| Universal Leather & Footwear Industries Limited |
|
|
|
| Annual
Report 1997 |
|
|
|
| Contents |
|
| Corporate
Profile |
|
| Directors'
Report |
|
| Chairman's
Review |
|
| Notice
of Meeting |
|
| Auditors'
Report to the members |
|
| Balance
Sheet |
|
| Profit
& Loss Account |
|
| Statement
of Changes in Financial Position |
|
| Notes
to the Accounts |
|
| Pattern
of Shareholdings |
|
|
|
| Corporate
Profile |
|
|
| Board
of Directors |
|
| S.M.
Saleem |
|
| Chairman |
|
|
| Shakil
Ahmed |
|
| Chief
Executive |
|
|
| S.
Muhammad Naseem |
Muhammad Jamil |
|
| Shahid
Hussain |
Farrukh Hussain Sheikh |
|
| Akram
Mahmood |
|
|
| Auditors |
|
| M.
Yousuf Adil & Co. |
|
| Chartered
Accountants |
|
|
| Legal
Advisers |
|
| Mohsin
Tayebaly & Co. |
|
| Advocates
& Legal Consultants |
|
|
| Corporate
Secretary |
|
| Asif Ali |
|
|
| Bankers |
|
|
| Askari
Commercial Bank Ltd. |
|
| Bank
of America NT & SA |
|
| Habib
Credit & Exchange Bank Ltd. |
|
| Mashreq
Bank PSC |
|
| United
Bank Ltd. |
|
| American
Express Bank Ltd. |
|
| Faysal
Bank Ltd. |
|
| Muslim
Commercial Bank Ltd. |
|
| Standard
Chartered Bank Ltd. |
|
|
| Registered
& Corporate Office |
|
| Cavish
Court |
|
| A-35,
Block 7 & 8, |
|
| K.C.H.S.U. |
|
| Sharea
Faisal, |
|
| Karachi-75350 |
|
|
| Factories |
|
| Plot
No. 16, Sector 15, |
|
| Korangi
Industrial Area, |
|
| Karachi. |
|
|
| Hallokey
Road, |
|
| Kana
Kachha, |
|
| Lahore. |
|
|
|
| Directors'
Report To The Members |
|
|
| The
Directors of your company take pleasure in presenting their 29th Annual
Report |
|
| with
Audited Accounts of the Company together with Auditors' Report thereon for
the |
|
| year
ended June 30, 1997. |
|
|
| Profit
and Appropriations |
|
|
Rupees |
|
|
| Profit
before taxation |
|
29,367,202 |
|
| Provision
for taxation |
|
(1,433,643) |
|
|
---------- |
|
| Profit
after taxation |
|
27,933,559 |
|
| Balance
of unappropriated profit brought forward |
|
6,012,024 |
|
|
---------- |
|
|
33,945,583 |
|
| Proposed
Cash Dividend @ 25% |
|
10,000,000 |
|
| Transfer
to General Reserve |
|
20,000,000 |
|
|
---------- |
|
|
30,000,000 |
|
|
---------- |
|
| Unappropriated
Profit Carried Forward |
|
3,945,583 |
|
|
---------- |
|
| Earning
per share (after tax on 4,000,000 shares) |
|
6.98 |
|
|
|
|
| CHAIRMAN'S
REVIEW |
|
| The
directors of the Company endorse the contents of the Chairman's review which
is |
|
| deemed
to be a part of the Directors' report. |
|
|
| PATTERN
OF SHAREHOLDINGS |
|
|
| A
statement of pattern of shareholdings in the Company as at June 30, 1997 is
shown on |
|
| page 27 |
|
|
| AUDITORS |
|
|
| The
present Auditors of the Company retire and being eligible, offer their
services for |
|
| the
year 1997-98. |
|
| By
order of the Board |
|
|
|
| Chairman's
Review |
|
|
| It
gives me great pleasure to welcome you |
|
| to
29th Annual General Meeting of the |
|
| Company
and present the annual report for |
|
| the
performance for the year ended 30 June, |
|
|
| 1997.
The Directors' report and audited |
|
| accounts
for the year under review are |
|
| placed
before you. |
|
|
| OPERATING
RESULTS: |
|
|
| During
the current year your Company has |
|
|
| earned
operating profit of Rs. 69.107 million |
|
|
| as
compared to last year's profit of Rs.63.12 |
|
| million.
The profit from operation has |
|
| increased
9.48 %. Due to strict budgetary |
|
| control
the Company managed to reduce |
|
| the
cost of goods sold in spite of increase in |
|
| input
costs. This resulted in enhancement of |
|
|
| gross
profit from Rs.112.519 million to |
|
| Rs.121.426
million representing increase |
|
|
| from
12.38% to 13.67% over last year. Profit |
|
| available
for appropriation after taxation |
|
| increased
from Rs.27.105 million to |
|
| Rs.33.945
million which is a remarkable |
|
| achievement.
Although gross profit percent- |
|
| age
has increased, the efforts to also increase |
|
|
| sales
was extremely difficult because of |
|
| diversification
of markets and shift of |
|
| industry
from Europe to Far East. |
|
|
| Competition
is still extremely fierce domest- |
|
| ically
and internationally and shortage of |
|
| raw
hides has resulted in increase of prices |
|
| of
raw materials. The demand of finished |
|
| leather
faces consumers' resistance there- |
|
| fore
further increases in prices in Dollar |
|
| terms
are extremely difficult. |
|
|
| FUTURE
OUTLOOK |
|
|
| Because
of business friendly policies of the |
|
| present
government, reduction of import |
|
| duty
on chemicals, dyes and as well aboli- |
|
| tion
of import duty on raw hides, the indus- |
|
| try
in general expects to produce larger |
|
| quantities
for domestic consumption and as |
|
| well
for exports. |
|
|
| Reduction
in interest rates should also help |
|
| in
reducing financial burden and it is |
|
| expected
that your management could |
|
| maintain
and continue process of consolida- |
|
| tion.
Our target this year remains the same |
|
| i.e.
rationalization and consolidation rather |
|
| than
expanding. |
|
|
| STAFF
RELATIONS |
|
|
| The
Company continues to benefit from the |
|
| efforts
and dedication of all employees, I am |
|
| pleased
to record their appreciation. |
|
| Development
of management and staff rela- |
|
| tions
has a high priority in the Company. |
|
|
|
| Notice
of Annual General Meeting |
|
|
| Notice
is hereby given that the 29th Annual |
|
| General
Meeting of the shareholders of Universal |
|
| Leather
& Footwear Industries Limited will be |
|
| held
on 30 December, 1997 at 10.00 A.M. at |
|
| Registered
Office of the Company. Cavish Court |
|
| A-35,
Block 7 & 8, K.C.H.S.U., Sharea Faisal |
|
| Karachi
- 75350 to transact the following business: |
|
|
| ORDINARY
BUSINESS |
|
|
| 1.
To confirm minutes of 28th Annual General |
|
| Meeting. |
|
|
| 2.
To receive, consider Company's Accounts for |
|
| the
year ended 30 June, 1997 together with |
|
| the
Reports of the Auditors and Directors. |
|
|
| 3.
To appoint Auditors for the year ending 30 |
|
| June,
1998 and fix their remuneration. |
|
|
| 4.
To approve the payment of dividend as rec- |
|
| ommended
by the Directors. |
|
|
| 5.
To transact any other business with the per- |
|
| mission
of the chair. |
|
|
| SPECIAL
BUSINESS |
|
|
| 6.
To approve the revised remuneration of the |
|
| Chairman
and the Chief Executive. |
|
|
|
| NOTES |
|
|
| 1.
The share transfer books will be closed from |
|
| 23
December, 1997 to 30 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 on his / her |
|
| behalf.
Proxies in order to be valid must be |
|
| received
at the Registered Office of the |
|
| Company
not less than 48 hours before the |
|
| time
of meeting. |
|
|
| 3.
Shareholders are requested to promptly noti- |
|
| fy
the Company of any change in their |
|
| address. |
|
|
| Statement
under Section 160(1) (b) of the |
|
| Companies
Ordinance, 1984, being sent |
|
| with
the notice of the meeting. |
|
|
| 1.
To consider and approve the remuneration |
|
| payable
to the Chairman and the Chief |
|
| Executive
and in this respect to pass with or |
|
| without
modification, the following resolu- |
|
| tion
as an Ordinary Resolution. |
|
|
| "Resolved
that the monthly remuneration of |
|
| the
Chairman and the Chief Executive be |
|
| revised
to Rs. 100,000/-- each and the |
|
| Company
shall also bear the tax on above |
|
| remuneration,
exclusive of reimbursement of |
|
| utilities
and free use of Company maintained |
|
| car
for the year ending 30 June, 1998." |
|
|
|
| Auditors'
Report to the Members |
|
|
| We
have audited the annexed balance |
|
| sheet
of Universal Leather and |
|
| Footwear
Industries Limited as at June |
|
| 30,
1997 and the related profit and loss |
|
| account
and statement of changes in |
|
| financial
position (cash flow statement) |
|
| together
with the notes forming part |
|
| thereof,
for the year then ended on that |
|
| date
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 conformi- |
|
| ty
with the Companies |
|
| Ordinance,
1984 and are in |
|
| agreement
with the books |
|
| of
account and are further |
|
| in
accordance with account- |
|
| ing
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 dur- |
|
| ing
the year were in accor- |
|
| dance
with the objects of the |
|
| Company; |
|
|
| (c)
In our opinion and to the best of our |
|
| information
and according to the |
|
| explanation
given to us, the balance |
|
| sheet,
profit and loss account and |
|
| the
statement of changes in financial |
|
| position,
(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 |
|
| Company's
affairs as at June 30, |
|
| 1997
and of the profit and the |
|
| changes
in financial position 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. |
|
|
| Karachi: |
|
M. Yousuf Adil & Co. |
|
| Date:
08 December, 1997 |
|
Chartered Accountants |
|
|
|
| Balance
Sheet as at June 30, 1997 |
|
|
|
1997 |
1996 |
|
|
Note |
Rupees |
Rupees |
|
| Share
Capital and Reserves |
|
|
| Authorised
Capital |
|
| 10,000,000
Ordinary shares |
|
| of
Rs. 10/= each |
|
100,000,000 |
100,000,000 |
|
|
========== |
========== |
|
| Issued,
subscribed and paid up capital |
|
3 |
40,000,000 |
38,542,420 |
|
| Reserve
for issue of bonus shares |
|
|
-- |
1,457,580 |
|
| General
reserve |
|
4 |
120,000,000 |
100,000,000 |
|
| Unappropriated
profit |
|
3,945,583 |
6,012,024 |
|
|
---------- |
---------- |
|
|
163,945,583 |
146,012,024 |
|
|
| Deferred
liabilities |
|
|
| Taxation |
|
-- |
4,104,000 |
|
| Staff
retirement gratuity |
|
7,908,980 |
7,006,092 |
|
|
|
7,908,980 |
11,110,092 |
|
|
| Current
liabilities |
|
|
| Short
term borrowings |
|
5 |
366,844,953 |
332,312,979 |
|
| Creditors,
accrued and other |
|
|
|
| liabilities |
|
6 |
331,510,540 |
289,698,755 |
|
| Dividends |
|
7 |
10,037,417 |
9,673,022 |
|
| Taxation |
|
|
7,096,241 |
7,259,864 |
|
|
|
715,489,151 |
638,944,620 |
|
|
|
|
| Contingencies
and Commitments |
|
8 |
|
|
---------- |
---------- |
|
|
887,343,714 |
796,066,736 |
|
|
========== |
========== |
|
| The
annexed notes from 1 to 30 form an integral part of these accounts. |
|
|
| Fixed
Capital Expenditure |
|
|
| Operating
assets |
|
9 |
94,563,277 |
99,341,565 |
|
| Capital
work in progress |
|
10 |
3,113,802 |
-- |
|
|
|
---------- |
---------- |
|
|
|
97,677,079 |
99,341,565 |
|
| Long
Term Investments |
|
11 |
54,490,000 |
55,215,153 |
|
| Long
Term Advances |
|
12 |
1,174,781 |
1,286,336 |
|
| Long
Term Security Deposits |
|
|
118,090 |
118,090 |
|
|
|
|
|
| Current
Assets |
|
|
|
|
| Stores
and spares |
|
13 |
13,335,171 |
14,657,705 |
|
| Stock
in trade |
|
14 |
510,943,798 |
418,716,957 |
|
| Trade
debts |
|
15 |
124,748,688 |
123,068,479 |
|
| Loans
and advances |
|
16 |
36,402,913 |
34,641,104 |
|
| Deposits
and prepayments |
|
17 |
313,721 |
279,922 |
|
| Other
receivables |
|
18 |
24,389,858 |
39,083,237 |
|
| Cash
and bank balances |
|
19 |
23,749,615 |
9,658,188 |
|
|
---------- |
---------- |
|
|
733,883,764 |
640,105,592 |
|
|
---------- |
---------- |
|
|
887,343,714 |
796,066,736 |
|
|
========== |
========== |
|
|
| Profit & Loss Account for
the |
|
| Year
Ended June 30, 1997 |
|
|
1997 |
1996 |
|
|
Note |
Rupees |
Rupees |
|
|
| Sales |
|
20 |
888,016,798 |
908,652,466 |
|
| Cost
of goods sold |
|
21 |
766,590,664 |
796,132,774 |
|
|
|
---------- |
---------- |
|
| Gross
profit |
|
121,426,134 |
112,519,692 |
|
|
| Operating
expenses |
|
| Selling |
|
22 |
35,021,458 |
34,576,135 |
|
| Administration |
|
23 |
17,297,334 |
14,818,597 |
|
|
|
52,318,792 |
49,394,732 |
|
|
---------- |
---------- |
|
| Operating
profit |
|
69,107,342 |
63,124,960 |
|
| Other
income |
|
24 |
847,387 |
375,967 |
|
|
|
---------- |
---------- |
|
|
|
69,954,729 |
63,500,927 |
|
|
|
|
|
| Financial
charges |
|
25 |
39,027,316 |
34,722,892 |
|
| Workers'
profit participation fund |
|
1,560,211 |
1,447,973 |
|
|
---------- |
---------- |
|
|
40,587,527 |
36,170,865 |
|
|
---------- |
---------- |
|
| Profit
before taxation |
|
29,367,202 |
27,330,062 |
|
|
| Provision
for taxation |
|
| Current |
|
(7,096,241) |
(7,610,249) |
|
| Prior
Years |
|
1,558,598 |
702,787 |
|
| Deferred |
|
4,104,000 |
-- |
|
|
---------- |
---------- |
|
|
(1,433,643) |
(6,907,462) |
|
|
---------- |
---------- |
|
| Net
profit after taxation |
|
27,933,559 |
20,422,600 |
|
|
| Unappropriated
profit brought forward |
|
6,012,024 |
6,682,609 |
|
|
---------- |
---------- |
|
| Profit
available for appropriation |
|
33,945,583 |
27,105,209 |
|
|
| Appropriations |
|
| Proposed
dividend @25% (1996 @25%) |
|
10,000,000 |
9,635,605 |
|
| Proposed
issue of bonus shares NIL (1996 - 3.78%) |
|
- |
1,457,580 |
|
| Transferred
to general reserve |
|
20,000,000 |
10,000,000 |
|
|
---------- |
---------- |
|
|
30,000,000 |
21,093,185 |
|
|
---------- |
---------- |
|
| Unappropriated
profit carried forward |
|
3,945,583 |
6,012,024 |
|
|
========== |
========== |
|
| The
annexed notes from 1 to 30 form an integral part of these accounts. |
|
|
|
| Statement
of Changes in Financial Position |
|
| (Cash
Flow Statement) |
|
| for
the Year Ended June 30, 1997 |
|
|
|
1997 |
1996 |
|
|
Rupees |
Rupees |
|
|
| A.
CASH USED IN OPERATING ACTIVITIES |
|
|
| Profit
before taxation |
|
29,367,202 |
27,330,062 |
|
| Adjustment
for: |
|
| Depreciation |
|
10,375,067 |
10,905,459 |
|
| Financial
Charges |
|
39,027,316 |
34,722,892 |
|
| Provision
for diminution in |
|
|
|
| value
of investments |
|
(887,Z 7) |
(2,712,810) |
|
| Gain
on sale of investments |
|
837,405 |
3,431,270 |
|
| Gain/(Loss)
on sale of fixed assets |
|
33,463 |
(154,474) |
|
| Provision
of gratuity |
|
1,512,530 |
2,160,832 |
|
| Payment
of gratuity |
|
(609,642) |
(591,281) |
|
| Provision
for obsolete and slow |
|
|
|
| moving
stores and stock |
|
256,777 |
680,308 |
|
|
---------- |
---------- |
|
|
50,545,679 |
48,442,196 |
|
| Operating
profit before working |
|
---------- |
---------- |
|
| capital
changes |
|
79,912,881 |
75,772,258 |
|
|
| Changes
in Working Capital |
|
|
| (Increase)
/ decrease in Current Assets |
|
| Stores
and spares |
|
1,229,285 |
(16,502) |
|
| Stock
in trade |
|
(92,390,369) |
(114,078,334 |
|
| Trade
debtors |
|
(1,680,209) |
(23,666,481 |
|
| Loans
and advances |
|
(1,591,039) |
23,852,715 |
|
| Deposits
and prepayments |
|
(33,799) |
264,272 |
|
| Other
receivables |
|
14,693,379 |
1,246,976 |
|
|
| Increase
/ (decrease) in current liabilities |
|
| Creditors,
accrued and other liabilities |
|
45,315,253 |
68,618,567 |
|
|
---------- |
---------- |
|
|
(34,457,499) |
(43,778,787) |
|
---------- |
---------- |
|
| Cash
generated from operations |
|
45,455,382 |
31,993,471 |
|
|
---------- |
---------- |
|
| Taxes paid |
|
(5,872,036) |
(5,564,056) |
|
| Financial
charges paid |
|
(42,530,784) |
(35,299,110) |
|
|
---------- |
---------- |
|
| Net
cash used in operating activities |
|
(2,947,438) |
(8,869,695) |
|
|
---------- |
---------- |
|
|
|
1996 |
1997 |
|
|
Rupees |
Rupees |
|
| B.
CASH USED IN INVESTING ACTIVITIES |
|
|
| Fixed
capital expenditure |
|
(8,969,771) |
(23,824,840) |
|
| Proceeds
from disposal of fixed assets |
|
225,727 |
456,043 |
|
| Proceeds
form disposal of investment |
|
774,985 |
5,504,000 |
|
| Long
Term Advances |
|
111,555 |
(704,164) |
|
|
---------- |
---------- |
|
| Net
cash used in investing activities |
|
(7,857,504) |
(18,568,961) |
|
---------- |
---------- |
|
| C.
CASH FROM FINANCING ACTIVITIES |
|
| Increase
in short term borrowings |
|
34,531,974 |
34,716,570 |
|
| Payment
of dividend |
|
(9,635,605) |
(10,803,857) |
|
| Net
cash from financing activities |
|
24,896,369 |
23,912,713 |
|
|
|
|
| Net
Increase / (decrease) in cash and |
|
|
|
| cash
equivalents (A + B + c) |
|
14,091,427 |
(.3,525,943) |
|
|
|
|
| Cash
and cash equivalent at the |
|
|
|
| beginning
of the year |
|
9,658,188 |
13,184,131 |
|
