| Suzuki Motorcycles Pakistan Limited |
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| Annual
Report 1998 |
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| Contents |
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|
| Board
of Directors |
|
| Notice
of the Annual General Meeting |
|
| Chief
Executive's Review |
|
| Directors'
Report to the Shareholders |
|
| Pattern
of Shareholdings |
|
| Auditors'
Report to the Members |
|
| Balance
Sheet |
|
| Profit
and Loss Account |
|
| Cash
Flow Statement |
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| Notes
to the Accounts |
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| BOARD
OF DIRECTORS |
|
|
| JAVED
BURKI |
|
|
| KATSUMI
TAKATA |
|
|
| KAZUYA
FUKUZAWA |
|
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| MUTSUMI
TAKAMATSU |
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| AKIHIKO
KOBAYASHI |
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|
| ZAHEERAHMED |
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| DANISHMAND |
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| CHAIRMAN |
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| JAVED
BURKI |
|
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| CHIEF
EXECUTIVE |
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|
| DANISHMAND |
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| SECRETARY |
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|
| MIDHAT
A. KIDWAI |
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| AUDITORS |
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|
| SIDAT
HYDER QAMAR MAQBOOL & CO. |
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|
| Chartered
Accountants |
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| BANKERS: |
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| DEUTSCHE
BANK |
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| THE
BANK OF TOKYO - MITSUBISHI, LTD. |
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| MUSLIM
COMMERCIAL BANK LTD. |
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| ABN-AMRO
BANK |
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| BANK
AL-HABIB LTD. |
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| REGISTERED
OFFICE: |
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| F/14,
MAURIPUR LINK ROAD, |
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| S.I.T.E.,
KARACHI-75730. |
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| TELEPHONE
NOS: |
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| PABX
2578840-43 |
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|
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| DIR
2573309 - 2577754 - 2575189 |
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| E-mail:
suzukimc @ paknet3.ptc.pk |
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| FAX:
92 21 2563895 |
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| NOTICE
OF THE ANNUAL GENERAL MEETING |
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| Notice
is hereby given that the 35th Annual General Meeting of the Company will be
held at the |
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| Registered
Office of the Company at F-14, Mauripur Link Road, S.I.T.E., Karachi, on 31
st December, |
|
| 1998
at 9:00 a.m. to transact the following business: |
|
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| ORDINARY
BUSINESS: |
|
| 1.
To confirm the minutes of the Annual General Meeting held on 31st December,
1997. |
|
|
| 2.
To receive, consider and adopt the Audited Accounts of the Company for the
year |
|
| ended
30th June, 1998 together with the Directors' and Auditors' Reports thereon. |
|
|
| 3.
To appoint Auditors for the year ending 30th June, 1999 end to fix their
remuneration. |
|
|
| 4.
To elect seven directors as fixed by the Board and in accordance with the
provisions |
|
| of
the Companies Ordinance 1984, in place of the following retiring directors: |
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|
|
| 1.
Mr. Jared Burki |
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5. Mr. Akihiko Kobayashi |
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| 2.
Mr. Katsumi Takata |
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6. Mr. Zaheer Ahmed |
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| 3.
Mr. Kazuya Fukuzawa |
7. Mr. Danishmand |
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| 4.
Mr. Mutsumi Takamatsu |
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|
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| 5.
To transact any other business with the permission of the Chair. |
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BY THE ORDER OF THE BOARD |
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|
M I DHAT A. KIDWAI |
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|
|
(COMPANY SECRETARY) |
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| Dated:
23rd November, 1998 |
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|
| NOTES: |
|
|
| 1.
The share transfer books shall remain closed from 24th December, 1998 to 31st |
|
| December,
1998 (both days inclusive). |
|
|
| 2.
A member entitled to attend and vote at the Annual General Meeting is
entitled to appoint |
|
| another
person as a proxy who is entitled on his own behalf to be present and vote at
the |
|
| meeting
or he/she is appointed to act at the meeting as the representative of a |
|
| corporation. |
|
|
| 3.
The instrument appointing a proxy must be received at the Registered Office
of the |
|
| Company
not later than forty eight hours before the meeting. |
|
|
| 4.
Persons eligible and interested to contest the election of directors should
file a notice |
|
| of
intention to offer themselves for election at the Registered Office of the
Company not |
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| later
than 14 days before the meeting. |
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|
| CHIEF
EXECUTIVE'S REVIEW |
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|
| It
is my privilege to place before you the Company's 35"~ Annual Report for
the year ended 30th June 1998. |
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|
| General: |
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| 1997-98
was one of the most difficult years for Pakistan economy. Government revenue
shortfall |
|
| remained
a persistent problem. Government spending on all but those items considered
absolutely |
|
| necessary
was curtailed. There was a drive for recovery of bank loans. Many factories
failed to pay |
|
| the
farmers for their produce. There was a drive to cut payrolls; few new jobs
were created. Money' |
|
| moved
into US dollars. Inflation hit the poor and the middle classes hard. Towards
the end of the fiscal |
|
| year,
Pakistan detonated atomic bombs in response to Indian explosions. This
further increased |
|
| economic
uncertainty with questions about direction of Government policy, response of
the major |
|
| economic
powers and the near term prospects of our economy became alarming. |
|
|
| Sales
& Market Situation: |
|
| The
severe economic conditions prevailing during the year adversely affected the
motorcycle industry |
|
| as
a whole. Motorcycles are durable, high priced items. Both the consumers and
Government |
|
| institutions
worked on tight budgets, cutting down on purchases that could be postponed.
Suzuki |
|
| motorcycle
business was affected relatively more severely than others as Government
motorcycle |
|
| purchases
were slashed almost entirely. According to our estimate the total market of
motorcycles |
|
| during
the year under review shrank by 30%. Sales of our Company were reduced by
28.29% during |
|
| 1997-1998
as compared to the previous year. |
|
|
| Export: |
|
| During
1997-98 your Company continued to Export motorcycles, which shows that we are
producing |
|
| high
quality motorcycles at competitive prices. The sales were rather small as the
economies of our |
|
| customers,
Nigeria, Kenya, Mauritius and Tanzania remained quite sluggish during this
period. |
|
|
| Gross
Profit: |
|
| Gross
Profit was reduced from Rs. 98.639 Million in 1996-97 to Rs. 73.887 Million
in 1997-98 due to. |
|
| reduction
in sales. However on account of low value of Japanese Yen, gross profit ratio
marginally |
|
| improved
from 26.9% to 28.1%. |
|
|
| Selling
and Administrative Expenses: |
|
| Selling
and Administrative Expenses increased from Rs. 51.287 Million in 1996-97 to
Rs. 89.791 Million |
|
| in
1997-98. The main reason for this increase was that as receipts of payments
slowed down from |
|
| agricultural
areas, we decided to follow a conservative and prudent policy and made a
large provision |
|
| of
Rs. 43.271 Million as Bad & Doubtful Debts for the year. However the
Company intends to recover |
|
| all
the accounts receivables, and where actual default occurs, will vigorously
pursue its claims by all |
|
| legal
means. |
|
|
| Financial
Charges: |
|
| Financial
charges of the Company were reduced from Rs. 43.838 Million to Rs. 31.932
Million. As |
|
| mentioned
in the last year's Annual report, the Company had issued Right Shares valuing
Rs. 146.330 |
|
| Million
in the middle of financial year 1996-97 which reduced bank borrowings for
half of the year. |
|
| Consequently
financial expenses during the second half of financial year 1996-97 were
reduced. The |
|
| induction
of fresh capital subscribed almost entirely by Suzuki Motor Corporation,
Japan, resulted in |
|
| lower
financial expenses for the year 1997-98. |
|
|
| Profitability: |
|
| The
Company incurred a loss of Rs. 47.981 Million during 1997-98. As already
explained the main |
|
| reasons
for the loss are low level of sales and large amount of Provision for Bad and
Doubtful Debts. |
|
|
| Future
Prospects: |
|
| Over
the years your Company's motorcycles have been accepted in the market as high
quality products. |
|
| We
are trying to increase export of our motorcycles. This is truly a tough
market, specially now when |
|
| there
is over-capacity in many countries. We have had some success but we find
refund of Custom |
|
| duties
and sales tax, despite Government assurances, a tedious, worrisome problem.
Economies of |
|
| some
of our foreign markets are showing signs of improvement and we hope to have
better sales abroad |
|
| during
the current financial year. Presently economic conditions in Pakistan are
discouraging. However |
|
| the
Government has a clear policy to boost industry in general, and Engineering
industry, in particular. |
|
| We
hope Government policy and our efforts will result in recovery of sales. |
|
|
| Towards
the end of the financial year 1997-98, your Company opened its first 4-S
model showroom in |
|
| the
largest motorcycle market in the country, Lahore. The showroom is a
successful venture. Your |
|
| Company
plans to open another direct 4-S showroom in Lahore before end of December
1998. A model |
|
| service
centre was established in the Karachi motorcycle market, which is not only
convenient for our |
|
| customers,
but is also an operational success. A direct model service centre is opening
in Rawalpindi |
|
| by
the end of November 1998 to provide service to our customers as well as
institutional users in that |
|
| important
urban centre. We plan to open a direct 4-S showroom in Karachi within the
fiscal year in |
|
| progress. |
|
|
| We
hope these operations would help stabilize sales, improve Company and product
image and |
|
| encourage
our dealers to upgrade their showrooms. |
|
|
| We
also would like to report that Suzuki motorcycles products and operations are
reviewed intensively |
|
| with
Suzuki Motor Corporation, Japan. Suzuki Motorcycles Pakistan Limited and
Suzuki Motor |
|
| Corporation
are determined to provide the products best suited to Pakistani user needs to
assure |
|
| satisfaction
of our customers and success of our dealers and your Company. |
|
|
| We
would like to express our thanks to Suzuki Motor Corporation, Japan for their
continuing all-round |
|
| support.
We would also like to register our appreciation and thanks to Mr. Abu Shamim
Arif, Secretary, |
|
| Ministry
of Industries and Production for his support in solving our export related
problems. |
|
|
|
|
DANISHMAND |
|
|
|
(CHIEF EXECUTIVE) |
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|
|
| DIRECTORS'
REPORT TO THE SHAREHOLDERS |
|
|
| Your
Directors are pleased to present their report and audited accounts for the
year ended 30th June, 1998. |
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|
|
| Accounts: |
|
|
|
Rupees |
|
|
| Loss
for the year |
|
(46,650,120) |
|
| Taxation-
Current |
|
(1,331,115) |
|
|
|
|
---------- |
|
| Loss
After Tax |
|
(47,981,235) |
|
| Accumulated
Loss Brought Forward |
|
(231,944,521) |
|
|
|
|
---------- |
|
| Accumulated
Loss Carried Forward |
|
(279,925,756) |
|
|
========== |
|
|
|
|
| Chief
Executive Review: |
|
| The
attached Chief Executive's Review gives the picture of the Company's
activities and performance |
|
| during
1997-98. The Directors of the Company endorse the contents of the Review. |
|
|
| Directors: |
|
| There
was no change in the Directors of the Company since the last Directors'
Report. |
|
|
| Auditors: |
|
| The
present auditors M/s Sidat Hyder Qamar Maqbool & Co., Chartered
Accountants retire and being |
|
| eligible,
offer themselves for reappointment. |
|
|
| Pattern
of Shareholding: |
|
| The
pattern of holding of the shares of the company as on 30th June, 1998 is
annexed. |
|
|
| Year
2000 Compliance: |
|
| The
Company has already made necessary changes in all the Computer Programmes to
solve the |
|
| Year
2000 Problem. Therefore we confirm that Year 2000 Compliance has been fully
made. |
|
|
|
|
ON BEHALF OF THE BOARD |
|
|
|
|
|
|
|
|
|
DANISHMAND |
|
| 23rd
November 1998 |
|
(CHIEF EXECUTIVE,) |
|
|
|
| PATTERN
OF SHARE HOLDING AS AT JUNE 30, 1998 |
|
|
|
Size of Holding |
|
Number of |
Number of |
|
|
of Rs. 10 Shares |
|
Shareholders |
Rs. 10 |
|
|
|
|
Shares Held |
|
|
|
|
| 1 |
- |
100 |
2957 |
78,361 |
|
| 101 |
- |
500 |
576 |
163,674 |
|
| 501 |
- |
1000 |
241 |
200,203 |
|
| 1001 |
- |
5000 |
372 |
896,700 |
|
| 5001 |
- |
10000 |
67 |
491,012 |
|
| 10001 |
- |
15000 |
29 |
357,833 |
|
| 15001 |
- |
20000 |
7 |
123,601 |
|
| 20001 |
- |
25000 |
9 |
206,084 |
|
| 25001 |
- |
30000 |
8 |
226,800 |
|
| 35001 |
- |
40000 |
6 |
226,583 |
|
| 40001 |
- |
45000 |
2 |
83,548 |
|
| 50001 |
- |
55000 |
2 |
100,900 |
|
| 65001 |
- |
70000 |
1 |
65,900 |
|
| 135001 |
- |
140000 |
1 |
139,600 |
|
| 165001 |
- |
170000 |
1 |
169,235 |
|
| 170001 |
- |
175000 |
1 |
170,700 |
|
| 1520001 |
- |
1525000 |
1 |
1,520,905 |
|
| 1715001 |
- |
1720000 |
1 |
1,717,746 |
|
| 1835001 |
- |
1840000 |
1 |
1,835,304 |
|
| 35120001 |
- |
35125000 |
1 |
35,124,269 |
|
| ---------- |
---------- |
---------- |
---------- |
---------- |
|
|
Totals: |
4284 |
43,898,958 |
|
| ========== |
========== |
========== |
========== |
========== |
|
|
|
|
| CATEGORIES
OF SHARE HOLDERS AS AT 30/06/98 |
|
|
| Categories
of Shareholders |
|
Number |
Shares Held |
Percentage |
|
|
|
|
| Individuals |
|
4227 |
3,388,980 |
7.72 |
|
| Investment
Companies |
|
8 |
55,218 |
0.13 |
|
| Suzuki
Motor Corp. Japan |
|
1 |
35,124,269 |
80.01 |
|
| Pakistan
Automobile Corporation Limited |
1 |
1,835,304 |
4.18 |
|
| Insurance
Companies |
|
10 |
74,693 |
0.17 |
|
| Joint
Stock Companies |
|
22 |
92,892 |
0.21 |
|
| Financial
Institutions/Banks |
|
10 |
3,292,930 |
7.50 |
|
| Modaraba
Companies |
|
3 |
23,400 |
0.05 |
|
| Government
Organizations |
|
2 |
11,272 |
0.03 |
|
|
|
---------- |
---------- |
---------- |
|
|
|
4284 |
43,898,958 |
100.00 |
|
|
|
|
|
========== |
========== |
========== |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of SUZUKI MOTORCYCLES PAKISTAN |
|
| LIMITED
as at30 June 1998and 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 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 at30 June 1998and of the loss and the cash
flow |
|
| statement
for the year then ended; and |
|
|
| d)
in our opinion, no zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980. |
|
|
|
|
|
|
|
SIDAT HYDER QAMAR MAQBOOL & CO. |
|
|
|
CHARTERED ACCOUNTANTS |
|
|
| KARACHI:
23 NOVEMBER 1998 |
|
|
|
| BALANCE
SHEET AS AT 30 JUNE 1998 |
|
|
|
|
|
|
|
NOTE |
1998 |
1997 |
|
| CAPITAL
AND RESERVES |
|
|
|
| Authorised
Capital |
|
|
|
| 60,000,000
(1997: 60,000,000) |
|
|
| ordinary
shares of Rs. 10/- each |
|
600,000,000 |
600,000,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up capital |
3 |
438,989,580 |
438,989,580 |
|
| Capital
reserves |
|
4 |
5,932,000 |
5,932,000 |
|
| Accumulated
loss |
|
|
(279,925,756) |
(231,944,521) |
|
|
|
|
---------- |
---------- |
|
|
|
|
164,995,824 |
212,977,059 |
|
|
|
|
|
| SURPLUS
ON REVALUATION OF FIXED ASSETS |
5 |
35,297,981 |
35,297,981 |
|
| DEFERRED
LIABILITIES |
|
|
|
1,431,896 |
1,050,507 |
|
| LONG-TERM
SECURITY DEPOSITS |
|
|
2,000,000 |
2,504,634 |
|
| CURRENT
LIABILITIES |
|
|
|
|
| Short-term
loan |
|
|
6 |
176,240,000 |
161,784,900 |
|
| Running
finance under mark-up arrangement |
7 |
34,799,907 |
145,006,541 |
|
| Creditors,
accrued and other liabilities |
8 |
14,037,762 |
20,409,795 |
|
| Taxation
- net |
|
|
|
- |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
225,077,669 |
327,201,236 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
9 |
---------- |
---------- |
|
|
|
Rupees |
428,803,370 |
579,031,417 |
|
|
|
|
========== |
========== |
|
|
|
|
|
| FIXED
ASSETS - TANGIBLE |
|
|
|
| Operating
assets |
|
|
10 |
113,825,577 |
116,821,189 |
|
| Capital
work-in-progress |
|
|
49,944 |
- |
|
| LONG-TERM
LOANS |
|
|
11 |
1,714,542 |
1,217,357 |
|
| LONG-TERM
DEPOSITS |
|
|
|
475,650 |
393,900 |
|
| CURRENT
ASSETS |
|
|
|
|
| Stocks |
|
|
12 |
114,359,625 |
142,714,584 |
|
| Trade
debts |
|
13 |
158,867,102 |
220,418,240 |
|
| Loans,
advances, deposits, prepayments |
|
|
| and
other receivables |
|
14 |
24,028,686 |
19,864,775 |
|
| Cash
and bank balances |
|
15 |
15,482,244 |
77,601,372 |
|
|
|
|
---------- |
---------- |
|
|
|
|
312,737,657 |
460,598,971 |
|
|
|
|
---------- |
---------- |
|
|
|
|
Rupees |
428,803,370 |
579,031,417 |
|
|
|
|
========== |
========== |
|
|
|
|
| AUDITORS'
REPORT ANNEXED |
|
|
|
| These
accounts should be read with the annexed notes. |
|
|
|
KAZUYA FUKUZAWA |
|
DANISHMAND |
|
|
DIRECTOR |
|
|
CHIEF EXECUTIVE |
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR ENDED 30 JUNE 1998 |
|
|
|
|
NOTE |
1998 |
1997 |
|
|
|
|
Rupees |
Rupees |
|
| Net sales |
|
|
16 |
|
| Motorcycle |
|
|
222,902,584 |
337,691,920 |
|
| Complete
built-up units |
|
|
23,064,000 |
168,000 |
|
| Spare
parts |
|
|
15,573,988 |
17,344,847 |
|
| Generators |
|
|
280,500 |
10,634,388 |
|
| Painting
Services |
|
|
928,905 |
565,421 |
|
|
|
|
---------- |
---------- |
|
|
|
|
262,749,977 |
366,404,576 |
|
| Cost
of goods sold |
|
17 |
188,862,706 |
267,765,965 |
|
|
|
|
---------- |
---------- |
|
| Gross
profit |
|
|
73,887,271 |
98,638,611 |
|
| Selling
and administrative expenses |
18 |
89,791,462 |
51,287,276 |
|
|
|
|
---------- |
---------- |
|
| Operating
(loss)/profit |
|
|
(15,904,191) |
47,351,335 |
|
|
|
|
|
|
| Financial
charges |
|
19 |
(31,932,149) |
(43,838,319) |
|
| Other
income-net |
|
20 |
1,186,220 |
2,658,043 |
|
| Workers'
Profit Participation Fund |
|
- |
(308,553 |
|
|
|
|
---------- |
---------- |
|
|
|
|
(30,745,929) |
(41,488,829) |
|
|
|
|
---------- |
---------- |
|
| (Loss)/Profit
before taxation |
|
|
(46,650,120) |
5,862,506 |
|
| Taxation
- current |
|
21 |
(1,331,115) |
(1,834,796) |
|
|
|
|
---------- |
---------- |
|
| (Loss)/Profit
after taxation |
|
|
(47,981,235) |
4,027,710 |
|
| Accumulated
loss brought forward |
|
(231,944,521) |
(235,972,231) |
|
|
|
|
---------- |
---------- |
|
| Accumulated
loss carried forward |
|
Rupees |
(279,925,756) |
(231,944,521) |
|
|
|
|
========== |
========== |
|
|
| These
accounts should be read with the annexed notes. |
|
|
|
KAZUYA FUKUZAWA |
|
DANISHMAND |
|
|
DIRECTOR |
|
CHIEF EXECUTIVE |
|
|
|
| CASH
FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 1998 |
|
|
|
|
|
|
1998 |
1997 |
|
|
|
|
|
Rupees |
Rupees |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| (Loss)/profit
before taxation |
|
(46,650,120) |
5,862,506 |
|
| Adjustment
of non-fund items: |
|
|
| Depreciation |
|
10,771,823 |
11,175,829 |
|
| Deferred
liability-gratuity |
|
381,389 |
412,495 |
|
| Financial
charges |
|
31,932,149 |
43,838,319 |
|
| Gain
on disposal of fixed assets |
|
(852,589) |
(881,531) |
|
|
|
---------- |
---------- |
|
|
|
42,232,772 |
54,545,112 |
|
|
|
---------- |
---------- |
|
| Operating
(loss)/profit before working capital changes |
(4,417,348) |
60,407,618 |
|
| Working
capital changes |
|
|
| Stocks |
|
|
28,354,959 |
(21,266,115) |
|
| Trade
debts |
|
61,551,138 |
3,517,779 |
|
| Loans,
advances and deposits |
|
(3,045,294) |
5,479,470 |
|
| Short-term
loans |
|
14,455,100 |
(188,265,100) |
|
| Running
finance |
|
(110,206,634) |
118,840,920 |
|
| Creditors,
accured and other liabilities |
|
(4,453,723) |
(54,594,654) |
|
|
|
---------- |
---------- |
|
|
|
|
(13,344,454) |
(136,287,700 |
|
|
|
|
---------- |
---------- |
|
| Cash
generated from operations |
|
(17,761,802 |
(75,880,082) |
|
|
|
|
---------- |
---------- |
|
| Financial
charges paid |
|
(33,850,459) |
(40,031,906) |
|
| Income
tax paid |
|
|
(2,449,732) |
(3,382,133) |
|
|
|
---------- |
---------- |
|
|
|
