| Atlas Battery Limited |
|
|
|
|
|
|
|
|
|
| Annual
Report 1998 |
|
|
|
| Contents |
|
|
| Company
Information |
|
| Notice
of Meeting |
|
| Five
Years at a Glance |
|
| Chairman's
Review |
|
| Graphic
Illustration |
|
| Directors'
Report |
|
| Auditors'
Report |
|
| Balance
Sheet |
|
| Profit
and Loss Account |
|
| Cash
Flow Statement |
|
| Notes
to the Accounts |
|
| Atlas
Group Companies |
|
|
|
| Pattern
of Shareholding |
|
|
|
|
|
| Company
Information |
|
|
| Chairman |
|
|
| Yusuf
H. Shirazi |
|
|
|
| Directors |
|
|
| Aitzaz
Shahbaz |
M. Iwai |
|
|
| M.
Habib-ur-Rahman |
Shahid Anwar |
|
| Iftikhar
H. Shirazi |
Vazeer Ali |
|
|
|
|
| Chief
Executive |
|
| Vazeer Ali |
|
|
|
| Secretary |
|
| M.
Atta Karim |
|
|
| General
Manager (Tech) |
|
| M.
Khalid Jilani |
|
|
| Chairman
Group Personnel Committee |
|
| Yusuf
H. Shirazi |
|
|
| Chairman
Group Audit Committee |
|
| Sanaullah
Qureshi |
|
|
| Auditors |
|
| Hameed
Chaudhri & Co. |
|
| (Chartered
Accountants) |
|
|
| Bankers |
|
| National
Bank of Pakistan |
|
| Muslim
Commercial Bank Limited |
|
| Credit
Agricole Indosuez |
|
| Bank
of Tokyo-Mitsubishi Limited |
|
|
| Registered
Office (Factory) |
|
| D/181,
Central Avenue, S.I.T.E., Karachi. |
|
|
| GROUP
EXECUTIVE COMMITTEE |
|
|
| Chairman |
|
| Yusuf
H. Shirazi |
|
|
|
| Members |
|
| Jawaid
Iqbal Ahmed |
|
| Frahim
Ali Khan |
|
| Iftikhar
H. Shirazi |
|
| Aamir
H. Shirazi |
|
| Saquib
H. Shirazi |
|
|
|
| Secretary |
|
| Amjad
Hussain |
|
|
|
|
| Notice
of Meeting |
|
|
| Notice
is hereby given that the Annual General Meeting of the Shareholders of the |
|
| Company
will be held at 2.00 p.m. on Thursday, December 17, 1998 at D-181, Central |
|
| Avenue,
SITE, Karachi, to transact the following business: |
|
|
| ORDINARY
BUSINESS |
|
| 1.
To confirm Minutes of the Last Annual General Meeting held on December 17,
1997. |
|
|
| 2.
To consider and adopt the audited accounts of the company for the year ended |
|
| June
30, 1998 together with the Directors' and Auditors' Report thereon. |
|
|
| 3.
To consider and approve the recommendation of Directors for payment of |
|
| dividend
at the rate of 30o/o (Rs. 3/- per share)for the year ended June 30, 1 998. |
|
|
| 4.
To appoint Auditors for the year 1998-99 and fro their remuneration. |
|
|
| 5.
To transact any other business with the permission of the Chair. |
|
|
| SPECIAL
BUSINESS |
|
| 6.
To approve the remuneration of the Chief Executive and the working Director. |
|
| A
statement under section 160 of the Companies Ordinance, 1984 pertaining to
the Special Business |
|
| referred
to above is annexed to this Notice of Meeting. |
|
|
|
|
|
By Order of the Board |
|
| Karachi:
November 06, 1998 |
|
Company Secretary |
|
|
| Notes: |
|
|
| i.
The Share Transfer Books of the Company will remain closed from December 07, |
|
| 1998
to December 17, 1998(both days inclusive). Transfers received in order at |
|
| the
registered office of the company by December 05, 1 998 will be in time for
the |
|
| purpose
of entitlement for payment of the dividend to the transferee. |
|
|
| ii.
A member entitled to attend and vote at the General Meeting is entitled to |
|
| appoint
another member as a proxy to attend and vote on his/her behalf. |
|
| Proxies
in order to be effective must be received at the Registered Office of the |
|
| Company
not less than 48 hours before the time appointed for meeting. |
|
|
| iii.
The members are requested to please communicate to the company any change |
|
| in
their mailing address immediately. |
|
|
| STATEMENT
UNDER SECTION 160 OF THE COMPANIES ORDINANCE 1984 REGARDING |
|
| SPECIAL
BUSINESS AS GIVEN IN THE NOTICE OF MEETING: |
|
|
| This
statement is annexed to the notice of the 32nd Annual General Meeting of the
shareholders of ~i |
|
| Atlas
Battery Limited to be held on December 17, ] 998 and sets out the material
facts concerning !!!~ |
|
| the
following Special Business to be transacted at the meeting for approval of
s]shareholders. i~ |
|
|
| REMUNERATION
OF CHIEF EXECUTIVE AND THE WORKING DIRECTOR |
|
|
| A
total amount ofRs. 6.0 million will be proposed as the aggregate remuneration
of the Chief |
|
| Executive
and the Working Director of the Company, in the form of following resolution: |
|
|
| "RESOLVED
that the Company hereby authorises the holding of offices of profit and
payment as |
|
| remuneration
to Mr. Vazeer All, Chief Executive and Mr. Iftikhar H. Shirazi, Working
Director, not |
|
| exceeding
in the aggregate Rs. 6.0 million per annum for the year ending June 30, 1999
together |
|
| with
other benefits as per Company policy" |
|
|
| The
Chief Executive and the Working Director are interested in the remuneration
payable to them. |
|
|
|
| Five
Years at a Glance |
|
|
|
|
(Rs. in million) |
|
|
|
|
|
|
1994 |
1995 |
1995-96 |
1996-97 |
1997-98 |
|
|
|
6 Months |
|
|
|
| STATISTICS |
|
| Sales |
|
260.41 |
121.97 |
339.58 |
366.10 |
438.63 |
|
| Gross
Profit |
|
66.84 |
29.31 |
76.79 |
73.89 |
9,295 |
|
| Profit
before tax |
|
23.89 |
8.57 |
27.22 |
18.18 |
31.46 |
|
| Profit
after tax |
|
15.84 |
5.22 |
18.33 |
10.64 |
21.09 |
|
| Paid
up share capital |
|
23.00 |
23.00 |
23.00 |
23.00 |
24.73 |
|
| Reserves
and unappropriated profit |
18.38 |
20.15 |
32.73 |
40.50 |
52.45 |
|
| Shareholders'
equity |
|
41.38 |
43.15 |
55.73 |
63.50 |
77.17 |
|
| Long
term debt |
|
14.33 |
14.05 |
12.58 |
10.90 |
10.94 |
|
| Fixed
assets - Net |
|
43.19 |
45.44 |
49.93 |
56.12 |
65.33 |
|
| Total
assets |
|
134.07 |
162.79 |
198.29 |
199.52 |
213.92 |
|
|
|
|
| DIVIDEND
(%) |
|
| Cash |
|
20.00 |
15.00 |
25.00 |
12.50 |
30.00 |
|
|
| Stock |
|
- |
- |
- |
7.50 |
- |
|
|
|
|
|
| RATIOS |
|
| Gross
Profit to Sales (%) |
25.67 |
24.03 |
22.61 |
20.18 |
21.19 |
|
| N.P.
before tax to Sales (%) |
9.17 |
7.03 |
8.01 |
4.97 |
7.17 |
|
| Return
on equity before tax (%) |
57.73 |
19.88 |
48.84 |
28.63 |
40.76 |
|
| Return
on equity after tax (%) |
38.28 |
12.10 |
32.89 |
16.76 |
27.33 |
|
| Earning
per share before tax (Rs,) |
10.38 |
3.73 |
11.83 |
7.90 |
12.72 |
|
| Earning
per share after tax (Rs.) |
6.89 |
2.27 |
7.97 |
4.63 |
8.53 |
|
| Breakup
value per share (Rs.) |
1 7.99 |
18.76 |
24.23 |
27.61 |
31.21 |
|
| Current
ratio |
|
1.27:1 |
1.24:1 |
1.17:1 |
1.17:1 |
1.21:1 |
|
|
|
| Chairman's
Review |
|
|
| It
gives me great pleasure to present to you |
|
|
| the
32nd Annual Report and review of the |
|
|
| performance
of your company for the year |
|
|
| ended
June 30, 1998. It is a matter of |
|
|
| satisfaction
that your company has |
|
|
|
| performed
better than last year. |
|
|
|
|
|
|
|
|
| THE ECONOMY |
|
|
|
| The
year under review was full of |
|
|
|
| challenges
on both the domestic and |
|
|
|
| international
fronts. On the domestic front, |
|
|
| the
country faced constitutional issues of |
|
|
| extraordinary
nature which affected the |
|
|
| flow
of normal economic activity. On the |
|
|
| international
front, foreign investments was |
|
|
| affected
-partly due to the internal |
|
|
| situation
and mainly due to the economic |
|
|
| crises
affecting Latin American, Russian |
|
|
| and
the South East Asian countries' |
|
|
|
| economies
resulting into the shying away |
|
| of
investment from the international capital |
|
| markets. |
|
|
|
|
|
| On
the other hand, Pakistan's economic |
|
| performance
over the last few years has |
|
| been
marked by a deceleration in economic |
|
| activity,
deterioration in budgetary and |
|
| current
account deficits and inflation. In |
|
| order
to reinvigorate economic growth the |
|
| Government
took some measures. It |
|
| introduced
economic reforms based on both |
|
| supply
and demand side economics. To |
|
| improve
revenue collection, general sales |
|
| tax
regime was relaunched at the retail level |
|
| which
partially increased the 'Tax Net'. The |
|
| effect
of these policy measures will however |
|
| take
some time to yield the desired results. |
|
|
|
|
| Towards
the year end, Pakistan opted for |
|
| nuclear
detonation on 28th May 1998 |
|
| following
India's nuclear tests on 11th May, |
|
| 1998.
It led to economic sanctions by the |
|
| developed
countries. The international loan |
|
| giving
agencies put their shutters down. |
|
| Consequently,
foreign currency accounts |
|
| were
frozen, rupee was devalued by 4.4%, |
|
| making
it 14.1%for the full fiscal year and |
|
| a
two-tier foreign exchange regime was |
|
| introduced. |
|
|
|
|
|
| Despite
the worsening situation, the |
|
| economic
indicators for the year were quite |
|
| satisfactory.
The GDP grew by 5.4% as |
|
| against
1.3% last year, agricultural sector |
|
| grew
by 5.9% and the manufacturing sector |
|
| by
7.0%. The large-scale manufacturing |
|
| sector
registered a growth of 6.2%. The |
|
| transport
and communication sector |
|
| recorded
a growth of 8.8%. Fixed |
|
| investment
increased by 6.5% and national |
|
| savings
increased to 15.0% of GNP from the |
|
| 11.3%
of last year. |
|
|
|
|
| ATLAS
GROUP PERFORMANCE |
|
|
|
|
| The
Atlas Group of which your company is |
|
|
| a
constituent member, jealously guards its |
|
|
| brand
equity which represents good |
|
|
|
| management
practices, ethical standards |
|
|
| and
quality of goods and services provided |
|
|
| to
its customers. The Group enjoys an |
|
|
| excellent
image in government, business |
|
|
| and
social circles, both nationally and |
|
|
| internationally. |
|
|
|
|
|
|
|
|
|
| The
Atlas Group is diversified and has |
|
|
| operations
in engineering, financial |
|
|
| services,
trading, office equipments and |
|
|
| information
technology. It consists of seven |
|
|
| public
limited companies quoted on the |
|
|
| stock
exchanges in Pakistan and eight |
|
|
| private
limited companies. Atlas |
|
|
|
| shareholders'
equity has grown to about |
|
|
| Rs.
2.5 billion over the years; assets have |
|
|
| increased
to over Rs. 8.0 billion, and sales |
|
|
| revenue
crossed the Rs. 8.0 billion mark. |
|
|
| The
Group paid taxes of Rs. 2.2 billion |
|
|
| being
27.5% of the total turnover of the |
|
|
| Group.
More than 50% of employees |
|
|
|
| numbering
2,700 pay taxes on their income |
|
|
| and wealth. |
|
|
|
|
|
|
|
|
|
|
| The
total paid up capital of the seven listed |
|
|
| companies
stood at Rs. 944.0 million and |
|
|
| free
reserves and surplus at Rs. 1.1 billion. |
|
|
| The
total equity of listed companies stood |
|
|
| at
Rs. 2.1 billion as at June 30, 1998. The |
|
|
| net
worth value of a Rs. 10 share works |
|
|
| out
at Rs. 21.8. Out of these seven |
|
|
|
| companies,
two companies have been |
|
|
|
| rated
'A+' and three 'A' by the credit rating |
|
|
| and
other evaluating agencies. |
|
|
|
|
|
|
|
|
| The
seven listed companies, set up at |
|
|
| different
times - the earliest in 1963 with |
|
|
| a
paid up capital of Rs. 2.0 million and the |
|
|
| latest
in 1993 with a paid up capital of |
|
| Rs.
400.0 million - have paid cash dividend |
|
| of
Rs. 287.0 million and bonus of Rs. 208.0 |
|
| million
(market value Rs. 435.0 million). |
|
|
|
|
| Your
Company was set up in 1968 with a |
|
| paid
up capital of Rs. 3.0 million which has |
|
| now
grown to Rs. 24.7 million. The total |
|
| equity
at Rs. 77.2 million include reserves |
|
| and
un-appropriated profit of Rs. 52.4 |
|
| million.
During this period the Company |
|
| issued
bonus shares of Rs. 11.7 million |
|
| (market
value Rs. 43.4 million at Rs. 37.0 |
|
| per
share) and paid cash dividend of |
|
| Rs,
33.7 million. |
|
|
|
|
|
| HUMAN
RESOURCES |
|
|
| Reliance
on human resource has been the |
|
| hallmark
of the Atlas Group since its |
|
| inception.
Investment on human resource |
|
| development
is considered a prudent |
|
| investment
for all times to come. Education, |
|
| training
and grooming of employees for |
|
| higher
positions is a normal feature with |
|
| the Group. |
|
|
|
|
|
|
| To
cope up with the growing needs of the |
|
| Group,
a permanent cell has been |
|
| established
at the Corporate Office for |
|
| human
resource development. A full time |
|
| Director
assists the Group Personnel |
|
| Committee
which is headed by the Group |
|
| President
and Chairman. The Committee |
|
| actively
works for improving staff service |
|
| rules,
staff compensation, and career |
|
| planning
to make them more competitive |
|
| and
attractive for the employees. |
|
| Compensation
based on Job evaluation |
|
| and
performance appraisal is now all the |
|
| more
a determining factor for the |
|
| performance
bonus and the employees |
|
| motivation. |
|
|
|
|
|
|
| BATTERY
INDUSTRY |
|
|
|
|
| In
order to face the fierce and unhealthy |
|
|
| competition
from the unorganized sector |
|
|
| arising
mainly out of smuggling, under- |
|
|
| invoicing
and replating, the organized |
|
|
| sector
reduced selling prices. Further, the |
|
|
| Government
in its economic package also |
|
|
| reduced
sales tax to 12.5% from 18.0%. |
|
|
| Thus
the reduction in selling prices and |
|
|
| tax
burden and the depleting value of |
|
|
| rupee,
rendered smuggling less attractive |
|
|
| and
gave boost to the organized market. |
|
|
| As
a result the demand in the organized |
|
|
| sector
increased by 12.0% as compared |
|
|
| to
6.0% decline in the previous year. |
|
|
|
|
|
|
|
| COMPANY
OPERATIONS |
|
|
|
|
| Your
company posted record sales of |
|
|
|
| Rs.
438.6 million for the year under review |
|
|
| against
Rs. 366.1 million of the preceding |
|
|
| year
- an increase of 19,8%. The volume |
|
|
| grew
by 23.0% compared to an industry |
|
|
| growth
of 12.0%. Quality of batteries |
|
|
| continued
to improve contributing to |
|
|
| greater
market acceptability and |
|
|
|
| consequently
improvement in market |
|
|
|
| share. |
|
|
|
|
|
|
|
|
|
|
| Gross
profit ratio improved to 21.2% as |
|
|
| against
20.2% of the last year despite |
|
|
| reduction
in the selling price of the |
|
|
| batteries.
The management emphasized |
|
|
| on
internal cost controls like cost reduction |
|
|
| through
material sourcing, better product |
|
|
| mix,
improvement in quality resulting in |
|
|
| lower
wastage and claims and also volume |
|
|
| increases.
Lower prices of major imported |
|
|
| raw
materials helped to lower the |
|
|
|
| manufacturing
cost and offset the effect |
|
|
| of
continuous devaluation of the Pak |
|
|
| Rupee,
Rise in fuel and electricity charges |
|
|
| resulted
in a general inflationary cost |
|
|
| push.
Administration, selling and |
|
|
|
| distribution
expenses for the year were |
|
|
|
| Rs.
52.4 million compared to Rs. 44.2 |
|
|
|
| million
in the preceding year. The expenses |
|
|
|
| as
a ratio to sales were contained at 11.9% |
|
|
|
| as
against 12.1% in the corresponding |
|
|
|
| year.
The financial expenses for the year |
|
|
|
| stood
at Rs. 8,6 million against Rs. 12.0 |
|
|
|
| million
in the previous year, showing a |
|
|
|
| reduction
of 28.6%, This was achieved |
|
|
|
| through
prudent cash and inventory |
|
|
|
| management.
Thus the net profit before tax |
|
|
|
| for
the year improved to Rs. 31.5 million |
|
|
|
| against
Rs. 18.2 million of the last year - |
|
|
|
| up
by 73.1%! |
|
|
|
|
|
|
|
|
|
| All
financial ratios for the year improved |
|
|
|
| as
compared to the previous year. The total |
|
|
|
| liabilities
to equity ratio improved to 64:36 |
|
|
|
| from
68:32 in the previous year and sales |
|
|
|
| to
total assets ratio improved to 2.1 times |
|
|
|
| from
1,8 of the last year. Your company |
|
|
|
| achieved
an ROE of 27.3% and EPS of |
|
|
|
| Rs,
8.5 after tax against ROE of16.8% and |
|
|
|
| EPS
of Rs. 4.6 in the previous year. |
|
|
|
|
|
|
|
|
| EXPORT |
|
|
|
|
|
| It
is a matter of great satisfaction that |
|
|
|
| Japan
Storage Battery Company Ltd., the |
|
|
|
| joint
venture partners, have recognized our |
|
|
|
| quality
as of international standard and |
|
|
|
| are
willing to assist us in exporting our |
|
|
|
| batteries.
I am pleased to say that your |
|
|
|
| company
has made its debut in the export |
|
|
|
| market
by exporting automotive and |
|
|
|
| motorcycle
batteries to Kuwait and |
|
|
|
| Sri Lanka. |
|
|
|
|
|
|
|
|
|
|
| EXPANSION |
|
|
|
|
|
| The
management of your company has |
|
|
|
| reviewed
the manufacturing facilities and |
|
|
|
| decided
to increase capacity by balancing, |
|
|
|
| modernization
and replacement of |
|
|
|
| equipment
to cater for the growing market |
|
|
| demand,
and improvement in efficiency, |
|
|
| productivity
and quality. The company has |
|
|
| obtained
a medium term loan and have |
|
|
| placed
orders for the machinery. This will |
|
|
| help
expand capacity to meet the demand. |
|
|
|
|
|
|
|
| FUTURE
OUTLOOK |
|
|
|
| I
foresee challenging times ahead. Low |
|
|
| economic
activity, rising cost, inflation, and |
|
|
| constant
rupee devaluation will require the |
|
|
| management
and staff to rise to the |
|
|
|
| occasion.
I am confident that your |
|
|
|
| management
and staff will keep up the |
|
|
| Atlas
tradition of coming forward |
|
|
|
| admirably
successful from these occasions. |
|
|
| We
rely on the 3S's, i.e. smart, speedy and |
|
|
| stable
company, and the 3E's, i.e. |
|
|
|
| economy,
efficiency and effectiveness to |
|
|
| meet
the challenges of the future. Our |
|
|
| hallmark
continues to be our reliance on |
|
|
| human
resource development through |
|
|
|
| education
and training. I thus hope that |
|
|
| the
next year's performance will be quite |
|
| satisfactory. |
|
|
|
|
(Great are those who do things, impossible) |
|
|
| ACKNOWLEDGEMENT |
|
| I
take this opportunity to thank the |
|
| members
of the Board of Directors, our |
|
| Japanese
partners, banks and financial |
|
| institutions,
for their guidance, help and |
|
| support
in managing the affairs of the |
|
| company. |
|
|
| I
also thank the CEO, his team and all the |
|
| staff
members and employees of the |
|
| company
for their dedicated efforts and |
|
| valuable
contribution. I especially thank |
|
| the
CBA for its positive role and |
|
| contribution. |
|
|
|
|
YUSUF H. SHIRAZI |
|
|
|
|
| Directors'
Report |
|
|
| The
Directors have pleasure in presenting 32nd Annual Report together with the
Audited Accounts |
|
| and
Auditors Report thereon for the year ended June 30, 1998. |
|
|
|
|
| Financial
results are as follows: |
|
Rs. in 000 |
|
|
|
1998 |
1997 |
|
| Profit
before taxation |
|
31,458 |
18,181 |
|
| Provision
for taxation |
|
|
|
| Current |
|
10,236 |
13,258 |
|
| Prior Year |
|
- |
1,280 |
|
| Deferred |
|
133 |
- |
|
|
|
---------- |
---------- |
|
|
|
10,369 |
7,538 |
|
|
|
---------- |
---------- |
|
| Profit
after tax |
|
21,089 |
10,643 |
|
| Unappropriated
profit brought forward |
|
777 |
734 |
|
|
|
---------- |
---------- |
|
|
|
21,866 |
11,377 |
|
|
|
|
|
| Appropriations: |
|
|
|
| Cash
Dividend |
|
7,417 |
2,875 |
|
| Reserve
for issue of Bonus Shares |
|
- |
1,725 |
|
| General
Reserve |
|
14,000 |
6,000 |
|
|
|
---------- |
---------- |
|
|
|
21,417 |
10,600 |
|
|
|
---------- |
---------- |
|
| Unappropriated
profit carried to Balance Sheet |
|
449 |
777 |
|
|
|
========== |
========== |
|
|
| DIVIDEND |
|
| The
Directors are pleased to recommend a cash dividend of 30% {Rs. 3/- per share)
on the paid |
|
