| GHANDHARA NISSAN LIMITED |
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| Annual
Report 1997 |
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| Contents |
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| Company
Profile |
|
| Notice
of Meeting |
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| Chairman
and Director's Report |
|
| Auditor's
Report to the Members |
|
| Balance
Sheet |
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| Profile & Loss Account |
|
| Cash
flow Statement |
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| Notes
to the Accounts |
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| Pattern
of Shareholding |
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|
|
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| Company
Profile |
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|
| BOARD
OF DIRECTORS |
|
| Mr.
Raza Kuli Khan Khattak |
|
Chairman |
|
| Mr.
Ahmed Kuli Khan Khattak |
|
| Dr.
A. S. Mufti |
|
| Begum
Tehmina H. Khan |
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| Mr.
Mushtaq Ahmed Khan |
|
| Mr.
Jamil A. Shah |
· |
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| Mr.
Razi-ur-Rahman Khan |
|
| Mr.
Irfan Siddique |
|
| Mr.
H. S. Mufti |
|
Chief Executive |
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| COMPANY SECRETARY |
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| Mr.
Mohammad Saleem Baig |
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| REGISTERED
OFFICE |
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| Ghandhara
House, |
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| 109/2,
Clifton Karachi. |
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| BANKERS
OF THE COMPANY |
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| Allied
Bank of Pakistan Ltd. |
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| Societe
General Bank |
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| Hong
Kong Bank |
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| United
Bank Ltd. |
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| American
Express Bank Ltd. |
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| The
Muslim Commercial Bank Ltd. |
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| The
Bank of Tokyo Mitsubshi Ltd. |
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| LEGAL
& TAX ADVISOR |
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| Shaukat
Law Associates |
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| 217-218,
Central Hotel Annex |
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| Abdullah
Haroon Road, |
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| Karachi. |
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| AUDITORS |
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| M/s.
Taseer Hadi Khalid & Co. |
|
M/s. Nasim Akhtar &
Co. |
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| Chartered
Accountants |
|
Chartered Accountants |
|
| 1st
floor, Sheikh Sultan |
|
348 A1-Noor Chambers |
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| Trust
Building No. 2, |
|
Plaza Square, M.A. Jinnah
Road |
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| Beaumount
Road, Karachi. |
|
Karachi. |
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| SHARE
REGISTRARS |
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| T.H.K.
Associates (Pvt) Ltd. |
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| Ground
floor, Sheikh Sultan |
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| Trust
Building No. 2, |
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| Beaumount
Road, Karachi. |
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| Notice
of Annual General Meeting |
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| NOTICE
IS HEREBY GIVEN that 15th Annual General Meeting of the Company will be held
on Wednesday 31st December |
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| 1997,
at 2.00 p.m. at Avari Tower Hotel to transact the following business:- |
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| ORDINARY
BUSINESS |
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| To
receive consider and adopt the Audited Accounts together with the Chairman
and Directors' Report for the year ended |
|
| 30th
June, 1997. |
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| To
appoint Auditors and fix their remuneration. The present Auditors Messrs.
Taseer Hadi Khalid & Co. Chartered |
|
| Accountants
and M/s. Nasim Akhtar & Co. Chartered Accountants retire and being
eligible, offer themselves for re-appoint- |
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| ment. |
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| SPECIAL
BUSINESS |
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| To
consider and if thought fit to pass the following resolution as special
Resolution "Resolved that the authorised capital |
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| of
the company be and is hereby increased from Rs. 300 million to Rs. 800
million divided into 80 million ordinary shares |
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| of
Rs. 10 each and the company secretary be authorised to amend the Memorandum
& Articles of Association |
|
| accordingly" |
|
|
| OTHER
BUSINESS |
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| To
transact any other business as may be placed before the meeting with the
permission of the Chairman. |
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| NOTES: |
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| 1.
The Share Transfer Books of the company will remain closed from 24the
December 1997 to 31st December, 1997 |
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| (both
days inclusive) |
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|
| 2.
A member entitled to attend and vote at this meeting may appoint another
member as his/her proxy to attend the |
|
| meeting
and vote for him/her. No person shall act as a proxy who is not a member of
the company. Proxies in |
|
| order
to be effective must be received by the company not less than 48 hours before
the meeting. |
|
|
| 3.
Shareholders are requested to immediately notify the company of any change in
their addresses. |
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|
| Statement
under section 160 (B) |
|
| of
the companies ordinance, 1984 |
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| The
statement U/s 160(B) of the Companies Ordinance 1984 is annexed to the Notice
of Annual General Meeting of |
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| Ghandhara
Nissan Limited to be held on Wednesday 31st December, 1997 and set out
material facts concerning the |
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| special
business to be transacted at the meeting. |
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|
| INCREASE
IN AUTHORISED CAPITAL |
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| Your
management is proposing to increase the authorised capital of the company to
the extent of Rs. 800 million which |
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| would
facilitate increase in paid-up capital as and when required for the following
requirements:- |
|
|
| The
Company is highly geared. When the project was launched the economy was
buoyant. Under those |
|
| conditions
it was possible to carry on business operations with low equity and higher
debt (working capital). Now |
|
| when
the economy is stagnant, further, devaluation of Pak. Rupee amounting to
approximately 30% has taken |
|
| place.
It is necessary to raise equity of the Company to withstand the shocks of a
stagnant economy. |
|
| The
Government has laid down Industry Specific Deletion Programmes (ISDP) for
passenger cars amongst others. |
|
| The
programme has to be implemented strictly on time. In this regard the Company
will have to invest in facilities |
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| for
assembly of main components. |
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| The
Company is planning to expand its range of products. for which additional
jigs and tooling will be required |
|
| entailing
capital expenditure. |
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| Requirement
for working capital has increased due to higher tariffs and devaluation of
Pak. Rupee. |
|
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|
|
| Chairman
and Directors' Report |
|
| For
the year ended 30 June, 1997 |
|
|
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| The
Management is pleased to announce that by the blessings of Almighty God and
the support |
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| of
Principals, M/S Nissan Motor Company, Partners, M/S Tomen Corporation and
dedication and |
|
| hard
work of staff members, your Company's car assembly plant was completed during
the |
|
| year.
Commercial production commenced and our locally assembled/manufactured Nissan |
|
| Sunny
Cars are now visible in cities throughout Pakistan. |
|
|
| The
plant operation could avail only two months of commercial operation during
the financial |
|
| year
under review, Prior to which the plant went through the stages of the
progressive trial |
|
| production
and quality control following installation of plant and machinery. |
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| The
period under review is being termed as one of the most difficult and
disappointing periods |
|
| in
the economic history of the country. The effects of which were felt by your
Company whilst |
|
| introducing
the Nissan Sunny in the market. |
|
| A
summary of the results during the year are presented as under:- |
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| Summary
of Results |
|
| (Rs.
in 000) |
|
|
| Turnover |
|
225,286 |
|
| Gross
profit |
|
13,958 |
|
| Loss
for the year before taxation |
|
25,071 |
|
| Provision
for taxation |
|
15,300 |
|
| Unappropriated
profit b/f |
|
29,654 |
|
| Unappropriated
loss c/f |
|
51,077 |
|
|
|
|
| Associated
Companies |
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| GHANDHARA
NISSAN DIESEL LTD. |
|
| During
the year the Company's performance was very successful. After wiping out the |
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| past
losses Ghandhara Nissan Diesel has earned a substantial profit. |
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|
| GHANDHARA
LEASING CO. LTD. |
|
| Despite
tough competition in the leasing sector and the economic recession prevailing
in |
|
| the
country, Ghandhara Leasing Company (Previously Ghemni Leasing Co.) is |
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| progressing
well. During the year GLC has succeeded in obtaining a foreign credit line |
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| from
Asian Development Bank and has launched Ghandhara Gold Investment
Certificates |
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| which
have been well received. |
|
|
| MARKET
PROFILE |
|
| The
country is suffering the worst recessionary conditions in the market and |
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| consequently
competition is going to be intense with the possibility of a price war. The |
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| levy
of Advanced Wealth Tax of Rs. 10,000 plus the highest rate of CVT on 2000 cc
diesel |
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| cars
(which is the preferred vehicle for the small businessmen) has impeded the
sales of |
|
| GNL's
2000 cc diesel cars. |
|
|
| Representations
have been made to the Government explaining that the classification of |
|
| 2000
cc diesel cars should be in line with a 1300 cc petrol engine. The power
developed |
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| by
a 2000 cc diesel engine is the same as that of the 1300 cc petrol car.
Thereby |
|
| Government
departments and small businessmen can purchase an economical diesel |
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| vehicle. |
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|
| QUALITY
AND AFTER SALES SERVICE |
|
| Ghandhara
Nissan Car Plant is producing an excellent zero defects car. The quality and |
|
| workmanship
is in no way less than any foreign assembled unit. |
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| The
Company has a very strong 3S Dealers network throughout the country, for
sales and |
|
| after
sales to customers. GNL Service and Sales staff are always available at
Dealers' |
|
| Showrooms
to look-after the product for monitoring continuos and efficient services. |
|
|
| HUMAN
RESOURCES DEVELOPMENT |
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| For
achieving the long term and technical goals, the Company is determined to
achieve |
|
| the
highest. standards of staff training and enhancement of professional and
technical |
|
| skills.
Most of the technical manpower was trained in Nissan Plants in Malaysia and
Japan. |
|
| The
Sales and Service departments have also received assistance from competent
staff of |
|
| Nissan
Motor. There is an on-going process of hiring staff as per requirement. The
Service |
|
| department
is passing on technical skills to 3S Dealerships so as to provide optimum |
|
| service
to the user. |
|
|
| FUTURE
OUTLOOK. |
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| In
the current economic scenario the future outlook of the Company must be
viewed with |
|
| a
cautious approach. |
|
|
| ACKNOWLEDGMENT |
|
|
|
| The
Board of Directors gratefully acknowledge the support extended by Nissan
Motor, |
|
| Tomen,
Bankers, DFIs, the dedicated staff, and vendors. |
|
| PATTERN
OF SHAREHOLDING |
|
| A
statement. showing the pattern of share holding as at 30th June, 1997 is
attached. |
|
| AUDITOR
S |
|
| The
present Auditor s M/s. Taseer Hadi Khalid & Co. Chartered Accountants and
Nasim |
|
| Akhtar
& Co. Chartered Accountants retire and being eligible, offer themselves
for |
|
| re-appointment. |
|
|
|
| Auditors'
Report to the Members |
|
|
| We
have audited the annexed balance sheet of Ghandhara Nissan Limited as at
30June 1997 and the |
|
| related
profit and loss account and statement of changes in financial position,
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 except for the changes as indicated in notes 2.2.(c) and |
|
| 2.5
with which we concur; |
|
|
| ii)
the expenditure incurred during the period 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)
as more fully explained in note 8 and 9 to the financial statements,
engineering and |
|
| technical
fees payable has been classified as long term liability. We have not seen any |
|
| confirmation
to this effect; |
|
|
| (d)
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,
together with the notes forming part thereof, give the information required
by the |
|
| Companies
Ordinance, 1984 in the manner so required and except for the effect of matter |
|
| referred
to in para (c) above, respectively, give a true and fair view of the state of
the |
|
| company's
affairs as at 30 June 1997 and give a true and fair view of the loss and the
changes |
|
| in
financial position for the year then ended; and |
|
|
| (e)
in our opinion, no Zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980. |
|
|
| NASIM
AKHTAR & CO. |
|
TASEER HADI KHALID &
CO. |
|
| Chartered
Accountants |
|
Chartered Accountants. |
|
| Karachi: |
|
| Dated:
8th December, 1997 |
|
|
|
| Balance
Sheet |
|
| As
at 30 June 1997 |
|
|
Note |
1997 |
1996 |
|
|
(Rupees 000 ) |
|
| SHARE
CAPITAL AND RESERVES |
|
|
| Authorised |
|
| 30,000,000
(1996: 10,000,000) ordinary shares |
|
| of
Rs.10/- each. |
|
300,000 |
100,000 |
|
| Issued,
subscribed and paidup |
|
========= |
========= |
|
| Issued,
subscribed and paid-up |
|
3 |
100,000 |
100,000 |
|
|
|
|
|
| Share
Premium Reserve |
|
|
40,000 |
40,000 |
|
| Accumulated
loss |
|
|
(51,077) |
(10,706) |
|
|
|
--------- |
--------- |
|
|
|
88,923 |
129,294 |
|
|
|
|
|
| Surplus
on revaluation of assets |
|
4 |
149,827 |
106,315 |
|
| Advance
against equity |
|
5 |
47,735 |
39,040 |
|
|
|
--------- |
--------- |
|
|
|
286,485 |
274,649 |
|
|
|
|
|
| Long
term deposits |
|
6 |
12,611 |
10,611 |
|
| Long
term loans-- Secured |
|
7 |
101,857 |
96,000 |
|
| Engineering
and Technical fee payable |
|
8 |
58,717 |
-- |
|
| Liability
against assets subject to finance lease |
9 |
246,366 |
198,045 |
|
|
| Current
Liabilities |
|
| Current
maturity of lease facility |
|
7&9 |
71,071 |
11,155 |
|
| Finance
under mark-up arrangements |
|
10 |
84,110 |
897 |
|
| Creditors,
accrued expenses and other liabilities |
11 |
422,702 |
60,612 |
|
| Taxation |
|
12 |
2,805 |
1,781 |
|
|
|
--------- |
--------- |
|
|
580,688 |
74,445 |
|
|
| Contingencies
and Commitments |
|
13 |
-- |
-- |
|
|
|
--------- |
--------- |
|
|
1,286,724 |
653,750 |
|
|
========== |
========== |
|
| These
accounts should be read in conjunction with the attached notes |
|
|
| TANGIBLE
FIXED ASSETS |
|
|
| Operating
Assets |
|
14 |
627,228 |
18,157 |
|
| Capital
work-in-progress |
|
15 |
1,772 |
352,031 |
|
|
|
--------- |
--------- |
|
|
|
629,000 |
370,188 |
|
|
|
|
| Long
term deposits and deferred costs |
|
16 |
10,602 |
3,514 |
|
|
|
|
|
| Long
term investment |
|
17 |
189,816 |
186,340 |
|
| Current
Assets |
|
|
|
|
| Stores
and spares |
|
15 |
37,233 |
-- |
|
| Stock-in
trade |
|
19 |
326,254 |
30,074 |
|
| Trade
debts - unsecured considered good |
|
917 |
6,835 |
|
|
| Advances,
deposits, pre-payments and |
|
| other
receivables |
|
20 |
90,555 |
36,364 |
|
| Cash
and bank balances |
|
21 |
2,347 |
20,435 |
|
|
|
--------- |
--------- |
|
|
457,306 |
93,708 |
|
|
--------- |
--------- |
|
|
1,286,724 |
653,750 |
|
|
========= |
========= |
|
|
| Profit
and loss account |
|
|
|
| For
the year ended 30 June 1997 |
|
|
Eighteen |
|
|
Year ended |
months period |
|
|
30 June |
30 June |
|
|
1997 |
1996 |
|
|
Note |
|
(restated) |
|
|
(Rupees 000) |
|
| Sales
and services |
|
22 |
225,286 |
159,988 |
|
| Cost
of sales |
|
23 |
211,328 |
131,012 |
|
|
--------- |
--------- |
|
| Gross
profit |
|
|
13,958 |
28,976 |
|
|
|
|
|
| Share
of profit of associated companies |
|
24 |
7,993 |
8,714 |
|
| Other
income |
|
25 |
6,047 |
13,305 |
|
|
|
--------- |
--------- |
|
|
|
27,998 |
50,995 |
|
|
|
|
|
| OPERATING
EXPENSES |
|
|
|
|
| Administration
and selling expenses |
|
26 |
21,837 |
22,106 |
|
| Financial
charges |
|
27 |
30,356 |
18,597 |
|
| Amortisation
of share issue expenses |
|
|
876 |
1,315 |
|
|
|
--------- |
--------- |
|
|
|
53,069 |
42,018 |
|
|
|
--------- |
--------- |
|
| (Loss)/profit
before taxation |
|
|
(25,071) |
8,977 |
|
|
|
|
|
| Provision
for taxation |
|
|
|
|
| Current |
|
12 |
(1,126) |
(1,242) |
|
| Prior
year |
|
12 |
(14,174) |
-- |
|
|
|
--------- |
--------- |
|
|
|
(15,300) |
(1,242) |
|
|
|
--------- |
--------- |
|
| (Loss)/Profit
and after taxation |
|
|
(40,371) |
7,735 |
|
|
|
========= |
========= |
|
| Unappropriated
profit as previously reported |
|
|
29,654 |
21,933 |
|
| Change
in accounting policy with respect |
|
|
|
|
| to
accounting for investments |
|
28 |
(40,360) |
(40,374) |
|
|
|
--------- |
--------- |
|
| Accumulated
loss as restated |
|
(10,706) |
(18,441) |
|
|
|
|
| (Loss)/Profit
after taxation |
|
(40,371) |
7,735 |
|
|
--------- |
--------- |
|
| Accumulated
loss carried forward |
|
(51,077) |
(10,706) |
|
|
========= |
========= |
|
| These
accounts should be read in conjunction with the annexed notes. |
|
|
|
|
| Statement
of Changes in Financial Position |
|
| FOR
THE YEAR ENDED 30 JUNE 1997. |
|
Eighteen |
|
|
months period |
|
|
30 June |
30 June |
|
|
1997 |
1996 |
|
|
(Rupees 000 ) |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Profit/(Loss)
before taxation |
|
(25,071) |
8,977 |
|
| Adjustments
for |
|
|
|
| Depreciation |
|
11,449 |
2,769 |
|
| Amortisation
of deferred costs |
|
1,577 |
1,315 |
|
| Interest,
mark-up and lease finance charges |
|
24,930 |
17,229 |
|
| Profit
on term deposit |
|
(2,479) |
(3,180) |
|
| Share
of profit of associated companies |
|
(7,993) |
(8,714) |
|
| Deferred
cost incurred |
|
(7,950) |
-- |
|
| Profit
on disposal of fixed assets |
|
(666) |
(290) |
|
|
--------- |
--------- |
|
|
(6,203) |
18,106 |
|
| (Increase)/decrease
in current assets |
|
|
| Stock
in trade |
|
(296,180) |
63,446 |
|
| Stores
and spares |
|
(37,233) |
-- |
|
| Trade
debts |
|
5,918 |
(6,666) |
|
| Advances,
deposits, prepayments and other receivables |
|
(42,722) |
(15,200) |
|
|
| (Decrease)/Increase
in current liabilities |
|
|
| Creditors,
accrued expenses and other liabilities |
|
353,107 |
(12,812) |
|
|
--------- |
--------- |
|
|
(17,110) |
28,768 |
|
| Interest,
mark-up and lease finance charges paid |
|
(15,947) |
(17,420) |
|
| Income
tax paid |
|
(25,745) |
(11,656) |
|
|
--------- |
--------- |
|
| Net
cash flows from operating activities |
|
(65,005) |
17,798 |
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
| Capital
expenditure |
|
(226,523) |
(322,462) |
|
| Lease
deposits paid |
|
(715) |
(1,520) |
|
| Proceeds
from disposal of fixed assets |
|
715 |
290 |
|
| Dividend
received |
|
4,242 |
8,700 |
|
| Net
increase in investments |
|
-- |
(36,250) |
|
| Interest
received on term deposit |
|
2,479 |
3,180 |
|
|
--------- |
--------- |
|
| Net
cash flows from investing activities |
|
(219,802) |
(348,062) |
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Short
term loan |
|
-- |
(62,384) |
|
| Long
term loan |
|
41,857 |
106,877 |
|
| Engineering
fee payable |
|
58,717 |
-- |
|
| Loan
from directors |
|
-- |
(18,869) |
|
| Advance
against equity |
|
8,695 |
39,040 |
|
| Long
term deposits |
|
2,000 |
4,500 |
|
| Net
increase in lease finance |
|
72,237 |
196,954 |
|
|
--------- |
--------- |
|
| Net
cash flows from financing activities |
|
183,506 |
266,118 |
|
|
--------- |
--------- |
|
| (Decrease)/Increase
in cash and cash equivalents |
|
(101,301) |
(64,146) |
|
| Cash
and cash equivalents at beginning of the year |
|
19,538 |
83,684 |
|
|
|
--------- |
--------- |
|
| Cash
and cash equivalents at end .of the year |
|
(81,763) |
19,538 |
|
|
========= |
========= |
|
|
|
|
| Notes
to the Accounts |
|
| For
the year ended 30 June 1997 |
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
|
| Ghandhara
Nissan Limited was incorporated on 08'August 1981 as a Private Limited
company |
|
| and
subsequently converted into Public Limited Company on 24 May 1992. The
company's |
|
| shares
are listed on Karachi Stock Exchange. The principal activity of the company
is |
|
| manufacture
of Nissan Passenger Cars, import and marketing of Nissan vehicles and
marketing |
|
| of
Nissan Diesel Trucks assembled in Pakistan by Ghandhara Nissan Diesel
Limited, an |
|
| associated
company. |
|
|
| The
company commenced trial production of Nissan Passenger cars from 1 January
1997 and full |
|
| commercial
production commenced from 1 May 1997 after resolution of initial teething
problems. |
|
|
| 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
Accounting convention |
|
| These
accounts have-been prepared on the basis of historical cost convention as |
|
| modified
by revaluation of certain fixed assets. |
|
|
| 2.2
Fixed capital expenditure |
|
|
| Owned |
|
|
|
| (a)
Fixed assets are stated at cost less accumulated depreciation except for land
and |
|
| buildings
which are stated at revalued amounts. On disposal, the cost of the |
|
| assets
and the depreciation is adjusted from both the accounts and the
resultant |
|
| gain or
loss is dealt with through profit and loss account. |
|
|
| (b)
Freehold |
