| ZULFEQAR INDUSTRIES LIMITED |
|
|
|
|
|
|
|
|
|
| ANNUAL
REPORT 1996-97 |
|
|
|
| Contents |
|
| BOARD
OF DIRECTORS |
|
| NOTICE OF MEETING |
|
| REPORT OF DIRECTORS |
|
| AUDITORS'
REPORT |
|
| BALANCE SHEET |
|
| PROFIT AND LOSS ACCOUNT |
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| NOTES
TO THE ACCOUNTS |
|
| FORM -
34 |
|
|
|
|
|
| HI-LANDER
SOAPS (PVT) LIMITED |
|
| REPORT OF DIRECTORS |
|
| AUDITORS' REPORT |
|
| BALANCE SHEET |
|
| PROFIT AND LOSS ACCOUNT |
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| NOTES
TO THE ACCOUNTS |
|
|
|
| Board
of Directors |
|
|
| SYED
WAJID ALl |
Chairman |
|
|
|
| SYED
ASAD ALl |
Managing Director |
|
|
| SYED
SHAHID ALl |
|
| BEHRAM
HASAN |
|
| SHABBIR
A. FEROZPURWALA |
|
| S.
QAMAR ALl ZAIDI |
|
| S.
FERIEL RIFAAT ALl |
|
|
| COMPANY
SECRETARY |
|
| MUHAMMAD
RASHEED |
|
|
| AUDITORS |
|
| TASEER
HADI KHALID & CO. |
|
| CHARTERED
ACCOUNTANTS |
|
| KARACHI |
|
|
| REGISTERED
OFFICE |
|
| KANDAWALA
BUILDING |
|
| M.A.
JINNAH ROAD |
|
| KARACHI-74400 |
|
|
| BANKERS |
|
| MUSLIM
COMMERCIAL BANK LTD.- KARACHI |
|
|
| LEGAL
ADVISOR |
|
| HUSSAIN
AND HAlDER-KARACHI |
|
|
| FACTORY |
|
| LINK
HALl ROAD, HYDERABAD-71900 |
|
|
|
| Notice
of Meeting |
|
|
| NOTICE
IS HEREBY GIVEN that the Thirty-seventh Annual General Meeting of Zulfeqar |
|
| Industries
Limited will be held at Beach Luxury Hotel, Moulvi Tamizuddin Khan Road,
Karachi, |
|
| on
Saturday 27th December 1997 at 5.00 p.m. to transact the following business. |
|
|
| 1.
To confirm the minutes of the Thirty-sixth Annual General Meeting held on 21
st |
|
| December
1996. |
|
|
|
|
| 2.
To receive and consider the statement of accounts for the year ended 30th
June |
|
| 1997,
the report of Auditors and Directors thereon. |
|
|
| 3.
To appoint Auditors' and fix their remuneration. |
|
|
| 4.
To transact any other ordinary business with the permission of the Chair. |
|
|
| Karachi |
|
|
By Order of the Board |
|
| November
28, 1997 |
|
|
|
|
|
|
|
|
(Muhammad Rasheed) |
|
|
|
Company Secretary |
|
|
| NOTES: |
|
|
| i)
The Share Transfer Books of the Company for the purpose of this Annual
General |
|
| Meeting
will remain closed from 21st December 1997 to 27th December 1997 (both |
|
| days
inclusive). |
|
|
|
|
| ii)
A member entitled to attend and vote at the Annual General Meeting is also
entitled |
|
| to
appoint another member as proxy to attend and vote instead of him. |
|
|
| iii)
The instrument appointing proxy must be received at the Registered Office of
the |
|
| Company
not less than 48 hours before the time appointed for the meeting. |
|
|
|
| Report
of Directors to the Shareholders |
|
|
| The
directors of your company feel pleasure in placing before you the Audited
Accounts and |
|
| Audit
Report for the year ended 30 June 1997. |
|
|
| The
profit & (loss) and appropriation for the year are as follows: |
|
|
|
|
(Rupee in '000) |
|
|
| Operational
loss for the year |
|
(7,706) |
|
| Add:
Other Income |
|
3,606 |
|
|
|
|
---------- |
|
| Loss
before tax |
|
(4,100) |
|
| Less:
Provision for taxation |
|
2,153 |
|
|
|
|
---------- |
|
| Loss
after taxation |
|
(6,253) |
|
| Accumulated
loss brought forward |
|
(4,469) |
|
|
|
|
---------- |
|
| Accumulated
loss carried forward |
|
(10,722) |
|
|
|
|
========== |
|
|
| Depressed
economic and trading environments during the year adversely affected our |
|
| business.
The resulting reduction in volume led us to suffer loss of Rs. 4.1 million
compared to |
|
| a
profit of Rs. 16.061 million earned in the previous period of 18 months.
Sales went down |
|
| considerably
in the second half of the year mainly due to dramatic increase in smuggling
of |
|
| toilet
soaps at unprecedented large scale and its easy availability throughout the
country at |
|
| much
cheaper rates. The situation was further augmented with "lesser money in
the market" |
|
| syndrome
coupled with economic and political instability prevailing in the country. |
|
|
| Reduction
in tariffs announced by the government in April 1997, made us possible to
lower |
|
| selling
prices of all our brands of toilet soaps. The benefit of lower tariff rates
was fully passed |
|
| on
to the consumer. However, the combined efforts of the Government and the
Industry failed |
|
| to
produce any positive change in the market. |
|
|
| The
company had to spend more on advertising this year, owing to the revamped
launch of |
|
| our
main brand, Capri, and to counter the growing competition as the
multinationals continued |
|
| to
advertise aggressively. |
|
|
| The
operations at Hi-Lander Soaps (Pvt.) Limited, Mirpur, Azad Kashmir were
suspended on |
|
| 19
November 1996 after our failure to get the withdrawal of Education Cess
levied by the |
|
| Government
of Azad Kashmir. It is unlikely that the operations are re-started in near
future. |
|
| The
net asset value of investment by the company is Rs. 4.109 million as against
the cost of |
|
| Rs.
3 million. The Company is reviewing the possibility of disposal of assets of
Hi-Lander |
|
| Soaps
(Private) Limited including the transfer of plant and machinery to the
company. |
|
|
| In
order to expand Company's Business, some development activities have been
underway |
|
| and
are at the final stage. The Company will therefore be launching some new
products in |
|
| very
near future. |
|
|
| Trade
Marks of Capri, Sandaleen and Fantasy used by your Company under licence from |
|
| Treet
Corporation Limited have been agreed to be transferred to your Company at a
nominal |
|
| price
of one lac in addition to License fee aggregating Rs. 19.574 million already
paid during |
|
| the
period 1-4-1981 to 30-6-1996. |
|
|
| Treet
Corporation Limited also agreed to off load its 52% holding in the company by
way of |
|
| selling
it to Syed Asad Ali and his family members at a price of Rs. 12/- per share.
The Board |
|
| of
Directors of Treet Corporation Limited has agreed to the sale subject to
approval of its |
|
| members
at General Meeting. |
|
|
| The
company has discontinued its joint selling arrangements with Treet
Corporation Limited |
|
| effective
1st August 1997 and the selling operations are now undertaken jointly with
Wazir Ali |
|
| Industries
Limited. |
|
|
| We
would like to express our appreciation for the efforts and dedication of all
employees of |
|
| the
company which enabled us to run the company efficiently during the period. |
|
|
| The
present auditors Taseer Hadi Khalid & Co. Chartered Accountants retire
and being |
|
| eligible
offer themselves for re-appointment as auditors of the company on a
remuneration to |
|
| be
fixed by you. |
|
|
| A
statement showing the pattern of shareholding in the company as at June 30,
1997 is |
|
| presented
on Page 25. |
|
|
| Karachi: |
|
Syed Asad Ali |
S. Feriel Rifaat Ali |
|
| 28
November 1997 |
Chief Executive |
Director |
|
|
|
| Auditors'
Report to the Members |
|
|
| We
have audited the annexed balance sheet of Zulfeqar Industries Limited as at
30th June |
|
| 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 explanation which to the best of our
knowledge and |
|
| belief
were necessary for the purpose 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 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 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 respectively |
|
| give
a true and fair view of the state of the company's affairs as at 30 June 1997
and of |
|
| the
loss 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: |
|
|
Taseer Hadi Khalid &
Co. |
|
| 28
November 1997 |
|
Chartered Accountants |
|
|
| Balance
Sheet |
|
| As
at 30 June 1997 |
|
|
|
Note |
30 June |
30 June |
|
|
|
1997 |
1996 |
|
|
|
|
|
(Rupees in '000) |
|
|
|
|
| FIXED
CAPITAL EXPENDITURE |
|
3 |
23,737 |
22,137 |
|
| TRADE
MARK -at cost |
|
|
371 |
371 |
|
| LONG
TERM DEPOSITS |
|
4 |
699 |
918 |
|
| LONG
TERM INVESTMENT |
|
5 |
3,000 |
3,000 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
---------- |
---------- |
|
| Stores
and spares |
|
6 |
5,327 |
5,331 |
|
| Stock-in-trade |
|
7 |
106,202 |
59,208 |
|
| Trade
debtors-unsecured considered good |
8 |
12,335 |
19,921 |
|
| Advances,
deposits, prepayments |
|
|
|
| and
other receivables |
|
9 |
30,998 |
38,111 |
|
| Cash
& Bank Balances |
|
10 |
3,782 |
5,828 |
|
|
|
|
---------- |
---------- |
|
|
|
|
158,644 |
128,399 |
|
| CURRENT
LIABILITIES |
|
|
|
---------- |
---------- |
|
| Current
maturity of finance lease |
|
|
- |
966 |
|
| Finance
under mark-up-arrangement -secured |
11 |
57,579 |
42,579 |
|
| Short
term morabaha finance-secured |
|
12 |
3,000 |
8,000 |
|
| Due
to holding company |
|
13 |
19,732 |
19,069 |
|
| Creditors,
accrued expenses and other liabilities |
14 |
60,489 |
32,158 |
|
| Provision
for taxation |
|
15 |
2,560 |
2,550 |
|
| Dividend
payable |
|
|
- |
3,000 |
|
|
|
|
---------- |
---------- |
|
|
|
|
143,360 |
108,322 |
|
|
|
|
---------- |
---------- |
|
| NET
CURRENT ASSETS |
|
|
15,284 |
20,077 |
|
|
|
|
---------- |
---------- |
|
| NET ASSETS |
|
|
43,091 |
46,503 |
|
|
|
|
========== |
========== |
|
| FINANCED
BY: |
|
|
|
|
|
|
| SHARE
CAPITAL |
|
16 |
20,000 |
20,000 |
|
| REVENUE
RESERVES |
|
|
6,000 |
6,000 |
|
| ACCUMULATED
LOSS |
|
|
(10,722) |
(4,469) |
|
|
|
|
---------- |
---------- |
|
| SHARE
HOLDERS' EQUITY |
|
|
15,278 |
21,531 |
|
| SURPLUS
ON REVALUATION OF |
|
|
|
|
| FIXED
ASSETS |
|
17 |
16,519 |
16,519 |
|
| DEFERRED
LIABILITIES |
|
18 |
11,294 |
8,453 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
19 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
43,091 |
46,503 |
|
|
|
|
========== |
========== |
|
|
|
|
| These
accounts should be read in conjunction with the attached notes |
|
|
| Karachi: |
|
Syed Asad Ali |
S. Feriel Rifaat Ali |
|
| 28
November 1997 |
Chief Executive |
Director |
|
|
|
| Profit
and Loss Account |
|
| For
the year ended 30 June 1997 |
|
|
|
Note |
Year ended |
Eighteen |
|
|
|
30 June |
months |
|
|
|
1997 |
period ended |
|
|
|
30 June |
|
|
|
1996 |
|
|
|
|
|
|
(Rupees in '000) |
|
|
|
|
| Sales - Net |
|
20 |
502,324 |
752,346 |
|
| Cost
of Goods Sold |
|
21 |
452,609 |
664,325 |
|
|
|
|
---------- |
---------- |
|
| Gross
profit |
|
|
49,715 |
88,021 |
|
|
|
|
---------- |
---------- |
|
| Administrative
expenses |
|
22 |
7,421 |
11,202 |
|
| Selling
and distribution expenses |
|
23 |
38,755 |
43,990 |
|
| Financial
expenses |
|
24 |
11,245 |
17,498 |
|
| Workers'
profit participation fund |
|
|
- |
845 |
|
|
|
|
---------- |
---------- |
|
|
|
|
57,421 |
73,535 |
|
| Operating
profit/(loss) |
|
|
(7,706) |
14,486 |
|
| Other
income |
|
25 |
3,606 |
1,575 |
|
| Profit/(loss)
before taxation |
|
|
(4,100) |
16,061 |
|
|
|
|
---------- |
---------- |
|
| Provision
for taxation |
|
|
|
| Current |
|
2,560 |
3,824 |
|
| Prior |
|
|
|
(3) |
- |
|
| Deferred |
|
|
|
(404) |
(1,029) |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
2,153 |
2,795 |
|
|
|
|
|
---------- |
---------- |
|
| Profit/(loss)
after taxation |
|
(6,253) |
13,266 |
|
| Proposed
cash dividend 1997 NIL (1996:15%) |
|
- |
(3,000 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
(6,253) |
10,266 |
|
|
|
|
|
---------- |
---------- |
|
| Accumulated
(loss) brought forward |
|
(4,469) |
(14,735 |
|
|
|
|
|
---------- |
---------- |
|
| Accumulated
(loss) carried forward |
|
(10,722) |
(4,469 |
|
|
|
|
|
========== |
========== |
|
|
| These
accounts should be read in conjunction with the attached notes. |
|
|
| Syed
Asad Ali |
|
S. Feriel Rifaat Ali |
|
| Chief
Executive |
|
Director |
|
|
|
| Statement
of Changes in Financial Position |
|
| For
the year ended 30 June 1997 |
|
|
|
|
Year ended |
Eighteen |
|
|
|
30 June |
month period |
|
|
|
1997 |
ended 30 |
|
|
|
|
June 1996 |
|
|
|
|
(Rupees in '000) |
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
| Profit/(Ioss)
before taxation |
|
|
(4,100) |
16,061 |
|
|
|
|
|
|
|
| Adjustment
for |
|
|
|
---------- |
---------- |
|
| Mark-up
expense |
|
|
|
6,721 |
11,965 |
|
| Depreciation |
|
|
|
2,881 |
4,025 |
|
| Provision
for gratuity |
|
|
|
1,841 |
2,308 |
|
| Gain
on disposal of fixed assets |
|
|
(310) |
(424) |
|
| Dividend
income |
|
|
|
(3,000) |
- |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
8,133 |
17,874 |
|
|
|
|
|
---------- |
---------- |
|
| Operating
profits/(Ioss) before working capital changes |
4,033 |
33,935 |
|
|
|
|
| (Increase)/decrease
in operating assets |
|
---------- |
---------- |
|
| Stores
and spares |
|
4 |
(649) |
|
| Stock
in trade |
|
(46,994) |
5,924 |
|
| Trade
debtors |
|
7,586 |
(8,051) |
|
| Advances,
prepayments and other receivables |
|
7,705 |
(11,723) |
|
|
|
---------- |
---------- |
|
|
|
(31,699) |
(14,499) |
|
|
|
|
|
| (Increase)/decrease
in operating liabilities |
|
---------- |
---------- |
|
| Creditors,
accrued expenses and other liabilities |
28,546 |
(19,882) |
|
| Due
to holding company |
|
2,080 |
12,453 |
|
|
|
---------- |
---------- |
|
|
|
30,626 |
(7,429) |
|
|
|
---------- |
---------- |
|
| Cash
generated from operations |
|
2,960 |
12,007 |
|
|
|
---------- |
---------- |
|
| Income
tax paid |
|
|
|
(139) |
(11,776) |
|
| Gratuity
paid |
|
|
|
(13) |
(239) |
|
| Mark-up
paid |
|
|
|
(6,936) |
(11,635) |
|
| Dividend
paid |
|
|
|
(3,000) |
- |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
(10,088) |
(23,650 |
|
|
|
|
|
---------- |
---------- |
|
| Net
cash flows from operating activities |
|
(7,128) |
(11,643 |
|
|
|
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
---------- |
---------- |
|
| Investment |
|
- |
(3,000) |
|
| Fixed
capital expenditure |
|
(5,174) |
(2,257) |
|
| Sale
proceeds of fixed assets |
|
1,003 |
3,645 |
|
| Long
term deposits |
|
219 |
1,486 |
|
|
|
---------- |
---------- |
|
| Net
cash flows from investing activities |
|
(3,952) |
(126) |
|
|
|
========== |
========== |
|
|
|
|
Year ended |
Eighteen |
|
|
|
30 June |
month period |
|
|
|
1997 |
ended 30 |
|
|
|
|
June 1996 |
|
|
|
(Rupees in '000) |
|
|
|
|
|
|
|
| CASH
FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
---------- |
---------- |
|
| Morahaba
financing |
|
|
|
(5,000) |
500 |
|
| Repayment
of lease liability - net |
|
|
(966) |
(1,838) |
|
|
|
|
|
---------- |
---------- |
|
| Net
cash flows from financing activities |
|
(5,966) |
(1,338) |
|
|
|
|
|
---------- |
---------- |
|
| Net
increase in cash and cash equivalents |
|
(17,046) |
(13,107) |
|
| Cash
and cash equivalents at the beginning of the year |
(36,751) |
(23,644) |
|
|
|
|
|
---------- |
---------- |
|
| Cash
& cash equivalents at the end of the year |
|
(53,797) |
(36,751) |
|
| NOTE: |
|
|
|
| CASH
AND CASH EQUIVALENTS |
|
|
|
| Cash
and bank balances |
|
|
|
3,782 |
5,828 |
|
| Finance
under mark-up arrangements |
|
|
(57,579) |
(42,579) |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
(53,797) |
(36,751) |
|
|
|
========== |
========== |
|
|
|
|
|
| Syed
Asad Ali |
|
S. Feriel Rifaat Ali |
|
| Chief
Executive |
|
Director |
|
|
|
| Notes
to the Accounts |
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| For
the year ended 30 June 1997 |
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| 1.
STATUS AND NATURE OF BUSINESS |
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| The
company was incorporated in February 1960 as private limited company and |
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| subsequently
converted as a public limited company in November 1986 and was listed |
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| on
Karachi Stock Exchange and Lahore Stock Exchange in December 1986 & 1987 |
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| respectively.
The company is a subsidiary of Treat Corporation Limited which holds |
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| 52.03
percent of its shares. The principal activity of the company is manufacture
and |
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| sale
of toilet and washing soaps. |
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| 2.
ACCOUNTING POLICIES |
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| The
significant accounting policies are summarized as follows: |
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| 2.1
Accounting convention |
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| These
accounts have been prepared under the historical cost convention except |
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| to
the extent that certain fixed assets as stated in note 3.1 are shown at
revalued |
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| amount. |
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| 2.2
Staff retirement benefits |
|
| (a)
Staff gratuity |
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| The
company operates an unfunded gratuity scheme and provision is made |
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| annually
to cover the obligations under the scheme. |
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| (b)
Provident fund |
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| A
recognized provident fund scheme is in operation which covers all |
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| permanent
employees who have completed 3 months service and have |
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| been
issued confirmation letters. Equal contributions are made monthly |
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| both
by the company and the employees in accordance with the value of |
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| the
scheme at 10% of basic pay. |
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|
| (c)
Retirement benefits |
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| Retirement
benefits are calculated with reference to last drawn salary and |
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| prescribed
qualifying period of service of the employee. Amounts are |
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| charged
to profit and loss account as and when paid. |
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| 2.3
Taxation |
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| a) Current |
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| The
charge for current taxation is based on taxable income at the current |
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| rates
of taxation after taking into account applicable tax credits and tax |
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| rebates
available, if any. |
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| b) Deferred |
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| Deferred
taxation is provided using the liability method on all major timing |
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| differences.
However, deferred tax debits are not accounted for. |
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| 2.4
Fixed assets |
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| - Owned |
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|
|
|
| (a)
Fixed assets including all additions are carried at cost or revaluation |
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