CASH EQUIVALENTS
Cash and bank balances				5,828	6,633
Finance under mark-up arrangements				(42,579)	(30,277)
				---------	---------
				36,751	(23,644)
				=========	=========
	Notes to the Accounts
	For the eighteen months period ended 30 June 1996
1. STATUS AND NATURE OF BUSINESS
The company was incorporated in February 1960 as a private limited company and
subsequently converted as a public limited company in November 1986 and was listed
on Karachi Stock Exchange and Lahore Stock Exchange in December 1986 & 1987
respectively. The company is a subsidiary of Treet Corporation Limited which holds
52.03 percent of its shares. The principal activity of the company is manufacture and
sales of toilet and washing soaps.
2. ACCOUNTING POLICIES
The significant accounting policies are summarised as follows:
2.1 Accounting convention
These accounts have been prepared under the historical cost convention except
to the extent that certain fixed assets as stated in note 3.1 are shown at revalued
amounts.
2.2 Staff retirement benefits
(a) Staff gratuity
The company operates an unfunded gratuity scheme and provision is made
annually to cover the obligations under the scheme.
(b) Provident fund
A recognised provident fund scheme is in operation which covers all
permanent employees who have completed three months service and have
been issued confirmation letters. Equal contribution are made monthly both
by the company and the employees in accordance with the value of the
scheme at 10% of basic pay.
(c) Retirement benefits
Retirements benefits are calculated with reference to last drawn salary and
prescribed qualifying period of service of the employee. Amounts are
charged to profit and loss account as and when paid.
2.3 Taxation
a) Current
The charge for current taxation is based on taxable income at the current
rates of taxation after taking into account applicable tax credits and tax
rebates available, if any.
b) Deferred
Deferred taxation is provided using the liability method on all major timing
differences. However, deferred tax debits are not accounted for.
2.4 Fixed assets
- Owned
(a) Fixed assets including all additions are carried at cost or revaluation
less accumulated depreciation. ©n disposal or scrapping, the cost of
the assets and the corresponding depreciation is adjusted from both
the accounts and the resultant gain or loss is dealt with through the
profit and loss account.
(b) Depreciation on fixed assets other than freehold and leasehold land is
charged on a reducing balance method at the rates specified in note
3.1.