| National Motors Limited |
|
|
|
|
|
|
|
|
|
|
| ANNUAL
REPORT 1998 |
|
|
|
| CONTENTS |
|
|
| BOARD
OF DIRECTORS |
|
| NOTICE
OF MEETING |
|
| ABOUT
THE COMPANY |
|
| CHAIRMAN'S
REVIEW |
|
| REPORT
OF THE DIRECTORS |
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| BALANCE
SHEET |
|
| PROFIT
AND LOSS ACCOUNT |
|
| CASH
FLOW STATEMENT |
|
| NOTES
TO THE ACCOUNTS |
|
| TEN
YEARS' SUMMARY |
|
| PATTERN
OF SHAREHOLDINGS |
|
| SUBSIDIARY
COMPANY: |
|
| MARGHZAR
INDUSTRIES (PRIVATE) LIMITED |
|
|
|
| BOARD
OF DIRECTORS |
|
|
| Mr.
Raza Kuli Khan Khattak |
Chairman |
|
| Mr.
Ahmad Kuli Khan Khattak |
Chief Executive |
|
| Mr.
Mushtaq Ahmed Khan |
|
| Dr.
Adil Sultan Mufti |
|
| Dr.
Parvez Hassan |
|
| Ch.
Sher Mohammad |
|
| Mr.
Rashidullah Yakoob |
|
| Mr.
M. Sadiq Sheikh |
|
| Mr.
M. Asif Dar |
|
|
| SECRETARY |
|
| Mr.
M.R. Banka |
|
|
| AUDITORS |
|
| Hameed
Chaudhri & Co. |
|
| Chartered
Accountants |
|
|
| LEGAL
ADVISORS |
|
| Syed
Iqbal Ahmed Barrister at law |
|
| Jawaid
Law Associates (Tax) |
|
| Syed
Qamruddin Hassan |
|
|
| BANKERS |
|
| National
Bank of Pakistan |
|
| Habib
Bank Limited |
|
| United
Bank Ltd. |
|
| Allied
Bank of Pakistan Ltd. |
|
| Muslim
Commercial Bank Ltd. |
|
| Indus
Bank Ltd. |
|
|
| REGISTERED
OFFICE |
|
| Hub
Chowki Road |
|
| S.I.T.E. |
|
| Post
Box No. 2706 |
|
| Karachi-75730 |
|
|
|
| NOTICE
OF MEETING |
|
|
| Notice
is hereby given that the 35th Annual General Meeting of the Company will be
held on Thursday the 31st |
|
| December,
1998 at 10:30 A.M. at National Motors Limited, Hub Chowki Road, S.I.T.E,
Karachi to transact |
|
| the
following business: |
|
|
| ORDINARY
BUSINESS |
|
|
| 1.
To confirm the minutes of the 34th Annual General Meeting held on 26th
December, 1997. |
|
|
| 2.
To receive and adopt the audited accounts of the Company for the year ended
June 30, 1998 together |
|
| with
Directors and Auditors' reports thereon. |
|
|
| 3.
To appoint auditors for the next financial year and fix their remuneration. |
|
|
| 4.
To transact any other ordinary business of the Company with the permission of
the Chair. |
|
|
| SPECIAL
BUSINESS |
|
|
| 5.
To consider and if thought fit to pass the following resolution as Special
Resolution to change/alter the |
|
| name
of the Company from National Motors Limited to Ghandhara Industries Limited. |
|
|
|
|
| "RESOLVED
that the name of the Company be and is hereby changed/altered from National
Motors |
|
| Limited
to Ghandhara Industries Limited and accordingly the name of National Motors
Limited, wherever |
|
| appearing
in the Memorandum and Articles of Association of the Company be substituted
with the |
|
| name
of Ghandhara Industries Limited." |
|
|
| 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 |
|
|
|
|
|
|
|
M.R. BANKA |
|
| KARACHI:
DECEMBER 09, 1998 |
|
SECRETARY |
|
|
|
| Note: |
|
|
|
| (1)
The share Transfer Books of the Company will remain closed from December 21,
1998 to December |
|
| 31,
1998, both days inclusive. |
|
|
|
|
| (2)
A member entitled to attend and vote at this meeting may appoint another
member as his/her proxy to |
|
| attend
the meeting and vote for him/her. Proxies in order to be effective must be
received by the Company |
|
| not
less than 48 hours before the meeting. |
|
|
| (3)
Members are requested to promptly notify the Company of any change in their
addresses. |
|
|
| Statement
under Section 160 of the Companies Ordinance 1984 |
|
| After
nationalization the original name of this Company was changed by the Federal
Government of Pakistan |
|
| vide
SRO No.206 (1) 73 dated 19-02-1973 from Ghandhara Industries Limited to
National Motors Limited. |
|
| Since
this Company has been privatised, the Directors are now only interested to
adopt the original name of |
|
| the
Company. |
|
|
| THE COMPANY |
|
| The
National Motors Limited is a public limited company quoted on the Stock
Exchanges and registered under the |
|
| Companies
Act, 1913 (now Companies Ordinance, 1984). It was established in Karachi by
General Motors Overseas |
|
| Distribution
Corporation of U.S.A. In 1963 Lt. Gen. (Rtd) M. Habibullah Khan Khattak
acquired these facilities from |
|
| General
Motors and renamed it Ghandhara Industries Limited. The Government of
Pakistan nationalised Ghandhara |
|
| Industries
in 1972 and renamed it National Motors Limited. In 1992 M/s. Bibojee Services
(Pvt) Ltd. acquired it under |
|
| the
Privatization Policy of the Government. |
|
|
| The
major business activities of the company comprise of progressive manufacture,
assembly and marketing of Isuzu |
|
| truck
and bus chassis and fabrication of Bus and Load bodies. In order to utilize
idle plant capacity the company has |
|
| plans
for the assembly of Cars, Vans, Pick-ups and Light commercial vehicles in
addition to standard Isuzu trucks and |
|
| buses.
To accomplish its mission the company has a country-wide dealers net work for
marketing its products. 'In |
|
| addition
the company represents its principals in Pakistan for other built up
products. |
|
|
| The
company has provided impetus to the local manufacture of engineering goods.
With the introduction of new |
|
| models
that compliments the Isuzu products, additional opportunities are being
availed to provide work for the |
|
| company's
in house manufacturing facilities as well as for the vendors producing Isuzu
parts locally. |
|
|
| In-house
facilities also include two assembly lines, a machine shop and a press shop.
Equipped with these facilities |
|
| the
plant is capable of producing about 2400 truck & bus chassis and 2400
LCVs per annum on a single shift basis, |
|
| depending
on the business requirements. Other avenues are also being explored to
utilize the idle capacity of the plant |
|
| as
far as possible. |
|
|
| LONG-
TERM OBJECTIVES |
|
| -
Maximise the value of shareholders equity. |
|
| -
Create an environment that assures national self-sufficiency in automobile
industry. |
|
| -
Create an environment that furthers healthy competition in the Automobile
sector. |
|
|
| MAJOR
PRODUCTS |
|
| - Isuzu Truck Model FTR |
|
| - Isuzu Truck Model FVR/FVM |
|
| - Isuzu Truck Model NPR |
|
| - Isuzu Bus Model MT |
|
| - Isuzu Light
Commercial Vehicles - KB Series |
|
| - Isuzu Bus/Load Body Fabrication |
|
|
| MAJOR
CUSTOMERS |
|
| - Owner Operators |
|
| - Fleet Owners |
|
| -
Pakistan Armed Forces |
|
| -
Civilian and Paramilitary Law Enforcement Agencies |
|
| -
Government & Semi-Government Organizations |
|
| -
Transport Authorities |
|
| -
Educational Institutions |
|
| - Health Organizations |
|
| -
Public Sector Companies |
|
| -
Private Sector Companies |
|
| -
General Public |
|
|
|
| CHAIRMAN'S
REVIEW: |
|
|
| I
have pleasure in presenting the 35th Annual Report of your Company for the
year 1997-98. |
|
|
| This
was a difficult year as the economy went through deep recession and no sign
of recovery are in sight even |
|
| at
this moment when we have already completed six months of the year 1998-99.
The overall economy of the |
|
| country
was in bad shape but the market for the commercial vehicles was hit the most.
The market reduced to |
|
| such
an extent that the conventional figure of five thousand trucks & buses a
year dwindled to about one |
|
| thousand
vehicles. |
|
|
| The
cost increases due to depreciation of Pak Rupees viz a viz Japanese Yen is
now eating up not only the |
|
| profits
of the companies but also the volumes. |
|
|
| Due
to lower sales your company went into operating loss but because of
adjustments and writebacks of the |
|
| financial
expenses as explained in the Annual Report, the loss of Rs.65 Million
suffered this year was lower |
|
| than
that of last year. |
|
|
| The
main focus of your company since its privatization in 1992 has been to reduce
the costs commensurate |
|
| with
business volume. The financial cost has been the major cause of the losses in
the past and your management |
|
| is
successfully negotiating rescheduling/settlement of the debt problem with its
bankers. |
|
|
| As
stated above the country had not yet come out of recession that the
international community imposed |
|
| economic
sanctions on Pakistan after our bomb explosion. This gave severe blow to the
foreign exchange |
|
| reserves
of the country and the Government had to resort to harsh measures such a
discouraging of imports |
|
| through
30% cash margin with the banks for opening L/Cs. This and the requirement of
the Japanese principals |
|
| to
ask for confirmation of the Letter of Credits from a first class
international bank further increased the cost to |
|
| prohibitive
levels. |
|
|
| In
this bleak economic scenario there is a small ray of hope in the increase in
bus demand during the last three |
|
| months
due to Government of Punjab' s plan to improve public transport business in
the province. |
|
|
| Government
is also planning to introduce the yellow cab scheme which may boost the
economy and as a result |
|
| the
automobile business. Let us hope for the better. |
|
|
| 1.
Operating Results: |
|
| This
year your Company suffered loss of Rs. 65 million after taxation. |
|
|
|
|
| Our
sales of Rs 183 million was lower by Rs 39 million as compared to last year.
The Company's |
|
| operating
loss was Rs 17.6 million as compared to loss of Rs 13.4 million last year.
The lower sales |
|
| were
due to general recession and economic slow down and depressed market in the
second half. |
|
|
| 2. Sales: |
|
|
| Due
to depressed market and unfavourable situation, the Company managed to sell
vehicles amounting |
|
| to
Rs 183 million during the year under review as compared to sales amounting to
Rs.222 million last |
|
| year.
It sold trucks amounting to Rs 74 million and buses amounting to Rs 106
million. Auto spares and |
|
| other
sales amounted to Rs 3 million. Buses attracted higher sales due to lower
rate of Custom Duty. |
|
|
| 3.
Production: |
|
| Economic
slow down and reduced sales were the main reasons for the low production. As
a result |
|
| trucks
and bus chassis were produced keeping in view the actual market demand. |
|
|
| 4.
Labour Management Relations: |
|
| The
workers have extended as usual their full cooperation and understanding to
the management. The |
|
| workers
management relations have been very good and enviable. |
|
|
| 5.
Year 2000 Compliance of Computer System |
|
| The
Company is using P.C. based software system. We do not anticipate any problem
in compliance of |
|
| Y2K
requirements. |
|
|
| 6.
Future Outlook |
|
| While
we are hopeful to achieve substantial reduction in the mark-up burden which
was having crippling |
|
| effects
on NML' s health, the economic sanctions imposed on Pakistan are also having
negative affects |
|
| on
our company's future planning. The frequent devaluation of Pak Rupee have
certainly increased the |
|
| cost
and is also a great challenge for the management to recover the cost by
increasing the prices in a |
|
| market
which is very competitive and limited. |
|
|
|
|
| Your
Directors are still making all out efforts to turn around the Company inspite
of recession in the |
|
| automobile
sector and uncertain currency situation in the country which requires more
patience on you |
|
| part
as shareholders. |
|
|
| 7.
Acknowledgement |
|
| I
am thankful for the keen efforts of the management, staff and workers who are
constantly working |
|
| hard
to mm around the Company. Our gratitude to our bankers for their continuous
support and assistance. |
|
| I
am grateful to our vendors and suppliers who stood by us in these trying
years. I would also like to |
|
| thank
ISUZU Motors Limited and ITOCHU Corporation for their continuous support and
assistance ~o |
|
| NATIONAL
MOTORS LIMITED. |
|
|
| In
the end I thank you for reposing your confidence in my management. I pray to
Allah for guidance. |
|
|
|
|
|
RAZA KULI KHAN KHATTAK |
|
|
|
|
CHAIRMAN |
|
|
|
| REPORT
OF THE DIRECTORS |
|
|
| The
Directors of your Company take pleasure in presenting their 35th Annual
Report with audited accounts of the |
|
| Company
together with auditors' report thereon for the year ended June 30, 1998. |
|
|
| FINANCIAL
RESULTS |
|
|
| The
financial results for the year ended June 30, 1998 are summarized below: |
|
|
|
|
|
(Rupees' 000) |
|
| Loss
for the year |
|
(64,152) |
|
| Taxation |
|
|
(934) |
|
|
|
|
---------- |
|
| Loss
for the year after taxation |
|
(65,086) |
|
| Accumulated
loss brought forward |
|
(828,094) |
|
|
|
|
---------- |
|
| Accumulated
loss carried forward |
|
(893,180) |
|
|
|
|
========== |
|
|
|
|
|
|
| BASIS
OF ACCOUNTS |
|
|
| 1.
The restructuring/rescheduling of company's loans from banks was approved by
Pakistan banking |
|
| Council
in August, 1996. Due to delay in its implementation, the company also opted
for debt retirement |
|
| under
State Bank of Pakistan's Scheme by depositing Rs. 30 million as down payment. |
|
|
|
|
| Negotiations
with banks are in progress for settlement of debts or rescheduling by
offering the banks, |
|
| properties
of the company. |
|
|
|
|
| The
settlement of debts or rescheduling will result in reduction of interest cost
which is the main |
|
| contributor
of Accumulated Losses. |
|
|
| The
company has now ISUZU products in its line of production. ISUZU is world No.
I in commercial |
|
| vehicles.
The company is striving hard to increase its Market share and has an edge in
bus market. It is |
|
| hoped
that with the growth in bus market, the company's share will increase
substantially resulting in |
|
| more
capacity utilisation. |
|
|
| 2.
A bank had instituted suit against the company for recovery of Rs. 100.041
million which has been |
|
| decreed
in favour of the bank for Rs. 60.822 million plus mark-up @ 60 paisas per
thousand per day |
|
| from
the date of institution of the suit till its payment. |
|
|
|
|
| On
the basis of above decision, the company has reversed excess markup amounting
to Rs. 26.782 |
|
| million
provided in the accounts for previous years. The Company has provided markup
~ 60 paisas per |
|
| thousand
per day from the date of institution of the suit. |
|
|
|
|
| Keeping
in view the above facts it is expected that the Company will continue as a
going concern. |
|
|
| YEAR
2000 COMPLIANCE OF COMPUTER SYSTEM |
|
| The
company is using P.C based Software System. We do not anticipate any problem
in compliance of |
|
| Y2K
requirements. |
|
|
| AUDITORS |
|
| The
present auditors M/s. Hameed Chaudhri & Co. retire and being eligible
have offered themselves for appointment |
|
| as
auditors for the year 1998-99. |
|
|
| PATTERN
OF SHARE HOLDING |
|
| The
pattern of Shareholding as at June 30, 1998 is annexed. |
|
|
|
|
On behalf of the Board |
|
|
|
|
AHMAD KULI KHAN KHATTAK |
|
| December
09, 1998 |
|
CHIEF EXECUTIVE |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of National Motors Limited as at 30
June, 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; |
|
|
| (ii)
the expenditure incurred during the year was for the purpose of Company's |
|
| business;
and |
|
|
| (iii)
the business conducted, investments made and 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 |
|
| Company's
affairs as at 30 June, 1998 and of the loss and cash flows for the year then |
|
| ended; and |
|
|
|
| (d)
In our opinion, no Zakat was deductible at source under Zakat and Ushr
Ordinance, 1980. |
|
|
| Without
qualifying our opinion above, we draw attention to note 1 to the accounts.
The continuity |
|
| of
the company as a going concern is dependent upon successful implementation of
management's |
|
| plans
for maximum utilisation of plant capacity. |
|
|
|
|
|
|
HAMEED CHAUDHRI & CO. |
|
| KARACHI:
DECEMBER 9, 1998 |
|
|
CHARTERED ACCOUNTANTS |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1998 |
|
|
|
Note |
1998 |
1997 |
|
|
|
|
|
(Rupees' 000) |
|
| SHARE
CAPITAL & RESERVES |
|
|
|
|
|
| Authorised
Capital |
|
|
|
| 10,000,000
ordinary shares of Rs. 10 each |
|
100,000 |
100,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed & paid up capital |
|
3 |
65,553 |
65,553 |
|
| Reserves |
|
|
|
| Capital
reserves |
|
4 |
40,800 |
40,800 |
|
| Revenue
reserve |
|
|
2,400 |
2,400 |
|
| Accumulated
loss |
|
|
(893,180) |
(828,094) |
|
|
|
|
---------- |
---------- |
|
|
|
|
(784,427) |
(719,341) |
|
|
|
|
|
| SURPLUS
ON REVALUATION OF FIXED ASSETS |
|
723,364 |
723,364 |
|
|
|
|
|
|
| LONG
TERM LOANS & DEFERRED LIABILITY |
|
|
|
|
|
| Long
term loans - unsecured |
|
5 |
30,761 |
27,691 |
|
| Provision
for staff retirement gratuity |
|
8,788 |
6,514 |
|
|
|
|
---------- |
---------- |
|
|
|
|
39,549 |
34,205 |
|
| CURRENT
LIABILITIES |
|
|
| Current
portion of long term loans |
|
|
2,000 |
2,000 |
|
| Short
term loan/running finances and borrowing |
6 |
497,550 |
500,285 |
|
| Creditors,
accrued & other liabilities |
7 |
441,418 |
420,859 |
|
|
|
|
---------- |
---------- |
|
|
|
940,968 |
923,144 |
|
| CONTINGENT
LIABILITY |
|
|
8 |
---------- |
---------- |
|
|
|
|
919,454 |
961,372 |
|
|
|
|
========== |
========== |
|
|
|
|
| TANGIBLE
FIXED ASSETS |
|
|
|
|
|
|
| Operating
fixed assets |
|
9 |
323,959 |
332,212 |
|
| Capital
work in progress |
|
|
54 |
41 |
|
|
|
|
| LONG
TERM INVESTMENTS |
|
|
|
|
|
|
| Investments
in subsidiary & other companies |
10 |
1,401 |
1,401 |
|
| Investment
in immovable properties |
|
11 |
390,803 |
392,040 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
392,204 |
393,441 |
|
|
|
|
| LONG
TERM LOANS AND ADVANCES |
|
12 |
15 |
12 |
|
|
|
|
| LONG
TERM DEPOSITS & DEFERRED COSTS |
|
|
| Deposits |
|
|
493 |
353 |
|
| Deferred
costs |
|
13 |
6,066 |
1,758 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
6,559 |
2,111 |
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores,
spares & tools |
|
14 |
1,802 |
2,295 |
|
| Stock
in trade |
|
15 |
160,351 |
179,916 |
|
| Trade debts |
|
16 |
3,297 |
3,465 |
|
| Loans,
advances, deposits & prepayments |
17 |
14,560 |
16,982 |
|
| Other
receivables |
|
18 |
9,099 |
15,529 |
|
| Cash
and bank balances |
|
19 |
7,554 |
15,368 |
|
|
|
|
---------- |
---------- |
|
|
196,663 |
233,555 |
|
|
---------- |
---------- |
|
|
919,454 |
961,372 |
|
|
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
M. ASIF DAR |
|
AHMAD KULI KHAN KHATTAK |
|
|
|
Director |
|
Chief Executive |
|
|
|
|
| PROFIT
& LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
Note |
1998 |
1997 |
|
|
|
|
|
(Rupees' 000) |
|
|
|
|
| Net Sales |
|
20 |
183,420 |
222,417 |
|
| Cost
of sales |
|
21 |
(179,841) |
(217,257) |
|
|
|
|
---------- |
---------- |
|
| Gross
profit |
|
|
3,579 |
5,160 |
|
|
|
|
| Administration
and selling expenses |
|
22 |
(21,272) |
(18,601) |
|
|
|
|
---------- |
---------- |
|
| Operating
loss |
|
|
(17,693) |
(13,441) |
|
|
|
|
| Other
Income |
|
23 |
3,471 |
2,416 |
|
|
|
|
---------- |
---------- |
|
|
|
|
(14,222) |
(11,025) |
|
|
|
|
| Financial
and other charges |
|
24 |
(49,930) |
(104,667) |
|
|
|
|
---------- |
---------- |
|
| (Loss)
before taxation |
|
|
(64,152) |
(115,692) |
|
| Taxation |
|
25 |
(934) |
(416) |
|
|
|
|
---------- |
---------- |
|
| (Loss)
after taxation |
|
|
(65,086) |
(116,108) |
|
|
|
|
| Accumulated
loss brought forward |
|
|
(828,094) |
(711,986) |
|
|
|
|
---------- |
---------- |
|
| Accumulated
loss carried forward |
|
|
(893,180) |
(828,094) |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these account |
|
|
|
M. ASIF DAR |
|
|
|
AHMAD KULI KHAN KHATTAK |
|
|
Director |
|
|
|
Chief Executive |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
Note |
1998 |
1997 |
|
|
|
|
|
(Rupees '000) |
|
| Cash
flow from operating activities |
|
|
|
|
|
| Cash
generated from operation |
|
26 |
(19,719) |
57,502 |
|
| Staff
Gratuity |
|
|
(53) |
(154) |
|
| Interest
paid |
|
|
22,804 |
(6,304) |
|
| Taxes paid |
|
|
(400) |
(1,454) |
|
| Long-term
loans and advances (net) |
|
|
(3) |
(2) |
|
|
|
|
---------- |
---------- |
|
| Net
Cash inflow from operating activities |
|
2,629 |
49,588 |
|
|
|
|
|
| Cash
flow from investing activities |
|
|
| Fixed
capital expenditure |
|
(260) |
(29,243) |
|
| Capital
work in progress |
|
(271) |
(41) |
|
| Sale
proceeds of fixed assets |
|
626 |
6 |
|
