| THE GENERAL TYRE AND RUBBER CO. OF PAKISTAN LTD. |
|
|
|
|
| (A
Bibojee Group Company) |
|
|
|
|
(34th ANNUAL REPORT 1997) |
|
|
| CONTENTS |
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| Company
Profile |
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|
|
| Notice
of Meeting |
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|
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|
|
| Chairman's
Review |
|
|
|
|
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| Directors'
Report to the Shareholders |
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|
|
| Five
Years at a Glance |
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| Graphic
Illustrations |
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| Auditors'
Report to the Members |
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|
| Balance
Sheet |
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| Profit
& Loss Account |
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|
| Cash
Flow Statement |
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|
|
| Notes
to the Accounts |
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|
|
| Pattern
of Shareholding |
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| COMPANY
PROFILE |
|
| Board
of Directors |
|
| Raza
Kuli Khan Khattak |
Chairman |
|
| Dr
A.S. Mufti |
|
Managing Director |
|
| Brig
(Retd) Mahmud Jan |
|
| Ahmed
Kuli Khan Khattak |
|
| Humayaun
S. Mufti |
|
| Chaudhry
Sher Mohammad |
|
| Adnan
Ahmed Ali |
|
| Irfan
Siddiqui |
|
| Abdulazim
Mohammad Ali A1-Shamali (Tasnimul Haq Farooqui Alternate Director) |
|
| Shahid
Ghaffar |
|
| A.K.M.
Sayeed |
|
| David
R. Johnson |
|
| Dr
J. Mispagel (Technical) |
|
|
| Secretary |
|
| Chaudhry
Sher Mohammad |
|
|
|
| Bankers |
|
| American
Express Bank Limited |
|
| Deutsche
Bank AG |
|
| Muslim
Commercial Bank Limited |
|
| National
Bank of Pakistan |
|
| Allied
Bank of Pakistan Limited |
|
| Faysal
Bank Limited |
|
| National
Development Finance Corporation |
|
| Credit
Agricole Indosuez |
|
| Societe
Generale The French and International Bank |
|
| Bank
A1-Habib Limited |
|
| ANZ
Grindlays Bank |
|
|
| Auditors |
|
| A.
F. Ferguson & Co. |
|
| Chartered
Accountants |
|
| Hameed
Chaudhri & Co. |
|
| Chartered
Accountants |
|
|
|
| Registered
Office & Factory |
|
| H-23/2,
Landhi Industrial Trading Estate, Landhi |
|
| Karachi,
Phone: 7738862-3-4-7 |
|
|
| Head
Office |
|
| P
& O Plaza, I.I. Chundrigar Road, Karachi |
|
| Phone:
2417571-4, Fax: 2430662, 2418781 Telex: 21495 GTR PK |
|
|
| Branch
Office |
|
| Lahore: |
|
| Gardee
Trust Building, Thornton Road, Lahore. |
|
| Phone:
352663 Fax: 7235745 |
|
|
| Islamabad: |
|
| Plot
No. 176, I - 10/3 Kurang Road, Islamabad. |
|
| Phone:
449955, 449956 Fax: 417071 |
|
|
| Liaison
Office |
|
| 6,
Agha Khan Road, F-6/4, Islamabad |
|
| Phone:
820829 Fax: 220805 |
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|
|
|
| NOTICE
OF MEETING |
|
| Notice
is hereby given that the Thirty-fourth Annual General Meeting oŁ The General
Tyre and Rubber |
|
| Company
of Pakistan Limited will be held at Beach Luxury Hotel, Karachi on Friday,
26th December |
|
| 1997
at 5:00 p.m. to transact the following business: |
|
| 1.
To confirm the minutes of the Thirty-third Annual General Meeting of the
Shareholders held on |
|
| December
24, 1996. |
|
|
|
| 2.
To receive and consider the audited accounts for the year ended June 30,
1997, together with Directors' |
|
| and
Auditors' reports thereon. |
|
|
|
|
| 3.
To appoint auditors for the year 1997-98 and to fix their remuneration. The
retiring auditors, Messrs |
|
| A.F. Ferguson & Co., Chartered
Accountants and Hameed Chaudhri & Co., Chartered Accountants, |
|
| being eligible, offer themselves for
reappointment. |
|
|
|
| 4.
Any other matter with the permission of the Chair. |
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|
|
|
BY ORDER OF THE BOARD |
|
| Karachi |
|
(CH. SHER MOHAMMAD) |
|
| Dated:
November 19, 1997. |
|
Director & Secretary |
|
|
| NOTES: |
|
| 1.
The share transfer books of the company will remain closed from December 16,
to December 26, |
|
| 1997
(both days inclusive). |
|
|
| 2.
A member entitled to attend and vote at the Annual General Meeting is
entitled to cast his/her |
|
| vote by proxy. Proxies must be deposited at
the Company's Shares Department located at Parker |
|
| House, Aiwan-e-Tijarat Road, Off: I.I.
Chundrigar Road, Karachi not later than 48 hours before |
|
| the time for holding the meeting. |
|
|
| 3.
Members are requested to notify any change in their addresses immediately. |
|
|
|
| CHAIRMAN'S
REVIEW |
|
| On
behalf of your Board of Directors, I am pleased to present you the annual
report for the year ended |
|
| June
30, 1997. |
|
|
| OPERATING
PERFORMANCE |
|
| The
year under review experienced numerous difficulties. Production/sales was
affected due to "Go Slow" by the |
|
| workers.
The workers raised demand for payment of bonus equivalent to 17 months basic
salary for the eighteen |
|
| months
period ended June 30, 1996. Since CBA was adamant and resorted to "Go
Slow", management had no |
|
| choice
but to initiate legal action. Moreover, there was a need to correct the work
practices which was essentially |
|
| spoiled
by a group of 35 unwilling workers. |
|
|
| The
legal process of terminating the services of a permanent worker is very time
consuming and cumbersome. The |
|
| process
of obtaining NIRC judgement declaring "Go Slow" as illegal strike
also took time. However, finally the |
|
| NIRC
declared "Go Slow" illegal suspended the CBA from holding the
office and disqualified the General |
|
| Secretary
from contesting election. Workers demand was eventually settled for payment
equivalent to 7 months |
|
| basic
salary. In the process, the Management dismissed 35 unwilling/undesirable
workers and has initiated an |
|
| action
plan to eradicate bad habits among the workers which will improve the
productivity. Workers at present are |
|
| disillusioned
with the union and now do not agitate whenever disciplinary action is taken
against their unwilling |
|
| fellow
workers. |
|
|
| The
"Go Slow" which continued for four and a half months affected our
production and sales drastically. Though |
|
| we
have suffered due to labour unrest during the year, we feel confident that we
would reap in the long run the |
|
| benefits
of our principled stand which we took against the unfair labour practices. |
|
|
| Further
to the above, the operations got affected due to overall depressed economy,
low off take by Assembly |
|
| Plants
and depreciation of the Rupee by around 15% during this period. Company
produced 487766 tyres during |
|
| the
year under review as against 744555 tyres for 12 months last year Sales at
Rs. 1356.1 million for the year ended |
|
| June
30, 1997, were lower by 23% than the annual sale for the comparable period
i.e. July 01, 1995 -June 30, 1996. |
|
| Pretax
profit was reduced to Rs. 2.3 million as compared to Rs. 60.5 million for the
same period last year. |
|
|
| EXPANSION
PROGRAMME |
|
| The
"Farm Tyre" expansion project increasing the capacity from 50,000
tyres to over 100,000 rear farm tyres per |
|
| year
was completed during the year. As regards creation of additional capacity for
Steel Radial Tyres, I am pleased |
|
| to
report that the progress of implementation has been satisfactory. Civil Work
is in its final stage of completion |
|
| and
machinery has already arrived. Installation of machinery and trial run of
production shall commence by July, |
|
| 1998
- Inshallah. |
|
|
| FUTURE
OUTLOOK |
|
| The
labour problem has since been resolved and current production level in fact
is higher than the normal level. |
|
| Completion
of farm tyre project will enhance sale of this segment for which good demand
exists. However, the |
|
| inconsistent
policies of the Government are a major threat to industrial projects in
Pakistan. Just look at the |
|
| recently
announced import policy 1997-98 in which the Government has allowed the
import of tyres from India |
|
| despite
the fact that India's own industry is heavily protected by import levies as
high as 84.6% as against import |
|
| duty
of 15%-35% on import of tyres in Pakistan. Frequent devaluation of Pak Rupee,
reduction of duty on |
|
| imported
tyres, depressed economic conditions and low demand from Assembly Plants are
some of the other |
|
| threats
to be encountered by the Company during the ensuing year. The future
prospects of the Company's |
|
| business
looks reasonably bright due to improved productivity and right product mix. |
|
|
| In
conclusion, I would like to assure you that your Company is fully cognizant
of these challenges and every effort |
|
| is
being made not only to generate growth but also to maintain a reasonable
profit. |
|
|
|
| DIRECTORS'
REPORT TO THE SHAREHOLDERS |
|
| Your
Directors are pleased to place before you the audited financial statements
for the year ended |
|
| June
30, 1997. |
|
|
|
(Rupees in '000) |
|
| Financial
Results |
|
| Profit
for the year after taxation |
|
2,563 |
|
|
| Unappropriated
profit brought forward |
478 |
|
|
|
|
|
---------- |
|
|
| Unappropriated
profit carried forward |
3,041 |
|
|
|
|
|
========== |
|
|
| Chairman's
Review |
|
| The
Directors of the company endorse the contents of the Chairman's Review
dealing with the activities of |
|
| the
company. |
|
|
| Pattern
of Shareholding |
|
| A
statement showing the pattern of holding of shares as at June 30, 1997 is
attached. |
|
|
|
| Auditors |
|
| The
present Auditors, Messrs A.F. Ferguson & Co. Chartered Accountants and
Hameed Chaudhri & Co. |
|
| Chartered
Accountants retire and being eligible, offer themselves for re-appointment. |
|
|
| For
and on behalf of the Board of Directors |
|
|
| Dr.
A.S. Mufti |
|
| Chief
Executive |
|
|
|
| FIVE
YEARS AT A GLANCE |
|
|
|
|
(Rupees in million) |
|
|
1997 |
1996* |
1994 |
1993 |
1992 |
|
|
|
| Operating
Results |
|
|
| Gross
sales |
|
1,356 |
2,450 |
1,220 |
1,243 |
1,346 |
|
| Net sales |
|
1,089 |
1,974 |
990 |
1,013 |
1,096 |
|
| Gross
profit |
|
137 |
252 |
162 |
205 |
198 |
|
| Profit
before tax |
|
2 |
29 |
28 |
73 |
83 |
|
| Profit
after tax |
|
3 |
9 |
30 |
58 |
66 |
|
|
| Financial
Position |
|
| Gross
assets |
|
1,771 |
1,727 |
1,581 |
1,649 |
1,384 |
|
| Paid
up share capital |
171 |
155 |
124 |
83 |
83 |
|
| Reserves
and unappropriated profit |
229 |
243 |
125 |
135 |
77 |
|
| Shareholders'
equity |
|
400 |
398 |
249 |
218 |
160 |
|
| Breakup
value per share |
23 |
26 |
20 |
26 |
19 |
|
| Contribution
to public exchequer |
374 |
448 |
332 |
421 |
339 |
|
|
| *
1996 Accounts are of eighteen months January 1995 - June 1996 |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| We
have audited the annexed balance sheet of The General Tyre and Rubber Company
of Pakistan |
|
| Limited
as at June 30, 1997 and the related profit and loss account and cash flow
statement, 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 purposes of the
company's |
|
| business;
and |
|
|
|
|
|
| (iii)
the business conducted, investment 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 cash flow |
|
| statement
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 June 30, 1997 and
of the |
|
| profit
and the cash flows for the year then ended; and |
|
|
|
|
| (d)
in our opinion no zakat was deductible at source under the Zakat and Ushr
Ordinance, |
|
| 1980. |
|
|
|
| Without
qualifying our opinion we report that the ultimate outcome of the matter
explained in note |
|
| 14.1
to the accounts cannot presently be determined by the company with any degree
of Certainty. |
|
|
| The
accounts of The General Tyre and Rubber Company of Pakistan Limited for the
eighteen months |
|
| period
ended June 30, 1996 were audited by only Hameed Chaudhri & Co., Chartered
Accountants who |
|
| had
expressed an unqualified opinion on those accounts. |
|
|
| A.
F. FERGUSON & CO. |
|
HAMEED CHAUDHRI & CO. |
|
| Chartered
Accountants |
Chartered Accountants |
|
|
| Karachi:
November 27, 1997 |
|
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1997 |
|
|
|
June 30, |
June 30, |
|
|
|
Note |
1997 |
1996 |
|
|
|
(Rupees in thousand) |
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
| Share
capital |
|
| Authorised |
|
|
|
300,000 |
300,000 |
|
| 30,000,000
shares of Rs. 10 each |
|
========== |
========== |
|
|
| Issued,
subscribed and paid up |
|
3 |
170,775 |
155,250 |
|
| Reserves |
|
|
|
| Capital |
|
4 |
108,675 |
124,200 |
|
| Revenue |
|
5 |
117,750 |
117,750 |
|
| Unappropriated
profit |
|
|
3,041 |
478 |
|
|
|
|
---------- |
---------- |
|
|
|
|
229,466 |
242,428 |
|
|
|
|
---------- |
---------- |
|
|
|
|
400,241 |
397,678 |
|
| REDEEMABLE
CAPITAL |
|
6 |
69,823 |
47,397 |
|
| LONG
TERM LOANS |
|
7 |
15,622 |
15,622 |
|
| LIABILITIES
AGAINST ASSETS SUBJECT TO |
|
| FINANCE
LEASES |
|
8 |
37,809 |
1,741 |
|
| DEFERRED
LIABILITIES |
|
| Staff
retirement gratuity |
|
|
55,751 |
48,033 |
|
| Deferred
taxation |
|
9 |
-- |
6,200 |
|
|
---------- |
---------- |
|
|
|
|
55,751 |
54,233 |
|
| LONG
TERM DEPOSITS FROM DEALERS |
|
10 |
6,480 |
6,730 |
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
| Current
maturity of redeemable capital |
6 |
12,153 |
3,024 |
|
| Current maturity of
liabilities against |
|
|
| assets
subject to finances leases |
|
8 |
6,073 |
19,060 |
|
| Short
term finances |
|
11 |
35,000 |
65,000 |
|
| Running
finance under mark-up arrangements |
12 |
195,198 |
134,542 |
|
| Creditors,
accrued expenses and other liabilities |
13 |
297,359 |
395,610 |
|
| Unclaimed
dividend |
|
|
466 |
534 |
|
|
|
|
---------- |
---------- |
|
|
|
|
546,249 |
617,770 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
14 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
1,131,975 |
1,141,171 |
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
| TANGIBLE
FIXED ASSETS |
|
| Operating
assets |
|
15 |
287,045 |
240,933 |
|
| Capital
work in progress |
|
16 |
84,453 |
84,614 |
|
|
|
|
---------- |
---------- |
|
|
|
|
371,498 |
325,547 |
|
|
|
|
| LONG
TERM INVESTMENTS |
|
17 |
586 |
606 |
|
| LONG
TERM LOANS AND ADVANCES |
|
18 |
756 |
1,000 |
|
| LONG
TERM DEPOSITS AND DEFERRED COSTS |
19 |
3,492 |
8,770 |
|
|
| CURRENT
ASSETS |
|
| Stores
and spares |
|
|
20 |
153,679 |
128,622 |
|
| Stocks |
|
|
|
21 |
377,243 |
402,692 |
|
| Trade
debtors |
|
|
22 |
104,269 |
132,145 |
|
| Loans
and advances |
|
|
23 |
5,733 |
9,973 |
|
| Deposits,
prepayments and other receivables |
24 |
75,910 |
82,220 |
|
| Taxation |
|
|
|
|
22,987 |
19,038 |
|
| Cash
and bank balances |
|
25 |
15,822 |
30,558 |
|
|
|
|
|
|
---------- |
---------- |
|
|
|
755,643 |
805,248 |
|
|
|
|
---------- |
---------- |
|
|
1,131,975 |
1,141,171 |
|
|
|
========== |
========== |
|
| Dr.
A.S. MUFTI |
|
RAZA KULI KHAN KHATTAK |
|
| Chief
Executive |
|
Director |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1997 |
|
|
|
|
|
Year ended |
Eighteen |
|
|
|
June 30, |
months ended |
|
|
|
Note |
1997 |
June 30,1996 |
|
|
|
|
(Rupees in thousand) |
|
|
| Net sales |
|
26 |
1,089,312 |
1,973,566 |
|
| Cost
of sales |
|
27 |
952,355 |
1,721,104 |
|
|
|
|
---------- |
---------- |
|
| Gross
profit |
|
|
136,957 |
252,462 |
|
|
| Administrative
expenses |
|
28 |
34,246 |
47,162 |
|
| Selling
and distribution expenses |
|
29 |
49,279 |
76,161 |
|
|
|
|
|
|
---------- |
---------- |
|
|
|
83,525 |
123,323 |
|
|
|
---------- |
---------- |
|
| Operating
profit |
|
|
53,432 |
129,139 |
|
| Other
income |
|
30 |
11,598 |
18,384 |
|
|
|
|
---------- |
---------- |
|
|
|
65,030 |
147,523 |
|
|
|
|
|
| Financial
charges |
|
31 |
61,587 |
110,089 |
|
| Other
charges |
|
32 |
1,106 |
8,599 |
|
|
|
|
---------- |
---------- |
|
|
|
62,693 |
118,688 |
|
|
|
---------- |
---------- |
|
| Profit
before taxation |
|
2,337 |
28,835 |
|
| Taxation |
|
|
| Current
- for the year |
|
|
5,632 |
22,000 |
|
|
- for prior years |
|
|
342 |
(3,756) |
|
|
|
|
|
|
| Deferred |
|
|
9 |
(6,200) |
- |
|
| On
issue of bonus shares |
|
- |
1,553 |
|
|
|
---------- |
---------- |
|
|
|
(226) |
19,797 |
|
|
|
---------- |
---------- |
|
| Profit
after taxation |
|
2,563 |
9,038 |
|
| Unappropriated
profit brought forward |
|
478 |
1,965 |
|
|
|
---------- |
---------- |
|
| Profit
available for appropriation |
|
3,041 |
11,003 |
|
|
| Appropriations |
|
| Transfer
from general reserve |
|
|
- |
(5,000) |
|
| Transfer
to reserve for issue of bonus shares |
|
- |
15,525 |
|
|
|
|
|
|
---------- |
---------- |
|
|
|
- |
10,525 |
|
|
|
---------- |
---------- |
|
| Unappropriated
profit carried forward |
|
3,041 |
478 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30, 1997 |
|
|
|
Year ended |
Eighteen |
|
|
|
June 30, |
months ended |
|
|
|
1997 |
June 30, 1996 |
|
|
|
Note |
(Rupees in thousand) |
|
|
|
| Cash
flow from operating activities |
|
|
| Cash
generated from operations |
|
36 |
61,967 |
219,925 |
|
| Staff
retirement gratuity paid |
|
|
(2,328) |
(2,929) |
|
| Financial
charges paid |
|
|
(54,754) |
(98,806) |
|
| Taxes paid |
|
|
(9,923) |
(31,291) |
|
| Long
term loans and advances (net) |
|
|
244 |
141 |
|
| Long
term deposits |
|
|
4,189 |
1,870 |
|
| Long
term deposits from dealers |
|
|
(250) |
20 |
|
|
---------- |
---------- |
|
| Net
cash (outflow)/inflow from operating activities |
(855) |
88,930 |
|
|
|
|
|
|
|
|
|
| Cash
flow from investing activities |
|
| Fixed
capital expenditure |
|
|
(58,304) |
(95,108) |
|
| Sale
proceeds on disposal of fixed assets |
|
25 |
1,077 |
|
| Interest
received |
|
|
1,181 |
1,271 |
|
| Exchange
gain |
|
|
6 |
34 |
|
|
|
|
---------- |
---------- |
|
| Net
cash outflow from investing activities |
|
(57,092) |
(92,726) |
|
|
|
|
|
|
| Cash
flow from financing activities |
|
|
|
|
| Subscription
of right shares including share premium |
-- |
139,725 |
|
| Right
share issue expenses |
|
-- |
(5,443) |
|
| Redemption
of debentures |
|
-- |
(18,750) |
|
| Redeemable
capital (net) |
|
31,555 |
47,632 |
|
| Long
term loans (net) |
|
-- |
(7,115) |
|
| Liabilities
against assets subject to finance leases |
(18,932) |
(26,791) |
|
| Short
term finances (net) |
|
(30,000) |
(83,175) |
|
| Dividends
paid |
|
|
(68) |
(11) |
|
|
|
|
---------- |
---------- |
|
| Net
cash (outflow)/inflow from financing activities |
(17,445) |
46,072 |
|
|
|
|
---------- |
---------- |
|
| (Decrease)/increase
in cash and cash equivalents |
|
(75,392) |
42,276 |
|
|
|
|
| Cash
and cash equivalents at the beginning of the |
|
| year/period |
|
|
(103,984) |
(146,260) |
|
|
|
|
---------- |
---------- |
|
| Cash
and cash equivalents at the end of the |
|
| year/period |
|
37 |
(179,376) |
(103,984) |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
