| FEROZSONS LABORATORIES LIMITED |
|
|
|
|
|
|
|
|
| Annual
Report 1997 |
|
|
| IN
MEMORIAM |
|
|
|
|
| On
19th 'August of this year, your' Company lost one of its oldest and dearest
members: Mian Abdul |
|
| Hadi,
Vice President of Imports & Exports, passed away of cardiac arrest at the
age of 61. |
|
|
|
| At
the time of his untimely death, Mian Abdul Hadi had served your company
tirelessly for over three |
|
| decades.
He had originally joined Ferozsons Laboratories Limited in 1959, but left to
start his own business |
|
| a
year later. In 1965, he was re-employed as an Executive Sales Assistant in
your Company, and continued |
|
| to
serve it ever since. |
|
|
|
|
| Mian
Abdul Hadi was placed in the Company's procurement section in 1966, and was
promoted to |
|
| Procurement
Manager in 1968. Later, as head of the Imports and Exports Department, Mian
Abdul Hadi |
|
| also
developed the Company's export sales, especially in Saudi Arabia and other
countries in the Middle |
|
| East.
In recognition of his services, he was promoted to the rank of Vice President
of Imports and Exports |
|
| in 1988. |
|
|
|
|
| Mian
Abdul Hadi will be remembered by the staff and management not only as a
senior colleague |
|
| from
whom everyone learnt a great deal, but also as a close personal friend with
whom all had shared many |
|
| a
joke. His passing away has deprived his family of a generous and loving
husband and father. The Board, |
|
| Management
and Staff of your Company fully join his family in sharing their grief. The
dedication of Mian |
|
| Abdul
Hadi will always serve as an example to all at Ferozsons Laboratories
Limited. |
|
|
|
| CONTENTS |
|
|
| Board
of Directors |
|
|
|
| Summary
of Financial Results |
|
| Notice
of Annual General Meeting |
|
|
| Directors'
Report |
|
|
|
| Auditors'
Report |
|
|
|
| Balance
Sheet |
|
|
|
| Profit
and Loss Account |
|
|
|
| Statement
of source & Application of Funds |
|
| Notes
to the Accounts |
|
|
|
| Pattern
of Shareholding |
|
|
|
|
| BOARD
OF DIRECTORS |
|
|
| Chairperson
and Chief Executive |
|
| Mrs.
Akhter Khalid Waheed |
|
|
|
| Directors |
|
| Zafar,
Mr. A.U., President |
|
| Waheed,
Begum S. |
|
| Sayeed,
Mr. A.K.M. (N.I.T.) |
|
| Cassim,
Mr. Firozuddin A. |
|
| Ispahani,
Mr. M.M. |
|
| Khanzada,
Mr. Taj Mohammad |
|
| Sherpao,
Khan Dost Mohammad Khan |
|
| Azhar,
Ms. Munize |
|
| Waheed,
Mr. Osman Khalid |
|
| Mazhar,
Mr. Farooq |
|
| Iqbal
Mr. Walid |
|
|
| Secretary |
|
| Maqbool
Ahmed |
|
|
|
| General
Manager Nowshera |
|
| Sh.
Zawar Ahmed |
|
|
|
| Auditors |
|
|
| Messrs
Taseer Hadi Khalid & Co. |
|
| 6th
Floor, State Life Building No. 5, |
|
| Blue
Area, Islamabad. |
|
|
| Bankers |
|
|
| Allied
Bank of Pakistan Ltd. |
|
| Crescent
Investment Bank Ltd. |
|
|
| Registered
Office |
|
| 197-A,
The Mall, Rawalpindi. |
|
| Phones: |
(051) 562155-57 |
|
| Fax: |
(051) 584195 |
|
| e-mail: |
ferozson
@isb.comsats.net.pk |
|
| internet: |
http://www.ferozsons.net |
|
|
| Factories |
|
| P.O.
Ferozsons, Nowshera (N.W.F.P.) |
|
|
|
| Summary
of Financial Results |
|
|
|
|
1997 |
1996 |
Growth |
|
|
|
(Rs) |
(Rs) |
(%) |
|
|
| Net
Sales |
|
210,610,699 |
192,729,397 |
9.28 |
|
| Operating
Expenses |
|
43,534,755 |
37,782,674 |
15.22 |
|
| Operating
Profit |
|
33,867,049 |
28,199,556 |
20.10 |
|
| Profit
After Tax |
|
22,369,469 |
17,193,998 |
30.10 |
|
| Earnings
per Share |
|
7.12 |
5.47 |
30.10 |
|
|
|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
|
| Notice
is hereby given that the 41 st Annual General Meeting of FEROZSONS
LABORATORIES LIMITED |
|
| will
be held on Saturday, the 29th of November, 1997 at 11.30 a.m. at its
Registered Office, 197-A, The Mall, |
|
| Rawalpindi
to transact the following business: |
|
|
| 1.
To confirm the Minutes of 40th Annual General Meeting held on 16th November,
1996. |
|
|
| 2.
To receive, consider, and adopt the Annual Audited Accounts for the year
ended 30th June, 1997 and |
|
| Directors'
and Auditors' Reports thereon. |
|
|
| 3.
To approve payment of Dividend at the rate of 30% (Rs. 3/- per share of Rs.
10/- each) for the year |
|
| ended
30th June, 1997 as recommended by the Directors. |
|
|
| 4.
To approve recommendation of the Board of directors for the issue of Stock
Dividend (Bonus Shares) at |
|
| the
rate of 12.50%, in the ratio of one Bonus Share for every eight shares held,
for the year ended 30th |
|
| June,
1997. Bonus shares so allotted shall rank pari passu in all respect with the
existing shares of the |
|
| company,
except that they shall n6t qualify for dividend or any other benefit for the
year ended 30th June, |
|
| 1997.
The Bonus Shares if approved will be issued to those shareholders whose names
appear in the |
|
| Register
of the Company on 28th November 1997. |
|
|
| 5.
To consider and approve the following Resolution: |
|
|
| "RESOLVED
THAT in the event of any member holding shares which are not an exact
multiple of |
|
| his/her
entitlement, the Directors be and are hereby authorized to sell in the Stock
Market such fractional |
|
| entitlement
and to pay the proceeds of sale when realized to a charitable
institution." |
|
|
| 6.
To appoint Auditors and to fix their remuneration. |
|
|
| 7.
To transact any other business with the permission of the Chair. |
|
|
| Notes: |
|
|
| 1.
The Share Transfer Books of the Company will remain closed from 28th
November, 1997 to 6th |
|
| December,
1997 (both days inclusive). |
|
|
|
|
| 2.
A member entitled to attend and vote at this meeting may appoint another
member as his/her proxy |
|
| to
attend and vote. The Form of Proxy duly completed, should reach the
Registered Office of the |
|
| Company
48 hours before the time of the Meeting. |
|
|
|
|
| 3.
Members are requested to notify immediately the change in their address, if
any. |
|
|
|
| DIRECTORS'
REPORT FOR THE YEAR ENDED |
|
| 30TH
JUNE, 1997 |
|
|
| We
are pleased to present the audited annual accounts of your Company for the
year 1996-97, its 41st year of |
|
| operation. |
|
|
| The
year under review, especially in its first half, was a highly turbulent one
for the pharmaceutical industry. |
|
| Your
Company, along with several other firms in the sector, could not make any
dispatches from its factory for |
|
| virtually
the entire month of July because of the sales tax authority's inability to
resolve several issues arising from |
|
| the
GST imposed in the June 1996 budget. In addition, sluggish demand resulting
from reduced purchasing power of |
|
| the
public also hindered industrial growth through the first half and part of the
second half of the year. |
|
|
| As
a result, net sales of your Company grew by a nominal 9.28%, from Rs. 192.729
Million in 1996 to |
|
| Rs.
210.611 Million during the year under review, compared to a healthy 28.7%
growth achieved in 1996. |
|
|
| However,
we are glad to report that your company has fared better in terms of
profitability. Gross Profit, |
|
| driven
by the increased share in total Company sales of our newer launches, grew by
17.3%, from Rs. 65.982 Million |
|
| in
1996 to Rs. 77.401 Million in 1997. |
|
|
| While
administrative and financial expenses grew by 20.66% and 25.24% respectively
over the year because |
|
| of
inflationary pressures, selling expenses were curtailed to Rs. 25.128 Million
from Rs. 22.685 Million in 1996, |
|
| registering
a growth of 10.8%. |
|
|
| Operating
profits of your Company grew from Rs. 28.199 Million in 1996 to Rs. 33.867
Million during the |
|
| year
under review, increasing by 20.10%. |
|
|
| After
a provision of Rs. 2.012 Million for Workers' (Profit) Participation and
Central Research Funds, and Rs. |
|
| 9.600
Million for Taxation at the reduced rate of 33%, the Net Profit After Tax of
your company stands at |
|
| Rs.
22.369 Million, 30.10% higher than Rs.17.194 Million achieved in 1996. |
|
|
| The
Earnings per Share (EPS) before tax of your Company increased to Rs. 10.20
(1996: Rs. 8.52), and the |
|
| after
tax EPS from Rs. 5.47 in 1996 to Rs. 7.12 per 10 rupee share during the year
under review. |
|
|
| FUTURE
PROSPECTS |
|
|
| We
are hopeful that the stability provided by an elected government with a
strong majority heralds a bright |
|
| future
for your Company and the country's economy as a whole. The new government's
decision to remove sales tax |
|
| from
pharmaceuticals is a much-welcomed move, and coupled with a static exchange
rate, should ensure stable |
|
| prices
of medicines and a healthier environment for the pharmaceutical industry in
the future. It is hoped that the |
|
| government
also reviews its decision to continue with the 10% customs duty on
pharmaceutical raw and packing |
|
| material
imposed for the first time ever by the previous government in 1996. |
|
|
| Your
Company plans to continue with its strategy of launching specialized new
products in the coming year, |
|
| and
has brought two new medicines, Omega (an anti-ulcerant) and Clarion 500 mg
(an antibiotic) to the market in |
|
| the
1st Quarter of 1997-98. Both Medicines have been well received. |
|
|
| Most
of the machinery for your Company's proposed plant for injectable antibiotics
at Nowshera has either |
|
| been
sourced or imported, and we expect to complete civil works during the coming
year. We have great hopes that |
|
|
| this
one-of-a-kind project will greatly expand the range of products, and will go
a long way in further strengthening |
|
| your
company's reputation for providing life-saving drugs of Global Quality at
affordable prices. |
|
|
| DIVERSIFICATIONS |
|
|
| During
the year, your Company's toll manufacturing arrangement with Procter &
Gamble (Pvt.) Limited has |
|
| come
to an end, because of their need to consolidate their logistics around their
Head Office and Company Plant, in |
|
| Karachi
and Hub respectively. We wish them every success at their new location. The
shifting of the Vicks line has |
|
| also
freed up much-needed space in our pharmaceutical wing, and is the site for
our new sterile creams section. |
|
|
| We
regret also that the status of the toiletries plant at Gadoon remains
unchanged. Its logistical problems, in |
|
| the
absence of any tax advantages, provide weak grounds for commencing any
operations at the Industrial Estate. |
|
|
| AUDITORS |
|
|
| The
Auditors of the Company, Messrs Taseer Hadi Khalid & Co., stand retired
and have offered themselves |
|
| for
reappointment. |
|
|
| PATTERN OF SHAREHOLDING |
|
|
| The
statement indicating the number of shareholders and their categories forming
the pattern of shareholding is |
|
| annexed. |
|
|
| AFFIRMATION |
|
|
| We
are privileged to record our sincere appreciation for our company colleagues
at all levels for their loyalty |
|
| and
hard work. The results achieved by your company are a reflection of their
untiring dedication. |
|
|
|
| REPORT
OF THE AUDITORS TO THE MEMBERS OF |
|
| FEROZSONS
LABORATORIES LIMITED |
|
|
| We
have audited the annexed balance sheet of Ferozsons Laboratories Limited as
at 30th June, 1997 and the |
|
| related
profit and loss account and statement of source and application of funds,
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 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 source and application of
funds, 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 |
|
| 30th
June, 1997 and of the profit and the source and application of funds for the
year then ended; and |
|
|
| (d)
in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance,
1980 was deducted by |
|
| the
company and deposited in the Central Zakat Fund established under section 7
of that Ordinance. |
|
|
| Islamabad |
|
TASEER HADI KHALID &
CO. |
|
| 6th
October, 1997 |
|
Chartered Accountants |
|
|
|
|
| BALANCE
SHEET AS AT 30TH JUNE, 1997 |
|
|
|
|
|
|
|
1997 |
1996 |
|
|
|
|
|
|
NOTE |
(RUPEES) |
(RUPEES) |
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
| Share
capital |
|
|
3 |
31.403,670 |
31,403,670 |
|
| Capital
reserve |
|
|
4 |
321843 |
321,843 |
|
| Reserve
for issue of bonus shares |
|
|
3,925,459 |
-- |
|
| Unappropriated
profit |
|
|
|
27,488,830 |
18,465,921 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
63,139,802 |
50,191,434 |
|
|
|
|
|
|
|
| SURPLUS
ON REVALUATION OF |
|
|
|
|
|
| FIXED
ASSETS |
|
|
5 |
45,725,290 |
45,725,290 |
|
|
|
|
|
|
|
| DEFERRED
LIABILITY FOR TAXATION |
|
|
3,098,000 |
3,044,000 |
|
| OBLIGATIONS
UNDER FINANCE LEASE |
|
6 |
332,880 |
-- |
|
| CURRENT
LIABILITIES |
|
|
|
|
|
| Bank
and other borrowings |
|
|
7 |
25,616,651 |
16,356,178 |
|
| Current
maturity of long term liabilities |
|
8 |
489,393 |
1,045,425 |
|
| Creditors,
accrued and other liabilities |
|
9 |
21,747,210 |
17,714,586 |
|
| Revolving
advances |
|
|
10 |
898,456 |
1,200,456 |
|
| Provision
for taxation |
|
|
9,993,238 |
9,000,000 |
|
| Unclaimed
dividend |
|
|
888,957 |
491,813 |
|
| Proposed
dividend |
|
|
9,421,101 |
10,206,193 |
|
|
|
|
---------- |
---------- |
|
|
|
|
69,055,006 |
56,014,651 |
|
|
|
|
---------- |
---------- |
|
|
|
|
181,350,978 |
154,975,375 |
|
|
=========== |
=========== |
|
| The
report of the auditors is set out on page 89 |
|
| The
notes set on pages 14 to 25 form part of these accounts. |
|
| These
accounts were approved by the Board of Directors on 6th October, 1997. |
|
|
|
|
NOTE |
1997 |
1996 |
|
|
|
|
(RUPEES) |
(RUPEES) |
|
|
| FIXED
ASSETS |
|
|
11 |
80,376,818 |
77,129,178 |
|
| CAPITAL
WORK IN PROGRESS |
|
|
6,504,397 |
-- |
|
| LONG
TERM INVESTMENTS |
|
12 |
33,085 |
33,085 |
|
| COMPENSATION
RECEIVABLE |
|
|
|
|
|
| FROM
GOVERNMENT |
|
|
13 |
738,076 |
738,076 |
|
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
| Stores,
spares and loose tools |
|
14 |
1,780,851 |
1,584,873 |
|
| Stocks
in trade |
|
|
15 |
47,180,422 |
47,086,502 |
|
| Trade
debts - unsecured |
|
|
|
|
|
| (considered
good) |
|
|
|
20,720,725 |
17,716,129 |
|
| Advances,
deposits, prepayments and |
|
|
|
|
| other
receivables |
|
|
16 |
14,202,195 |
8,777,239 |
|
| Cash
and bank balances |
|
|
17 |
9,814,409 |
1,910,293 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
93,698,602 |
77,075,036 |
|
|
---------- |
---------- |
|
|
|
181,350,978 |
154,975,375 |
|
|
========== |
========== |
|
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR ENDED 30TH JUNE, 1997 |
|
|
|
|
|
|
1997 |
1996 |
|
|
|
|
NOTE |
(RUPEES) |
(RUPEES) |
|
|
| NET
SALES |
|
|
18 |
210,610,699 |
192,729,397 |
|
| LES:
COST OF SALES |
|
|
19 |
(133,208,895) |
(126,747,167) |
|
|
---------- |
---------- |
|
| GROSS
PROFIT |
|
|
|
77,401,804 |
65,982,230 |
|
|
| LESS:
OPERATING EXPENSES |
|
| Administrative
expenses |
|
20 |
13,206,003 |
10,944,438 |
|
| Selling
expenses |
|
|
21 |
25,127,885 |
22,685,247 |
|
| Financial
expenses |
|
|
22 |
5,200,867 |
4,152,989 |
|
|
---------- |
---------- |
|
|
|
|
43,534,755 |
37,782,674 |
|
|
|
|
---------- |
---------- |
|
| OPERATING
PROFIT |
|
|
33,867,049 |
28,199,556 |
|
| OTHER
INCOME |
|
| Profit
on sale of fixed assets |
|
23 |
168,323 |
242,325 |
|
|
|
|
|
|
---------- |
---------- |
|
| PROFIT
FOR THE YEAR |
|
|
|
34,035,372 |
28,441,88l |
|
|
|
|
|
|
| LESS:
WORKERS' (PROFIT) PARTICIPATION FUND |
|
1,693,352 |
1,409,978 |
|
| CENTRAL
RESEARCH FUND |
|
|
|
318,551 |
265,243 |
|
|
|
|
---------- |
---------- |
|
|
|
|
2,011,903 |
1,675,221 |
|
| PROFIT
BEFORE TAX |
|
|
|
32,023,469 |
26,766,660 |
|
| PROVISION
FOR TAXATION |
|
|
|
|
| --
Current |
|
|
9,600,000 |
9,000,000 |
|
| --
Prior year's |
|
|
-- |
85,662 |
|
| --
Deferred |
|
54,000 |
487,000 |
|
|
---------- |
---------- |
|
|
|
|
9,654,000 |
9,572,662 |
|
|
---------- |
---------- |
|
| PROFIT
AFTER TAX |
|
|
22,369,469 |
17,193,998 |
|
| ACCUMULATED
PROFIT BROUGHT FORWARD |
|
18,465,921 |
11,478,116 |
|
|
---------- |
---------- |
|
| PROFIT
AVAILABLE FOR APPROPRIATION |
|
|
40,835,390 |
28,672,114 |
|
|
| APPROPRIATIONS: |
|
| ProposedDividend@30%(1996:32.5%) |
|
|
94,211,011 |
10,206,193 |
|
| Transfer
to reserve for issue of Bonus Shares |
|
3,925,459 |
-- |
|
|
---------- |
---------- |
|
|
|
|
13,346,560 |
10,206,193 |
|
|
|
|
---------- |
---------- |
|
| UNAPPROPRIATED
PROFIT CARRIED FORWARD |
|
27,488,830 |
18,465,921 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
|
|
| STATEMENT
OF SOURCE AND APPLICATION OF FUNDS |
|
| FOR
THE YEAR ENDED 30TH JUNE, 1997 |
|
|
|
|
|
1997 |
1996 |
|
|
|
|
(RUPEES) |
(RUPEES) |
|
| Cash
flow from operating activities |
|
32,023,469 |
26,766,660 |
|
|
| Adjustment
for: |
|
| Depreciation |
|
|
|
4,130,139 |
3,594,336 |
|
| Profit
on sale of fixed assets |
|
|
(168,323) |
(242,325) |
|
|
---------- |
---------- |
|
|
|
|
3,961,816 |
3,352,011 |
|
|
---------- |
---------- |
|
| Operating
profit before working capital changes |
|
35,985,285 |
30,118,671 |
|
| (Increase)/decrease
in: |
|
| Stocks
and stores |
|
|
(289,898) |
(10,970,280) |
|
| Trade
debtors |
|
|
(3,004,596) |
(2,230,101 |
|
| Advances,
deposits, prepayments and other' receivables |
(5,424,956) |
1,066,748 |
|
|
|
|
---------- |
---------- |
|
|
|
|
(8,719,450) |
( 12,133,633 |
|
| Increase
in current liabilities |
|
12,991,096 |
8,310,236 |
|
|
|
|
---------- |
---------- |
|
|
|
|
40,256,931 |
26,295,274 |
|
| Payment
of tax |
|
|
(8,606,762) |
(11,686,243 |
|
| Payment
of dividend |
|
(9,809,048) |
(9,421,101 |
|
|
|
|
---------- |
---------- |
|
| Net
cash from operating activities |
|
21,841,121 |
5,187,930 |
|
|
| Cash
flow from investing activities |
|
| Capital
expenditure |
|
|
|
(14,015,927) |
(4,871,379) |
|
| Sale
proceeds of fixed assets |
|
|
302,075 |
421,280 |
|
|
---------- |
---------- |
|
| Net
cash used in investing activities |
|
(13,713,852) |
(4,450,099) |
|
|
---------- |
---------- |
|
| Cash
flow from financing activities |
|
| Payments
- finance lease |
|
|
|
(972,153) |
(1,013,820) |
|
| Finance
lease obtained |
|
|
749,000 |
-- |
|
|
---------- |
---------- |
|
| Net
cash used in financing activities |
|
(223,153) |
(1,013,820) |
|
|
| Net
increase/(decrease) in cash and |
|
| cash
equivalents |
|
|
7,904,116 |
(275,989) |
|
|
| Cash
and cash equivalents at the |
|
| beginning
of the year |
|
1,910,293 |
2,186,282 |
|
|
---------- |
---------- |
|
| Cash
and cash equivalents at the end of the year |
|
9,814,409 |
1,910,293 |
|
|
|
=========== |
=========== |
|
|
|
| NOTES
TO THE ACCOUNTS FOR THE YEAR ENDED 30TH JUNE, 1997 |
|
|
| 1.
THE COMPANY AND ITS OPERATIONS |
|
|
| Ferozsons
Laboratories Limited ("the company") was incorporated as a private
limited company on 28th |
|
| January,
1954 and was converted into public limited company on 8th September, 1960.
The company is listed |
|
| on
the Karachi, Lahore and Islamabad stock exchanges. The company is primarily
engaged in the manufacture |
|
| and
sale of pharmaceuticals and soap products. |
|
|
| 2.
PRINCIPAL ACCOUNTING POLICIES |
|
|
| The
following accounting policies have been applied consistently in dealing with
items which are considered |
|
| material
in relation to the company's accounts: |
|
|
| (a)
Accounting convention |
|
|
| These
accounts have been prepared under the historical cost convention, modified by
revaluation of |
|
| fixed
assets referred to in note 2 (d). |
|
|
| (b)
Staff retirement benefits |
|
|
| The
company operates a recognised provident fund scheme for employees who fulfill
conditions laid |
|
| down
in the scheme. Provision is made in these accounts for the amount payable by
the company to the |
|
| scheme
in this regard. |
|
|
