MITCHELL'S FRUIT FARMS LIMITED

Annual Reports 2003

CONTENTS

Company information

Vision and Mission Statement

Notice of annual general meeting

Chairman's review

Directors' report

Six years' review

Auditors' report

Balance sheet

Profit and loss account

Cash flow statement

Statement of changes in equity

Notes to the accounts

Pattern of shareholding

VISION AND MISSION STATEMENT

1.     To be a leader in the markets we serve by providing quality products to our consumers

while learning from their feedback to set even higher standards.

2.     To be a company that continuously enhances its superior technological skills to

remain internationally competitive in this day and age of increasing challenges.

3.     To be a company that attracts and retains competent people by creating a culture

that fosters innovation, promotes individual growth and rewards initiative and

performance.

4.     To be a company which optimally combines its people, technology, management

systems, and market opportunities to achieve profitable growth while providing fair

returns to its shareholders.

5.     To be a company that endeavours to set the highest standards in corporate ethics.

6.     To be a company that fulfills its social responsibility.

COMPANY INFORMATION

Board of Directors

S.M. Mohsin                 -       Chairman

Mehdi Mohsin              -       Chief Executive

Syed Babar Ali

Sitwat Mohsin

Syed Yawar Ali

Syed Faisal Imam

Umme Kulsum Imam

Anis Wahab Zuberi      -    NIT Nominee

Amir Sattar-alternate to Mr. Mehdi Mohsin

Audit Committee

S.M. Mohsin                 -    Chairman

Sitwat Mohsin              -    Member

Syed Faisal Imam        -    Member

Company Secretary/CFO

Amir Sattar

Auditors

A.F. Ferguson & Company

Chartered Accountants

Legal Advisors

Afridi, Shah & Minallah

15/2, F.C.C., Syed Maratib Ali Road, Gulberg IV, Lahore

Phones    :     (042) 5870300-02

Fax          :     (042) 5870303

Bankers

ABNAmroBankN.V.

Askari Commercial Bank Limited

Citibank N.A.

Muslim Commercial Bank Limited

Share Registrar

Corplink (Private) Limited-

Wings Arcade, 1-K (Commercial) Model Town, Lahore

Phones    :   (042)5839182,5887262

Fax          :   (042)5869037

Registered Office

3-B, LDA Flats,

Mian Muhammad Shafi Road, Lahore

Phones          (042)6307410-13

Fax                 (042) 6307414

E-mail           ho@mitchells.com. pk

Website         www.mitchells.com.pk

Factory & Farms

Renala Khurd, District Okara, Pakistan

Phones           (04443) 635907-8, 622908 & 636045

Fax                 (04443)621416

E. Mail           rnk@mitchells.com.pk

Regional Sales Office

Block No. 1 -A, Sector G - 7/4,

(North)

Street No. 40, Islamabad

Phones           (051) 2201961 - 62 & 2872669

Fax                 (051)2874542

E-mail            rson@mitchells.com.pk

Regional Sales Office

Syed House, Canal Berg,

(Central)

13 K.M. Multan Road, Lahore

Phones    :     (042) 5419350, 5423732 & 5425478

E-mail      :     rsoc@mitchells.com. pk

Regional Sales Office

Mehran VIP II, Ground Floor,

(South)

Plot 18/3 Dr. Dawood Pota Road, Karachi

Phones          (021) 5212112, 5212712 & 5219675

Fax                (021)5673588

E-mail            rsos@mitchells.com. pk

CHAIRMAN'S REVIEW

I have great pleasure in welcoming our shareholders to the 71st Annual General Meeting of the

company and in presenting a review of the year ended 30th September 2003.

Financial results:

Performance for the year is marked by an increase in both profit which increased by 30.99% as

well as sales which grew by 7.49 % over the corresponding figures for the previous year.

In more specific terms profit after tax has risen from Rs. 26,387,292 to Rs. 34,565,345 while sales

revenue increased from Rs. 692,768,745 to Rs. 744,660,437 as compared to last year.

Business perspective:

With the steady growth of the national economy, consumer demand for our products has also

registered an upward trend. Although this has been an encouraging development, growth has

remained modest and confined mainly to the larger urban centres.

It is our hope that with the expected improvement in the geo-political environment & increasing

political stability within the country, investment activity will be re-invigorated and the national economy

will show higher levels of growth. This should, in due course, reflect itself increased consumer

spending & brighter prospects for our industry.

Manufacturing:

Unlike the previous year our new chocolate moulding line remained in operation during the full

winter selling season. As entirely novel packaging had to be developed brief interruptions in the

supply of suitable materials occasioned problems in the smooth operation of the plant. Nonetheless

we were able to achieve a significant rise in the production of moulded chocolate.

Capital expenditure:

We are constantly reviewing the performance of our existing manufacturing plant and wherever

the need arises for renovation or increase in capacity investment decisions are taken after proper

assessment of market prospects and expected financial return. During the current year we plan to

invest in our confectionery plant to achieve greater efficiency & growth in production. Some additional

equipment may also be required to replace existing facilities in our groceries section.

Raw materials:

The costs of primary raw materials - sugar, cocoa powder, cocoa butter, liquid glucose & fruit/

vegetables - present a mixed picture. While sugar has been available throughout the year at a

lower average price than last year other materials listed here have generally been bought at higher

prices. Since Cocoa Powder and Cocoa Butter constitute a large part of the cost of chocolate

confectionery, we have had to absorb these higher costs while holding our selling prices unchanged.

The tomato crop did not live upto its early promise with the result that prices rose towards the

middle of the season; the winter crop is being quoted at rates which have no parallel in the past.

Apples & Mango have been available in sufficient volume while we have harvested a good lemon

cropjn the current citrus season.__

Marketing:

The national market for processed food appears to have expanded in the year under review;

demand for groceries rose marginally whereas stronger sales were recorded for confectionery. At

the same time the prominent presence of a wide variety of processed food items carrying global

brand names is evident in all major markets of the country.

The influx of imported groceries & confectionery is likely to gain momentum in the coming years,

especially after 2004, when WTO rules take effect. Domestic competition in both confectionery &

groceries is also intensifying with a number of new manufacturers entering the field.

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the 71st Annual General Meeting of Mitchell's Fruit Farms Limited will

be held on January 31,2004 on Saturday at 11:30 a.m. at the Registered Office of the Company at

3-B, LDA Flats, Lawrence Road, Lahore to transact the following business :

ORDINARY BUSINESS

1.      To confirm the minutes of the last meeting.

2.      To receive and adopt the Annual Audited Accounts of the Company for the year ended

September 30, 2003 together with the Directors' and Auditors' reports thereon.

3.      To approve payment of cash dividend @ 30% as recommended by the Directors.

4.      To appoint auditors for the year ending September 30,2004 and to fix their remuneration.

The retiring auditors namely Messrs A.F.Ferguson & Co., Chartered Accountants, are not

eligible for re-appointment due to rotation clause introduced through Corporate Governance

Rules in year 2003. The Company has applied to SECP for the relaxation of their re-

appointment. In case SECP does not allow their re-appointment, M/s Ford Rhodes Sidat

Hyder & Co. have consented to be appointed as auditors for the year ending September 30,

2004

5.      To transact any other business whici i may be placed before the meeting with the permission

of the chair.

NOTES

1.      The share transfer book of the Company will remain closed from January 24, 2004 to

January 31, 2004 (both days inclusive) for entitlement of 30% final cash dividend for

the accounting year ended September 30,2003. Transfers received in order (including

deposit requests under CDS) at our Registrar's office upto 1 : 00 p.m. on January 23,

2004 will be considered in time.

2.      A member eligible to attend and vote at this meeting may appoint another member as his/her

proxy to attend and vote instead of him/her. Proxies in order to be effective must be received

by the Company at the Registered office not later than 48 hours before the time meeting is

scheduled for.

3.       Shareholders are requested to immediately notify the change in their address, if any.

By order of the Board

Amir Sattar