| SUZUKI MOTORCYCLES PAKISTAN LIMITED |
|
|
|
|
|
|
| 34TH
ANNUAL REPORT 1997 |
|
|
| Contents |
|
|
| Board
of Directors |
|
| Notice
of the Annual General Meeting |
|
| Chief
Executive's Review |
|
| Directors'
Report to the Shareholders |
|
| Pattern
of Shareholdings |
|
| Auditors'
Report to the Members |
|
| Balance Sheet |
|
| Profit
and Loss Account |
|
| Cash
Flow Statement |
|
| Notes
to the Accounts |
|
|
|
|
|
| BOARD
OF DIRECTORS |
|
| JAVED BURKI |
|
| KATSUMI TAKATA |
|
| KAZUYA
FUKUZAWA |
|
| MUTSUMI
TAKAMATSU |
|
| AKIHIKO
KOBAYASHI |
|
| ZAHEER AHMED |
|
| DANISHMAND |
|
|
| CHAIRMAN |
|
| JAVED BURKI |
|
|
| CHIEF
EXECUTIVE |
|
| DANISHMAND |
|
|
| SECRETARY |
|
| MIDHAT
A. KIDWAI |
|
|
| AUDITORS |
|
| SIDAT
HYDER QAMAR MAQBOOL & CO. |
|
| Chartered
Accountants |
|
|
| BANKERS: |
|
| DEUTSCHE BANK |
|
| THE
BANK OF TOKYO - MITSUBISHI, LTD. |
|
| ALLIED
BANK OF PAKISTAN LTD. |
|
| MUSLIM
COMMERCIAL BANK LTD. |
|
| ABN-AMRO BANK |
|
|
| REGISTERED
OFFICE: |
|
| F/14,
MAURIPUR LINK ROAD, |
|
| S.I.T.E.,
KARACHI-75730. |
|
|
| TELEPHONE NOS: |
|
| PABX
2578840- 43 |
|
| DI
R 2573309 - 2577754 - 2575189 |
|
| E-mail:
suzukimc @ paknet3.ptc.pk |
|
|
| FAX: 2563895 |
|
|
|
|
| NOTICE
OF THE ANNUAL GENERAL MEETING |
|
| Notice
is hereby given that the 34th Annual General Meeting of the Company will be
held at the |
|
| Registered
Office of the Company at F-14, Mauripur Link Road, S.I.T.E., Karachi, on 31st
December, |
|
| 1997
at 9:00 a.m. to transact the following business: |
|
|
| ORDINARY
BUSINESS: |
|
|
| 1.
To confirm the minutes of the Annual General Meeting held on 31st December,
1996. |
|
|
| 2.
To receive, consider and adopt the Audited Accounts of the Company for the
year |
|
| ended
30th June, 1997 together with the Directors' and Auditors' Reports thereon. |
|
|
| 3.
To appoint Auditors for the year ending 30th June, 1998 and to fix their
remuneration. |
|
|
| 4.
To transact any other business with the permission of the Chair. |
|
|
|
| NOTES: |
|
|
| 1.
The share transfer books shall remain closed from 24th December, 1997 to 31st |
|
| December,
1997 (both days inclusive) |
|
| 2.
A member entitled to attend and vote at the Annual General Meeting is
entitled to |
|
| appoint
another person as a proxy who is entitled on his own behalf to be present and |
|
| vote
at the meeting or he/she is appointed to act at the meeting as the
representative |
|
| of
a corporation. |
|
|
| 3.
The instrument appointing a proxy must be received at the Registered Office
of the |
|
| Company
not later than forty eight hours before the meeting. |
|
|
| CHIEF
EXECUTIVE'S REVIEW |
|
|
| It
gives me pleasure to place before you the Company's 34th Annual Report for
the year ended 30th |
|
| June, 1997. |
|
|
| General: |
|
| During
1996-97 Pakistan economy was in a recession. Both the agricultural and
industrial sectors |
|
| performed
dismally. Liquidity in the market remained tight. Cotton crops and wheat
declined against |
|
| 1995-96.
The decline was severest in some parts of South Punjab which are the main
markets for |
|
| Suzuki
Motorcycles. Furthermore Federal and Provincial Governments cut back
purchases of |
|
| vehicles
including motorcycles to reduce their deficits. These factors adversely
affected the |
|
| Company
sales. However one factor remained favourable: the value of the Japanese Yen
remained |
|
| low
during the year under review. Therefore CKD imports of motorcycles were
cheaper, and resulted |
|
| in
reduced production cost. A more fundamental positive factor was the
wide-spread recognition of |
|
| the
superior quality of Suzuki motorcycles, specially our Shogun and SR21 models
which were |
|
| introduced
in February 1997. |
|
|
| Sales: |
|
| During
1996-97 net sales were Rs. 366.405 Million as compared to Rs. 425.742 Million
during 1995- |
|
| 96,
showing a decline of 13.94%. The reasons for lower sales are given above. |
|
|
| Export: |
|
| Your
Company exported motorcycles to five countries during the year under review.
I am happy to |
|
| report
that we are getting repeat orders from our foreign buyers on a continuous
basis. This shows |
|
| that
our motorcycles are of high quality and are selling against cheaper
motorcycles from some other |
|
| Asian
countries. We expect slow but continuously improving sales in the coming
years. |
|
|
| Gross Profit: |
|
| On
account of low value of the Yen, the cost of production of motorcycles
remained low which |
|
| improved
the Gross Profit ratio from 23.57% in 1995-96, to 26.92% in 1996-97. |
|
|
| Selling
and Administrative Expenses: |
|
| Selling
and Administrative expenses remained almost the same as during 1995-96; the
increase was |
|
| a
nominal 0.73%. |
|
|
| Financial
Charges: |
|
| During
the middle of 1996-97 the Company issued right shares valuing Rs. 146.330
Million. This issue |
|
| was
under-written and almost fully subscribed by Suzuki Motor Corporation, Japan.
Therefore the |
|
| Company
was able to reduce its bank borrowings substantially. This resulted in the
reduction of |
|
| financial
expenses from Rs. 51.353 Million in 1995-96 to Rs. 43.838 Million in 1996-97.
The right |
|
| shares
subscription fund were available to the Company for about six months only.
Therefore in the |
|
| year
1997-98 when the funds would be available for the whole year, the financial
charges are |
|
| expected
to be still lower. |
|
|
| Profitability: |
|
| The
Company earned a pre-tax profit of Rs. 5.863 Million mainly on account of low
value of the |
|
| Japanese
Yen and reduction in Financial Charges. Another factor has been gradual
reduction in price |
|
| differential
against other models; this factor should be important when volumes improve. |
|
|
| Future
Prospects: |
|
| With
the passage of time your Company products are being recognised for their high
quality. Sales |
|
| should
improve somewhat as the economy is likely to begin to improve towards the end
of 1997. We |
|
| also
expect improvement in our market share as a result of growing recognition of
superior quality |
|
| of
Suzuki Motorcycles. We expect continued major support from Suzuki Motor
Corporation, Japan |
|
| which
will be a source of great help and strength. We wish to record our
appreciation of all-around |
|
| support
of Suzuki Motor Corporation Japan. We expect improvement in operations and
profitability |
|
| of
the Company during 1997-98. |
|
|
| DIRECTORS'
REPORT TO THE SHAREHOLDERS. |
|
|
| Your
Directors are pleased to present their report and audited accounts for the
year ended 30th June, |
|
| 1997: |
|
|
| Accounts: |
|
|
|
Rupees |
|
|
| Profit
for year |
|
5,862,506 |
|
| Taxation
- Current |
|
(1,834,796) |
|
|
---------- |
|
| After
Tax Profit |
|
|
4,027,710 |
|
| Accumulated
Loss Brought Forward |
|
(235,972,231) |
|
|
|
|
---------- |
|
| Accumulated
Loss Carried Forward |
|
(231,944,521) |
|
|
========== |
|
|
| The
Company reached the break-even point; it has earned pretax profit of Rs.
5.863 Million. |
|
|
| Chief
Executive Review: |
|
| The
attached Chief Executive's Review gives the picture of the company's
activities and performance |
|
| during
1996-97. The Directors of the company endorse the contents of the Review. |
|
|
| Directors: |
|
| Since
the last Directors Report following changes have taken place on the Board of
Directors of the |
|
| Company: |
|
|
| In
view of new assignments, Mr. Masao Tani, Mr. Itsuo Yamashita and Mr. T. Kaito
resigned as |
|
| directors
and in their place following new directors were appointed: |
|
|
| 1.
Mr. Katsumi Takata |
|
| 2.
Mr. Kazuya Fukuzawa |
|
| 3.
Mr. Mutsumi Takamatsu |
|
|
| The
Board greatly appreciates the contributions made by the outgoing directors
for the progress and |
|
| prosperity
of the Company: |
|
|
| Auditors: |
|
| The
present auditors M/s Sidat Hyder Qamar Maqbool & Co., Chartered
Accountants retire and being |
|
| eligible,
offer themselves for reappointment. |
|
|
| Pattern
of Shareholding: |
|
| The
pattern of holding of the shares of the company as on 30th June, 1997 is
annexed. |
|
|
| PATTERN
OF SHARE HOLDING AS AT JUNE 30, 1997 |
|
|
|
Size of Holding |
|
|
Number of |
Number of |
|
|
of Rs. 10 Shares |
|
|
Shareholders |
Rs. 10 Shares |
|
|
|
|
|
Held |
|
|
| 1 |
- |
100 |
|
2949 |
78,247 |
|
| 101 |
- |
500 |
|
572 |
161,648 |
|
| 501 |
- |
1000 |
|
235 |
195,121 |
|
| 1001 |
- |
5000 |
|
369 |
891,540 |
|
| 5001 |
- |
10000 |
|
66 |
483,054 |
|
| 10001 |
- |
15000 |
|
27 |
337,024 |
|
| 15001 |
- |
20000 |
|
9 |
162,010 |
|
| 20001 |
- |
25000 |
|
11 |
249,384 |
|
| 25001 |
- |
30000 |
|
6 |
171,700 |
|
| 35001 |
- |
40000 |
|
6 |
228,483 |
|
| 40001 |
- |
45000 |
|
2 |
83,548 |
|
| 50001 |
- |
55000 |
|
2 |
100,900 |
|
| 65001 |
- |
70000 |
|
1 |
66,400 |
|
| 140001 |
- |
145000 |
|
1 |
140,100 |
|
| 165001 |
- |
170000 |
|
1 |
169,335 |
|
| 180001 |
- |
185000 |
|
1 |
182,100 |
|
| 1520001 |
- |
1525000 |
|
1 |
1,521,045 |
|
| 1715001 |
- |
1720000 |
|
1 |
1,717,746 |
|
| 1835001 |
- |
1840000 |
|
1 |
1,835,304 |
|
| 35120001 |
- |
35125000 |
|
1 |
35,124,269 |
|
| ---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
|
|
|
Totals: |
4262 |
43,898,958 |
|
| ========== |
========== |
========== |
========== |
========== |
========== |
|
|
|
|
|
|
|
| CATEGORIES
OF SHARE HOLDERS AS AT 30/06/97 |
|
|
| Categories
of Shareholders |
|
Number |
Shares Held |
Percentage |
|
|
|
|
| Individuals |
|
4205 |
3,380,440 |
7.70 |
|
| Investment
Companies |
|
8 |
57,218 |
0.13 |
|
| Suzuki
Motor Corp. Japan |
|
1 |
35,124,269 |
80.01 |
|
| Pakistan
Automobile Corporation Limited |
1 |
1,835,304 |
4.18 |
|
| Insurance
Companies |
|
10 |
74,693 |
0.17 |
|
| Joint
Stock Companies |
|
22 |
99,192 |
0.23 |
|
| Financial
Institutions/Banks |
|
10 |
3,293,170 |
7.50 |
|
| Modaraba
Companies |
|
3 |
23,400 |
0.05 |
|
| Government
Organizations |
|
2 |
11,272 |
0.03 |
|
|
|
---------- |
---------- |
---------- |
|
|
|
4262 |
43,898,958 |
100.00 |
|
|
========== |
========== |
========== |
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of SUZUKI MOTORCYCLES PAKISTAN |
|
| LIMITED
as at 30 June 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 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 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 30 June 1997 and of the profit and
the cash |
|
| flow
statement for the year then ended; and |
|
|
| d)
in our opinion, no zakat was deductible at source under the Zakat end Ushr
Ordinance, |
|
| 1980. |
|
|
|
|
|
SIDAT HYDER QAMAR MAQBOOL
& CO. |
|
| KARACHI:
04 NOVEMBER 1997 |
|
CHARTERED ACCOUNTANTS |
|
|
|
|
|
| BALANCE
SHEET AS AT 30 JUNE 1997 |
|
|
|
NOTE |
1997 |
1996 |
|
| CAPITAL
AND RESERVES |
|
|
|
| Authorised
Capital |
|
|
|
| 60,000,000
(1996: 60,000,000) |
|
|
|
| ordinary
shares of Rs. 10/- each |
|
|
600,000,000 |
600,000,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up capital |
|
3 |
438,989,580 |
292,659,720 |
|
| Capital
reserves |
|
4 |
5,932,000 |
5,932,000 |
|
| Accumulated
loss |
|
|
(231,944,521) |
(235,972,231) |
|
|
|
|
---------- |
---------- |
|
|
|
|
212,977,059 |
62,619,489 |
|
|
|
|
| SURPLUS
ON REVALUATION OF FIXED ASSETS |
|
5 |
35,297,981 |
35,297,981 |
|
| DEFERRED
LIABILITIES |
|
|
|
1,050,507 |
638,012 |
|
| LONG-TERM
SECURITY DEPOSITS |
|
|
|
2,504,634 |
1,643,601 |
|
| CURRENT
LIABILITIES |
|
|
|
---------- |
---------- |
|
| Short-term
loan |
|
|
6 |
161,784,900 |
350,050,000 |
|
| Running
finance under mark-up arrangement |
|
7 |
145,006,541 |
26,165,621 |
|
| Creditors,
accrued and other liabilities |
|
8 |
20,409,795 |
71,198,036 |
|
| Taxation - net |
|
|
|
- |
404,585 |
|
|
|
|
---------- |
---------- |
|
|
|
|
327,201,236 |
447,818,242 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
|
9 |
---------- |
---------- |
|
|
|
|
Rupees |
579,031,417 |
548,017,325 |
|
|
|
|
|
========== |
========== |
|
| FIXED
ASSETS --TANGIBLE |
|
|
|
| Operating
assets |
|
|
10 |
116,821,189 |
124,795,996 |
|
| LONG-TERM
LOANS |
|
|
11 |
1,217,357 |
725,885 |
|
| LONG-TERM
DEPOSITS |
|
|
|
393,900 |
340,900 |
|
| CURRENT ASSETS |
|
|
|
---------- |
---------- |
|
| Stocks |
|
|
12 |
142,714,584 |
121,448,469 |
|
| Trade debts |
|
|
13 |
220,418,240 |
223,936,019 |
|
| Loans,
advances, deposits, prepayments |
|
|
| and
other receivables |
|
|
14 |
19,864,775 |
24,201,493 |
|
| Cash
and bank balances |
|
|
15 |
77,601,372 |
52,568,563 |
|
|
|
|
---------- |
---------- |
|
|
|
|
460,598,971 |
422,154,544 |
|
|
|
|
---------- |
---------- |
|
|
Rupees |
579,031,417 |
548,017,325 |
|
|
|
|
========== |
========== |
|
| AUDITORS'
REPORT ANNEXED |
|
| These
accounts should be read with the annexed notes. |
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR ENDED 30 JUNE 1997 |
|
|
|
|
NOTE |
1996 |
1997 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| Net sales |
|
|
16 |
|
| Motorcycle |
|
|
337,691,920 |
405,583,593 |
|
| Complete
built-up units |
|
|
168,000 |
623,000 |
|
| Spare parts |
|
|
17,344,847 |
14,455,301 |
|
| Generators |
|
|
|
10,634,388 |
3,730,025 |
|
| Painting
Services |
|
|
565,421 |
1,350,007 |
|
|
|
|
---------- |
---------- |
|
|
|
|
366,404,576 |
425,741,926 |
|
| Cost
of goods sold |
|
17 |
267,765,965 |
325,383,192 |
|
|
|
|
---------- |
---------- |
|
| Gross profit |
|
|
|
98,638,611 |
100,358,734 |
|
| Selling
and administrative expenses |
|
18 |
51,287,276 |
50,917,934 |
|
|
|
|
---------- |
---------- |
|
| Operating
profit |
|
|
47,351,335 |
49,440,800 |
|
|
|
|
---------- |
---------- |
|
| Financial
charges |
|
19 |
(43,838,319) |
(51,353,469 |
|
| Other charges |
|
|
20 |
- |
(2,335,777) |
|
| Other
income-net |
|
21 |
2,658,043 |
4,177,012 |
|
| Workers'
Profit Participation Fund |
|
|
(308,553) |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
(41,488,829) |
(49,512,234) |
|
|
|
|
---------- |
---------- |
|
| Profit
/ (loss) before taxation |
|
|
5,862,506 |
(71,434) |
|
| Taxation
- current |
|
22 |
(1,834,796) |
(2,168,477) |
|
|
|
|
---------- |
---------- |
|
| Profit
/ (loss) after taxation |
|
|
4,027,710 |
(2,239,911) |
|
| Accumulated
loss brought forward |
|
(235,972,231) |
(233,732,320) |
|
|
|
|
---------- |
---------- |
|
| Accumulated
loss carried forward |
|
Rupees |
(231,944,521) |
(235,972,231) |
|
|
|
|
========== |
========== |
|
| These
accounts should be read with the annexed notes. |
|
|
|
|
| CASH
FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 1997 |
|
|
|
1997 |
1996 |
|
|
|
Rupees |
Rupees |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| Profit
/ (loss) before taxation |
|
5,862,506 |
(71,434) |
|
| Adjustment
of non-fund items: |
|
---------- |
---------- |
|
| Depreciation |
|
11,175,829 |
9,591,788 |
|
| Deferred
liability - gratuity |
|
412,495 |
25,757 |
|
| Financial
charges |
|
|
43,838,319 |
51,353,468 |
|
| Gain
on disposal of fixed assets |
|
|
(881,531) |
(443,183) |
|
|
|
|
---------- |
---------- |
|
|
|
|
54,545,112 |
60,527,830 |
|
|
|
|
---------- |
---------- |
|
| Operating
profit before working capital changes |
|
60,407,618 |
60,456,396 |
|
| Working
capital changes |
|
|
|
---------- |
---------- |
|
| Stocks |
|
|
|
(21,266,115) |
(19,698,338) |
|
| Trade debts |
|
|
3,517,779 |
(55,170,037) |
|
| Loans,
advances and deposits |
|
|
5,479,470 |
20,910,521 |
|
| Short-term
loans |
|
|
(188,265,100) |
71,239,000 |
|
| Running
finance |
|
|
118,840,920 |
21,933,456 |
|
| Creditors,
accrued and other liabilities |
|
|
(54,594,654) |
(15,720,687) |
|
|
|
|
---------- |
---------- |
|
|
|
|
(136,287,700) |
23,493,915 |
|
|
|
|
---------- |
---------- |
|
| Cash
generated from operations |
|
|
(75,880,082) |
83,950,311 |
|
|
|
|
---------- |
---------- |
|
| Financial
charges paid |
|
|
(40,031,906) |
(54,894,990) |
|
| Income
tax paid |
|
|
(3,382,133) |
(3,142,900) |
|
|
|
|
---------- |
---------- |
|
|
|
(43,414,039) |
(58,037,890) |
|
|
|
---------- |
---------- |
|
| Net
cash (used in)/from operating activities |
|
(119,294,121) |
25,912,421 |
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
| Fixed
assets additions |
|
(3,584,205) |
(11,277,703) |
|
| Capital
expenditure |
|
|
- |
(11,337,554) |
|
| Sale
proceed of fixed asset |
|
1,264,714 |
533,999 |
|
| Long-term
deposits |
|
(53,000) |
(423,436) |
|
| Long-term
loans |
|
(491,472) |
(36,750) |
|
|
|
---------- |
---------- |
|
| Net
cash (used in) investing activities |
|
(2,863,963) |
(22,541,444) |
|
|
|
---------- |
---------- |
|
|
|
(122,158,084) |
3,370,977 |
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
| Issuance
of shares |
|
146,329,860 |
- |
|
| Long-term
security deposits |
|
861,033 |
1,643,601 |
|
|
|
---------- |
---------- |
|
| Net
cash from investing activities |
|
147,190,893 |
1,643,601 |
|
|
|
---------- |
---------- |
|
|
|
25,032,809 |
5,014,578 |
|
| Cash
and bank at beginning of the year |
|
52,568,563 |
47,554,985 |
|
|
|
---------- |
---------- |
|
| Cash
and bank at the year end |
|
Rupees |
77,601,372 |
52,569,563 |
|
|
|
|
========== |
========== |
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED 30 JUNE 1997 |
|
|
| 1.
INTRODUCTION |
|
| 1.1.
The Company was incorporated in Pakistan as a public limited company and its
shares |
|
| are
quoted on the Karachi and Lahore Stock Exchanges. The Company is principally |
|
| engaged
in the manufacture, assembly and sale of Suzuki motorcycles, sale of Suzuki |
|
| brand
generators and also sale of spare parts. |
|
|
| 1.2.
The Company has accumulated losses of Rs. 231.945 million as at 30 June 1997
as |
|
| against
the issued, subscribed and fully paid-up share capital of Rs. 438.990 million |
|
| which
leaves a net equity of Rs. 212.977 million. Management has already imple- |
|
| mented
a plan of action, which is helping in improving the results of operations |
|
| considerably.
In view of the Company's pragmatic approach, towards improving its |
|
| results,
the Company during the year has earned a pretax profit of Rs. 5.863 million. |
|
| This
turnaround can also be viewed from the injection of further equity from the
parent |
|
| company,
which has significantly decreased its reliance on outside borrowing and |
|
| inturn
cut in financial charges. Accordingly these accounts have been prepared on a |
|
| going-concern
basis. |
|
|
| 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
| 2.1.
Accounting convention |
|
|
|
|
