| THE GENERAL TYRE AND RUBBER |
|
|
|
|
|
|
|
|
|
| COMPANY
OF PAKISTAN LIMITED |
|
| ANNUAL
REPORT 1998 |
|
|
|
|
| CONTENTS |
|
| Company
Profile |
|
| Notice
of Meeting |
|
| Chairman's
Review |
|
| Directors'
Report to the Shareholders |
|
| Five
Years at a Glance |
|
| Graphic
Illustrations |
|
| Auditors'
Report to the Members |
|
| Balance
Sheet |
|
| Profit
& Loss Account |
|
| Cash
Flow Statement |
|
| Notes
to the Accounts |
|
| Pattern
of Shareholding |
|
|
|
| COMPANY
PROFILE |
|
|
| Board
of Directors |
|
| Raza
Kuli Khan Khattak |
|
| Chairman |
|
|
| Dr.
A.S. Mufti |
|
| Chief
Executive |
|
|
| Brig.
(Ret'd) Mahmud Jan |
|
| Ahmed
Kuli Khan Khattak |
|
| Humayaun
S. Mufti |
|
| Chaudhry
Sher Mohammad |
|
| Adnan
Ahmed All |
|
| lrfan
Siddiqui |
|
| Abdulazim
Mohammad Ali A1-Shamali (Tasnimul Haq Farooqui - Alternate Director) |
|
| Shahid
Ghaffar |
|
| Razi-ur-Rehman
Khan |
|
| David
R. Johnson |
|
| Dr.
J. Mispagel (Technical) |
|
|
| Secretary |
|
| Chaudhry
Sher Mohammad |
|
|
| Major
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
Generals The French and International Bank |
|
| Bank
A1-Habib Limited |
|
| ANZ
Grindlays Bank |
|
| Askari
Commercial Bank Limited |
|
|
| 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: 5080172-82 |
|
|
| Head
Office |
|
| P
& O Plaza, I. I. Chundrigar Road, Karachi. |
|
| Phone:
2417571-4 Fax: 2430662, 2418781 |
|
|
| Branch
Offices |
|
|
| Lahore: |
|
| Gardee
Trust Building, Thornton Road, Lahore. |
|
| Phone:
7352663, 7313852 Fax: 7235745 |
|
|
| Islamabad: |
|
| Plot
No. 176, 1 - 10/3 Kurang Road, Islamabad. |
|
| Phone:
449955-6 Fax: 417071 |
|
|
| Liaison
Office |
|
| 6,
Agha Khan Road, |
|
| F-6/4,
Islamabad. |
|
| Phone
& Fax: 820829 |
|
|
|
| NOTICE
OF MEETING |
|
|
| Notice
is hereby given that the Thirty-Fifth Annual General Meeting of The General
Tyre & Rubber Company of |
|
| Pakistan
Limited will be held at Beach Luxury Hotel, Karachi on Wednesday, 30th
December 1998 at 3.00 p.m. to |
|
| transact
the following business: |
|
|
| 1.
To confirm the minutes of the Thirty-Fourth Annual General Meeting of the
Shareholders held on 26th December, 1997 |
|
|
| 2.
To receive and consider the audited accounts for the year ended 30th June
1998 together with Directors' and |
|
| Auditors'
report thereon. |
|
|
| 3.
To approve payment of cash dividend to the shareholders @ 20% as recommended
by the Directors. |
|
|
| 4.
To appoint auditors for the year 1998-99 and to fix their remuneration. The
retiring auditors, Messrs. A. F. Ferguson |
|
| &
Co., Chartered Accountants and Hameed Chaudhri & Co., Chartered
Accountants, being eligible, offer them- |
|
| selves
for reappointment. |
|
|
| 5.
Any other matter with the permission of the Chair. |
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|
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|
BY ORDER OF THE BOARD |
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|
|
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|
|
|
(Ch. Sher Mohammad) |
|
|
|
Director & Secretary |
|
|
| Karachi |
|
| Dated:
November 25, 1998 |
|
|
| NOTES: |
|
|
| 1.
The share transfer books of the Company will remain closed from 18th
December, 1998 to 30th December, 1998 |
|
| (both
days inclusive). Transfers received at the Company's Shares Department
located at Mezzanine Floor, Parker |
|
| House,
Aiwane Tijarat Road, Karachi at the close of business on 17th December, 1998
will be treated in time for |
|
| the
purpose of payment of dividend to the transferees. |
|
|
| 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 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 30,1998. |
|
|
| OPERATING
PERFORMANCE |
|
| The
Company's performance during the year under review was impressive despite
recessionary market conditions and |
|
| prevailing
high inflationary trend in the country. This was achieved through improved
efficiency and effective cost |
|
| controls.
Company produced 668,666 tyres during the year as against 487,766 tyres
produced last tear. The Gross Sales |
|
| increased
to Rs. 1678.1 M during the year under review, which was higher by 24% as
compared to last year's Gross |
|
| Sales
of Rs. 1356.1 M. The gross profit achieved was Rs. 286.1 M during the year
under review as compared to Rs. |
|
| 136.9
M during the preceding year. The operations resulted in pretax profit of Rs.
115.4 M as against Rs. 2.3 M during |
|
| the
preceding year. The profit would have been still higher had the fire in the
Mixing department on 8th May 1998 not |
|
| marred
it, which accordingly affected the production and sales. We are currently
meeting the requirement of mixing |
|
| stock
from sources inside as well as outside the country. This arrangement will
continue until such time the normal mix- |
|
| ing
capacity is restored in the plant. Assets damaged by the fire are insured and
a settlement of the claim is in process. |
|
|
| MILLENNIUM
BUG |
|
| The
Company is aware of the millennium bug problem and has already taken steps to
cope with it. We have installed |
|
| the
latest version of computers and software to ensure smooth working of the
system through the year 2000. Our |
|
| associated
companies and major suppliers, OE customers and companies with whom we have
business relations are also |
|
| appropriately
equipped to handle the situation. |
|
|
| MARKET |
|
| Overall
uncertain economic conditions and recession which remains unabated has led to
sluggish demand in the |
|
| market.
The situation got further deteriorated due to sanctions imposed by the
International communities as a result of |
|
| the
nuclear explosion in May 1998. The requirement to pay 30% cash margin up
front to open Letters of Credit, |
|
| introduction
of composite exchange rate, the increased forward cover premiums and the
devaluation of Pak Rupee twice |
|
| during
the year i.e. by 8.5% in the month of October 1997 and by 4.43% in the month
of June 1998, has led to a |
|
| substantial
increase in the cost of production. |
|
|
| The
massive depreciation of currencies of Far Eastern countries has resulted in
dumping of goods from Indonesia, Korea |
|
| and
Taiwan. Imports from these countries being cheaper have badly affected the
local industry. All these factors have |
|
| effected
market conditions of the Company during the current financial year. |
|
|
| FUTURE
OUTLOOK |
|
| The
country's current economic conditions and currency turmoil of South East
Asian countries have created consider- |
|
| able
uncertainties for the future. We feel that it will take minimum two years to
see the economic stability in this region. |
|
| During
this period, the demand of tyres will remain depressed. However, the
increased demand for Farm Tyres, for |
|
| which
capacity was enhanced last year, would offset the effect of sluggish demand
in commercial market to some extent. |
|
| The
management is abreast of the situation and will take appropriate steps to
survive during this difficult period. |
|
|
| As
regards expansion of Steel Radial Tyres, civil work has been completed, the
machinery is being installed and trial |
|
| run
of production shall commence by December 1998 Inshallah. |
|
|
| STAFF |
|
| On
behalf of the Board, I wish to extend my appreciation for the dedicated
services rendered by all the employees of |
|
| the
Company. |
|
|
|
|
Raza Kuli Khan Khattak |
|
|
|
Chairman |
|
|
|
| DIRECTORS'
REPORT TO THE SHAREHOLDERS |
|
|
| Your
directors are pleased to place before you the audited financial statements
for the year ended June 30, 1998. |
|
|
|
|
|
Rupees in thousand |
|
|
|
|
| Financial
Results |
|
|
|
| Profit
for the year after taxation |
|
|
74,647 |
|
| Unappropriated
profit brought forward |
|
3,041 |
|
|
|
|
|
---------- |
|
|
|
|
|
77,688 |
|
| Appropriations |
|
|
|
| Transferred
to general reserve |
|
|
43,000 |
|
| Proposed
dividend @ 20% |
|
|
34,155 |
|
|
|
|
|
---------- |
|
|
|
|
|
77,155 |
|
|
|
|
|
---------- |
|
| Unappropriated
profit carried forward |
|
533 |
|
|
|
========== |
|
|
| 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, 1998 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 |
|
|
| Karachi:
November 25, 1998 |
|
|
|
| FIVE
YEARS AT A GLANCE |
|
|
|
|
|
|
(Rupees in million) |
|
|
1998 |
1997 |
1996 |
1994 |
1993 |
|
|
|
|
| Operating
Results |
|
|
|
|
|
| Gross
sales |
|
1,678 |
1,356 |
2,450 |
1,220 |
1,243 |
|
|
|
|
| Net sales |
|
1,404 |
1,089 |
1,974 |
990 |
1,013 |
|
|
|
|
| Gross
profit |
|
286 |
137 |
252 |
162 |
205 |
|
|
|
|
| Profit
before tax |
|
115 |
2 |
29 |
28 |
73 |
|
|
|
|
| Profit
after tax |
|
75 |
3 |
9 |
30 |
58 |
|
|
|
|
| Financial
Position |
|
|
|
|
|
| Gross
assets |
|
1,716 |
1,771 |
1,727 |
1,581 |
1,649 |
|
|
|
|
| Paid
up share capital |
|
171 |
171 |
155 |
124 |
83 |
|
|
|
|
| Reserves
and unappropriated profit |
270 |
229 |
243 |
125 |
135 |
|
|
|
|
| Shareholders' equity |
441 |
400 |
398 |
249 |
218 |
|
|
|
| Breakup
value per share |
26 |
23 |
26 |
20 |
26 |
|
| Contribution
to public exchequer |
315 |
374 |
448 |
332 |
421 |
|
|
|
| *
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,
1998 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 except
for the change as |
|
| stated
in note 3 to the accounts with which we concur; |
|
|
| (ii)
the expenditure incurred during the year was for the purposes 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 June 30,1998
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 15.1 to the accounts |
|
| cannot
presently be determined by the company with any degree of certainty. |
|
|
|
|
A. F. Ferguson & Co. |
|
Hameed Chaudhri & Co. |
|
|
Chartered Accountants |
|
Chartered Accountants |
|
|
| Karachi:
November 25, 1998 |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1998 |
|
|
|
|
|
|
Note |
1998 |
1997 |
|
|
|
|
|
(Rupees in thousand) |
|
|
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
|
|
|
| Share
capital |
|
|
|
| Authorised |
|
|
|
| 30,000,000
ordinary shares of Rs l0 each |
|
300,000 |
300,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid up |
|
4 |
170,775 |
170,775 |
|
|
|
|
| Reserves |
|
|
| Capital |
|
5 |
108,675 |
108,675 |
|
| Revenue |
|
6 |
160,750 |
117,750 |
|
| Unappropriated
profit |
|
|
533 |
3,041 |
|
|
|
|
---------- |
---------- |
|
|
|
|
269,958 |
229,466 |
|
|
|
|
---------- |
---------- |
|
|
|
|
440,733 |
400,241 |
|
|
|
|
| REDEEMABLE
CAPITAL |
|
7 |
55,317 |
69,823 |
|
| LONG
TERM LOANS |
|
8 |
- |
15,622 |
|
| LIABILITIES
AGAINST ASSETS SUBJECT TO |
|
|
| FINANCE
LEASES |
|
9 |
30,348 |
37,809 |
|
|
|
|
|
| DEFERRED
LIABILITIES |
|
|
|
| Staff
retirement gratuity |
|
|
575,991 |
55,751 |
|
| Deferred
taxation |
|
10 |
7,993 |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
65,592 |
55,751 |
|
|
|
|
|
|
| LONG
TERM DEPOSITS FROM DEALERS |
|
11 |
6,600 |
6,480 |
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Current
maturity of redeemable capital |
7 |
14,506 |
12,153 |
|
| Current
maturity of a long term loan |
8 |
3,622 |
- |
|
| Current
maturity of liabilities against assets subject to |
|
|
| finance
leases |
|
9 |
7,461 |
6,073 |
|
| Short
term finances |
|
12 |
45,000 |
35,000 |
|
| Running
finance under mark-up arrangements |
13 |
90,133 |
195,198 |
|
| Creditors,
accrued expenses and other liabilities |
14 |
295,149 |
297,359 |
|
| Proposed
Dividend |
|
|
34,155 |
- |
|
| Unclaimed
dividend |
|
|
456 |
466 |
|
|
|
|
---------- |
---------- |
|
| CONTINGENCIES
AND COMMITMENTS |
|
15 |
490,482 |
546,249 |
|
|
|
|
---------- |
---------- |
|
| The
annexed notes form an integral part of these accounts. |
1,089,072 |
1,131,975 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
Note |
1998 |
1997 |
|
|
|
|
|
(Rupees in thousand) |
|
|
|
|
| TANGIBLE
FIXED ASSETS |
|
|
|
|
|
|
| Operating
assets |
|
16 |
282,705 |
287,045 |
|
| Capital
work-in-progress |
|
17 |
104,584 |
84,453 |
|
|
|
|
---------- |
---------- |
|
|
|
|
387,289 |
371,498 |
|
|
|
|
| LONG
TERM INVESTMENTS |
|
18 |
604 |
586 |
|
|
|
|
|
| LONG
TERM LOANS AND ADVANCES |
|
19 |
2,015 |
756 |
|
| LONG
TERM DEPOSITS AND DEFERRED COSTS |
20 |
2,403 |
3,492 |
|
| CURRENT
ASSETS |
|
|
|
|
|
| Stores
and spares |
|
21 |
147,529 |
153,679 |
|
| Stocks |
|
22 |
334,386 |
377,243 |
|
| Trade
debtors |
|
23 |
77,975 |
104,269 |
|
| Loans
and advances |
|
24 |
10,034 |
5,733 |
|
| Deposits,
prepayments and other receivables |
25 |
93,496 |
75,910 |
|
| Taxation |
|
|
1,128 |
22,987 |
|
| Cash
and bank balances |
|
26 |
32,213 |
15,822 |
|
|
|
|
---------- |
---------- |
|
|
|
|
696,761 |
755,643 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
1,089,072 |
1,131,975 |
|
|
|
|
========== |
========== |
|
|
|
Raza Kuli Khan Khattak |
|
|
Dr. A.S. Mufti |
|
|
Chairman |
|
|
Chief Executive |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
|
Note |
1998 |
1997 |
|
|
|
|
|
(Rupees in thousand) |
|
|
|
|
| Net sales |
|
27 |
1,403,791 |
1,089,312 |
|
| Cost
of sales |
|
28 |
1,117,699 |
952,355 |
|
|
|
|
---------- |
---------- |
|
| Gross
profit |
|
|
286,092 |
136,957 |
|
|
|
|
---------- |
---------- |
|
| Administrative
expenses |
|
29 |
42,783 |
34,246 |
|
| Selling
and distribution expenses |
|
30 |
61,729 |
49,279 |
|
|
|
|
---------- |
---------- |
|
|
|
|
104,512 |
83,525 |
|
|
|
|
---------- |
---------- |
|
| Operating
profit |
|
|
181,580 |
53,432 |
|
|
|
|
|
|
| Other
income |
|
31 |
11,134 |
11,598 |
|
|
|
|
---------- |
---------- |
|
|
|
192,714 |
65,030 |
|
|
|
|
| Financial
charges |
|
32 |
65,500 |
61,587 |
|
| Other
charges |
|
33 |
11,765 |
1,106 |
|
|
|
|
---------- |
---------- |
|
|
|
77,265 |
62,693 |
|
|
|
---------- |
---------- |
|
| Profit
before taxation |
|
|
115,449 |
2,337 |
|
| Taxation |
|
|
|
| Current
- for the year |
|
|
38,500 |
5,632 |
|
| for
prior years |
|
(5,691) |
342 |
|
| Deferred |
|
|
|
7,993 |
(6,200) |
|
|
|
|
|
---------- |
---------- |
|
|
|
40,802 |
(226) |
|
|
|
---------- |
---------- |
|
| Profit
after taxation |
|
|
74,647 |
2,563 |
|
| Unappropriated
profit brought forward |
|
3,041 |
478 |
|
|
|
|
---------- |
---------- |
|
| Profit
available for appropriation |
|
77,688 |
3,041 |
|
|
|
|
|
| Appropriation |
|
|
|
| Proposed
dividend @ 20% (1997: Nil) |
|
34,155 |
- |
|
| Transferred
to general reserve |
|
43,000 |
- |
|
|
|
---------- |
---------- |
|
|
|
77,155 |
- |
|
|
|
|
---------- |
---------- |
|
| Unappropriated
profit carried forward |
|
533 |
3,041 |
|
|
|
|
========== |
========== |
|
| Basic
earnings per share |
|
34 |
Rs 4.37 |
Rs 0.15 |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Raza Kuli Khan Khattak |
|
|
Dr. A.S. Mufti |
|
|
Chairman |
|
|
Chief Executive |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
|
|
|
Note |
1998 |
1997 |
|
|
|
|
(Rupees in thousand) |
|
|
|
|
| Cash
flow from operating activities |
|
|
|
|
| Cash
generated from operations |
|
35 |
330,284 |
61,967 |
|
| Staff
retirement gratuity paid |
|
|
(12,658) |
(2,328) |
|
| Financial
charges paid |
|
|
(78,079) |
(54,754) |
|
| Taxes paid |
|
|
(10,950) |
(9,923) |
|
| Long
term loans and advances (net) |
|
|
(1,259) |
244 |
|
| Long
term deposits |
|
|
- |
4,189 |
|
| Long
term deposits from dealers |
|
|
120 |
(250) |
