| Growth Mutual Fund Limited |
|
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| Annual
Report 1998 |
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|
| CONTENTS |
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| CORPORATE
INFORMATION |
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
| DIRECTOR'S
REPORT |
|
| AUDITOR'S
REPORT TO THE MEMBERS |
|
| BALANCE
SHEET |
|
| PROFIT
AND LOSS ACCOUNT |
|
| CASH
FLOW STATEMENT |
|
| NOTES
TO THE ACCOUNTS |
|
| STATEMENT
OF INCOME & EXPENDITURE IN RELATION TO THE INVESTMENT COMPANY |
|
| PATTERN
OF HOLDING OF THE SHARES |
|
|
|
| CORPORATE
INFORMATION |
|
|
| INVESTMENT
ADVISER |
|
| INTERNATIONAL
INVESTMENT & FINANCIAL SERVICES LIMITED |
|
|
| CUSTODIAN |
|
| Allied
Bank of Pakistan Limited |
|
|
| BOARD
OF DIRECTORS |
|
|
| CHIEF
EXECUTIVE |
|
| Mr.
M. Akram Ghanchi |
|
|
| DIRECTORS |
|
|
| Mr.
S.A. Kermani |
|
| Mr.
Jamshed Ali |
|
| Mr.
Mustafa Jalil |
|
| Mr.
Irfan Ahmed Qureshi |
|
| Mr.
Nadeem Ali |
|
| Mr.
Rasheed Waheed |
|
|
| COMPANY
SECRETARY |
|
| Mr.
Irfan Ahmed Qureshi |
|
|
| AUDITORS |
|
| M/s.
M. Yousuf Adil Saleem & Co. |
|
| Chartered
Accountants |
|
|
| BANKERS |
|
| Bank
of America |
|
| Muslim
Commercial Bank Limited |
|
| Union
Bank Limited |
|
| Gulf
Commercial Bank Limited |
|
|
| LEGAL
ADVISER |
|
| Haneef-uz-Zaman
Siddiqui |
|
| House
No. A-522A |
|
| Block
"J" North Nazimabad |
|
| Karachi. |
|
|
| SHARE
REGISTRARS |
|
| Uni
Associates (Pvt) Limited |
|
| 6th
Floor, Lakson Square, |
|
| Building
No. 3, |
|
| Sarwar
Shaheed Road, Karachi. |
|
| Phone:
5687016 - 5687026 |
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| Fax:(021)
5680414 |
|
|
| REGISTERED
OFFICE |
|
| 6th
Floor, Lakson Square, Building No. 3 |
|
| Sarwar
Shaheed Road, Karachi - 74200, Pakistan. |
|
| Phone:
5687016, 5687026, 5687056 |
|
| Fax:(021)
5680414 |
|
|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
|
| Notice
is hereby given that the Sixth Annual General Meeting of GROWTH MUTUAL |
|
| FUND
LIMITED will be held on December 23, 1998 at 3:00 p.m. at Raffia Choudri |
|
| Memorial
Centre, Ground Floor, Sidco Avenue Centre, 264 R.A. Lines Sarwar Shaheed |
|
| Road,
Karachi at to transact the following business. |
|
|
| 1.
To confirm the Minutes of the Annual General Meeting held on December 31,
1997. |
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|
|
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| 2.
To receive and consider and adopt the Audited Accounts together with the
Directors |
|
| and
the Auditors Report for the year ended June 30, 1998. |
|
|
| 3.
To appoint Auditors for the year 1998-99 and fix their remuneration. The
present |
|
| auditors
M/S. M. Yousuf Adil Saleem & Co. Chartered Accountants, retire and |
|
| being
eligible, offer themselves for re-appointment. |
|
|
| 4.
Any other business with the permission of the chair. |
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|
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|
By Order of the Board |
|
|
|
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| Karachi: |
|
IRFAN AHMED QURESHI |
|
| Dated:
December 02, 1998 |
|
Director/Company Secretary |
|
|
|
|
|
| Notes: |
|
|
| 1.
The shares transfer books of the company shall remain closed from December |
|
| 17,
1998 to December 23, 1998 (both days inclusive.) no transfer will be accepted |
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| for
the registration during the period. |
|
|
|
|
| 2.
A member entitled to attend, speak and vote at the meeting is entitled to
appoint |
|
| a
proxy to attend, speak and vote for him/her. A proxy must be a member of the |
|
| Company. |
|
|
|
|
| 3.
An instrument of proxy and the power of attorney or other authority (if any)
under |
|
| which
it is signed or a notarially certified copy of such power of attorney in
order |
|
| to
be valid, must be deposited with our registered office at 6th Floor, Lakson |
|
| Square,
Building No. 3, Sarwar Shaheed Road, Karachi. not less than 48 hours |
|
| before
the meeting. |
|
|
|
|
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| 4.
Members are requested to notify any change in their addresses immediately. |
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|
| DIRECTOR'S
REPORT |
|
|
| It
is a great pleasure for us to present to our shareholders the sixth annual
report of GROWTH |
|
| MUTUAL
FUND LIMITED with the Audited Accounts for the year ended June 30, 1998. |
|
|
| The
year under review began with a positive sentiment towards Stock market with
significant |
|
| interest
of foreign buyers as well as local investors and financial institutions but
the collapse of the |
|
| South
East Asian economics created havoc in the region, making foreign investors
averse to invest |
|
| in
the emerging markets, thereafter the independent power projects crisis,
Nuclear test by India and |
|
| its
follow up by Pakistan prompted massive selling by the foreign and local
investors. KSE 100 |
|
| Index,
which rose to 2068 in October 1997 went to 879 on June 30, 1998 and to its
life low of |
|
| 749
on July 10, 1998 |
|
|
| The
financial results of the year ended June 30, 1998 are as under: |
|
|
|
|
Rupees |
|
|
| Profit/(Loss) before taxation |
, |
|
|
(10,415,181) |
|
| Provision
for taxation |
|
|
(47,801) |
|
|
---------- |
|
| Profit/(Loss)
after taxation |
|
(10,462,982) |
|
| Accumulated
loss carried forward |
|
(68,752,286) |
|
|
| Increase
in the loss for year ended June 30, 1998 is due to the unfavorable market
conditions |
|
| as
explained earlier. The net asset value of your fund is Rs. 3.12 based on June
30, 1998 |
|
| values. |
|
|
| FUTURE
OUTLOOK |
|
| After
the Nuclear tests economic sanctions were imposed on Pakistan. The State Bank
of |
|
| Pakistan
has frozen the foreign currency accounts and introduced multiple exchange
rate system |
|
| in
order to combat the economic sanctions and to face the balance of payment
crisis. This led |
|
| to
the systematic loss of confidence. and in the absence of capital inflows from
the foreign as |
|
| well
as local investors, the stock market has fallen prey to speculative bearish
forces. We hope |
|
| 'the
lifting of sanctions on the country and the governments resolution of
independent power |
|
| plants
problem, and funding for balance of payment support from international
monetary fund |
|
| and
Asian development Bank, narrowing of balance of payment gap will restore
confidence and |
|
| the
economy will start recovering. |
|
|
| DIRECTOR |
|
| Mr.
Akram Ghanchi became the Chief Executive in place of Mr. Rasheed Waheed the
board |
|
| wished
to record their appreciation for the services rendered by the out going Chief
Executive. |
|
|
| COMPLIANCE
TO THE YEAR 2000 CHANGE |
|
| Your
management is fully aware of the year 2000. changes in the software systems
and all |
|
| measure
are begin taken to be ready for the year 2000. |
|
|
| PATTERN
OF SHAREHOLDING |
|
| A
statement showing pattern of shareholding in the company as at June 30, 1998
is annexed |
|
| to
the financial statement. |
|
|
| AUDITORS |
|
| The
retiring Auditor's M/s. Yousuf Adil Saleem & Co. Chartered Accountants,
being eligible |
|
| offer
themselves for re-appointment. |
|
|
| ACKNOWLEDGMENT |
|
| The
directors would like to take this opportunity to thank the Corporate Law
Authority for |
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| their
co-operation guidance & support. The board also appreciates the devoted
work done by |
|
| staff
and officers of the company. |
|
|
|
|
For and On behalf of the Board |
|
|
|
|
| Karachi: |
|
|
Akram Ghanchi |
|
| Dated:
30 November, 1998 |
|
Chief Executive |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of GROWTH MUTUAL FUND LIMITED as |
|
| at
June 30, 1998 and the related profit and loss account and statement of
changes in financial |
|
| position
(cash flow statement), together with the notes thereon for the year then |
|
| ended.
Our examination was made in accordance with the generally accepted auditing |
|
| standards
and accordingly. included such tests of the accounting records and such other |
|
| auditing
procedures as were considered necessary in the circumstances 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 and Rule 16 of the |
|
| Investment
Companies and Investment Adviser's Rules 1971; |
|
|
| (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 in accordance with the provisions of the |
|
| Investments
Companies and Investment Adviser's Rules, 1971 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 investment policy of the |
|
| company
and Investment Companies and Investment Adviser's Rules, |
|
| 1971. |
|
|
|
|
| (iv)
the company has not contravened the provision of Rule 8 of the |
|
| Investment
Companies and Investment Adviser's Rules, 1971; and |
|
|
| (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 |
|
| statement
of changes in financial position (cash flow statement), together |
|
| with
the notes thereon, given the information required by the Companies |
|
| Ordinance,
1984 and Investment Companies and Investment Adviser's Rules, |
|
| 1971
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 loss and |
|
| changes
in financial position for the year then ended; and |
|
|
|
|
| (d)
in our opinion, no Zakat was deductible at source under the Zakat and |
|
| Ushr
Ordinance, 1980. |
|
|
|
| Karachi: |
|
M. Yousuf Adil Saleem & Co. |
|
| Dated:
30th November' 98 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT 30 JUNE 1998 |
|
|
|
Notes |
1998 |
1997 |
|
|
|
Rupees |
Rupees |
|
|
|
|
| SHARE
CAPITAL |
|
|
|
| Authorised |
|
|
|
| 20,000,000
Ordinary shares |
|
|
| of
Rs.10/= each |
|
|
200,000,000 |
200,000,000 |
|
|
|
|
========== |
========== |
|
|
|
|
| Issued,
subscribed and paid up |
|
|
| 10,000,000
ordinary shares |
|
|
|
| of
Rs. 10/= each fully paid in cash |
|
|
100,000,000 |
100,000,000 |
|
|
|
|
| Accumulated
loss |
|
|
|
(68,752,286) |
(58,289,304) |
|
|
|
|
|
|
31,247,714 |
41,710,696 |
|
|
|
|
---------- |
---------- |
|
| DEFERRED
LIABILITY |
|
|
3 |
- |
1,111,427 |
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
|
| Current
portion of deferred liability |
|
|
1,111,427 |
1,111,427 |
|
| Due
to Investment Adviser |
|
4 |
422,706 |
999,558 |
|
| Accrued
expenses |
|
|
20,000 |
20,000 |
|
| Taxation |
|
|
5 |
352,336 |
327,846 |
|
|
|
|
1,906,469 |
2,458,831 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
33,154,183 |
45,280,954 |
|
|
|
|
|
========== |
========== |
|
|
| DEFERRED
EXPENDITURE |
|
6 |
- |
1,241,076 |
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
|
| Marketable
securities |
|
7 |
7,125,967 |
17,256,654 |
|
| Accounts
receivable considered good |
|
|
25,572,342 |
26,185,591 |
|
| Advance tax |
|
|
160 |
23,311 |
|
| Cash
with banks |
|
8 |
455,714 |
574,322 |
|
|
|
|
---------- |
---------- |
|
|
|
|
33,154,183 |
44,039,878 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
33,154,183 |
45,280,954 |
|
|
|
|
|
========== |
========== |
|
| The
annexed notes from 1 to 12 form |
|
|
|
|
| an
integral part of these accounts. |
|
|
|
|
|
|
M. AKRAM GHANCHI |
|
IRFAN AHMED QURESHI |
|
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
Note |
1998 |
1997 |
|
|
|
Rupees |
Rupees |
|
|
|
|
| Income |
|
|
|
| Loss
on dealing in securities |
|
9 |
(8,568,684) |
(17,005,736) |
|
| Return
on deposits and certificates |
|
|
1,599 |
51,751 |
|
| Dividends |
|
|
980,923 |
1,057,932 |
|
| Other |
|
|
5,366 |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
(7,580,796) |
(15,896,053) |
|
|
|
|
|
| Operating
Expenses |
|
|
|
| Remuneration
to Investment Adviser |
|
312,477 |
834,214 |
|
| Amortisation
of deferred expenditure |
|
1,241,076 |
1,111,427 |
|
| Custodian
charges |
|
|
300,000 |
300,000 |
|
| Financial
charges |
|
|
222,285 |
333,428 |
|
| Audit fee |
|
|
20,000 |
20,000 |
|
| Others |
|
|
2,295 |
13,533 |
|
|
|
---------- |
---------- |
|
|
|
(2,098,133) |
(2,612,602) |
|
|
|
---------- |
---------- |
|
|
|
(9,678,929) |
(18,508,655) |
|
| (Provision)/Reversal
for diminution in value |
|
| of
Marketable Securities |
|
|
(736,252) |
14,736,042 |
|
|
|
|
---------- |
---------- |
|
| Loss
before taxation |
|
|
(10,415,181) |
(3,772,613) |
|
| Taxation |
|
|
|
|
| Current |
|
|
(50,000) |
(70,000) |
|
| Prior
year's |
|
|
2,199 |
(4,404) |
|
|
|
---------- |
---------- |
|
|
|
(47,801) |
(74,404) |
|
|
|
---------- |
---------- |
|
| Loss
after taxation |
|
|
(10,462,982) |
(3,847,017) |
|
| Accumulated
loss brought forward |
|
(58,289,304) |
(54,442,287) |
|
|
|
---------- |
---------- |
|
| Accumulated
loss carried forward |
|
(68,752,286) |
(58,289,304) |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes from 1 to 12 form an |
|
| integral
part of these accounts |
|
|
|
M. AKRAM GHANCHI |
|
|
IRFAN AHMED QURESHI |
|
|
CHIEF EXECUTIVE |
|
|
DIRECTOR |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) |
|
| FOR
THE YEAR ENDED JUNE 30, 1998. |
|
|
|
|
|
|
|
1998 |
1997 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| A.
CASH (USED) IN OPERATING ACTIVITIES |
|
|
|
|
|
|
| Loss
before taxation |
|
|
|
(10,415,181) |
(3,772,613) |
|
| Adjustment
for items not involving |
|
|
|
|
| movement
of funds |
|
|
|
|
|
| Provision/(Reversal)
for diminution in |
|
|
|
|
| marketable
securities |
|
|
|
736,252 |
(14,736,042) |
|
| Amortisation
of deferred expenditures |
|
|
1,941,076 |
1,111,427 |
|
|
|
---------- |
---------- |
|
|
|
|
|
1,977,328 |
(13,624,615) |
|
|
|
|
|
---------- |
---------- |
|
| Operating
loss before working capital changes |
|
(8,437,853) |
(17,397,228) |
|
|
|
|
|
|
| Changes
in working capital |
|
|
|
|
| (Increase)/decrease
in current assets |
|
|
|
|
|
|
|
|
| Investment
in marketable securities |
|
|
9,394,434 |
34,078,211 |
|
| Accounts
receivable |
|
|
613,250 |
(21,181,910) |
|
| Dividend/interest
receivable |
|
|
- |
564,108 |
|
| Advance tax |
|
|
|
23,151 |
(5,175) |
|
| (Decrease)/Increase
in current liabilities |
|
|
|
| Due
to Investment Adviser |
|
|
|
(576,852) |
88,404 |
|
| Accrued
expenses |
|
|
|
- |
(12,738) |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
9,453,983 |
13,530,900 |
|
| Tax paid |
|
|
|
(23,311) |
(80,471) |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
9,430,672 |
13,450,429 |
|
|
|
|
|
---------- |
---------- |
|
| Net
cash from/(used in) operating activities |
|
992,819 |
(3,946,799) |
|
|
|
========== |
========== |
|
|
|
|
| B.
CASH USED IN FINANCING |
|
|
|
| ACTIVITIES |
|
|
|
|
|
|
| Deferred
expenditure |
|
|
|
(1,111,427) |
(1,111,427) |
|
|
|
|
|
---------- |
---------- |
|
| Net
Cash used in financing activities |
|
|
(1,111,427) |
(1,111,427) |
|
|
|
|
---------- |
---------- |
|
| Net
decrease in cash and |
|
|
|
|
| cash
equivalents (A+B) |
|
(118,608) |
(5,058,226) |
|
|
|
|
|
| Cash
and cash equivalents at |
|
|
|
| the
beginning of the year |
|
574,322 |
5,632,545 |
|
|
|
|
| Cash
and cash equivalent at |
|
|
---------- |
---------- |
|
| the
end of the year |
|
455,714 |
574,322 |
|
|
|
========== |
========== |
|
|
|
M. AKRAM GHANCHI |
|
IRFAN AHMED QURESHI |
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
| NOTES
TO THE ACCOUNTS - JUNE 30, 1998 |
|
|
| 1.
STATUS AND ACTIVITIES |
|
| 1.1
The Company was incorporated on May 24, 1992 as a Public Company Limited by |
|
| shares
under the Companies Ordinance, 1984 and has been registered as an Invest- |
|
| ment
Company under the Investment Companies and Investment Adviser's Rules, |
|
| 1971.
It is listed on the Karachi Stock Exchange, It is a closed end mutual fund. |
|
|
|
|
| 1.2
"International Investment and Financial Services Limited" are the
approved "Invest- |
|
| ment
Adviser" and Allied Bank of Pakistan Limited are the approved Custodian
of |
|
| the
Company. |
|
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
Accounting Convention |
|
| These
accounts have been prepared under 'historical cost convention'. |
|
|
| 2.2
Taxation |
|
| Provision
for current taxation is based on taxable income at the current tax |
|
| rates
after taking into account tax credits available, if any. The company |
|
| accounts
for deferred taxation arising on all major timing difference using the |
|
| liability
method but does not account for deferred tax debits. |
|
|
| 2.3
Deferred Expenditure |
|
| The
expenditure incurred on the incorporation and. issue of shares to the public
is |
|
| deferred
and are amortised over a maximum period of five years from the year of |
|
| incurrence. |
|
|
|
|
| 2.4
Marketable Securities |
|
|
| Investment
is valued at lower of average cost and market value on an aggregate |
|
| portfolio
basis. Market value is taken from Karachi Stock Exchange quotation sheets |
|
| on
last working day of the income year. |
|
|
|
| 2.5
Revenue recognition |
|
|
| Sale
and purchase of securities and resultant gain/loss are recognised on the |
|
| date
of contract. |
|
|
|
| Dividend
income is recognised when the right to receive dividend is established and is |
|
| shown
net off zakat deduction |
|
|
|
|
|
|
| Return
on bank deposits is recognised on accrual basis. |
|
|
|
|
|
|
|
|
|
|
1998 |
1997 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| 3.
Deferred liability |
|
|
|
|
|
|
| International
Investment and |
|
|
|
| Financial
Services Limited - Investment Adviser |
|
|
|
|
|
| Preliminary
and share issue expense incurred |
|
5,557,135 |
5,557,135 |
|
|
|
|
|
|
|
| Less:
Repaid to the Investment Adviser |
|
|
|
|
| Upto
previous year |
|
|
|
3,334,281 |
2,222,854 |
|
|
|
|
| During
the year |
|
|
|
1,111,427 |
1,111,427 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
(4,445,708) |
(3,334,281) |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
1,111,427 |
2,222,854 |
|
| Payable
within one year shown |
|
|
|
|
| under
current liabilities |
|
|
|
(1,111,427) |
(1,111,427) |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
- |
1,111,427 |
|
|
|
|
|
========== |
========== |
|
| Markup
is being paid @ 10% per annum. |
|
|
|
|
|
|
| 4.
Due to Investment Adviser |
|
|
|
| International
Investment and Financial Services Limited |
|
| Remuneration |
|
|
|
| 1%
of net assets (4.1) |
|
312,477 |
834,214 |
|
| Interest
on deferred liability |
|
110,229 |
165,344 |
|
|
|
---------- |
---------- |
|
|
|
|
|
422,706 |
999,558 |
|
|
|
========== |
========== |
|
|
| 4.1
The remuneration of the Investment Adviser is payable at the rate of 2% of
the net |
|
| assets
of the company for the first five years and thereafter at the rate of 1% of
the |
|
| net
ass |
