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Allwin Engineering Industries Limited
Annual Report 2000
MISSION STATEMENT
To be a dynamic, profitable and growth
oriented company with market leadership in
auto parts, through excellence in quality,
advance technology, innovation and
continuous improvement. To create joy of
producing and selling, and joy for the
customers to buy. To ensure attractive return
to business associates, share holders and
to reward employees according to their ability
& performance. Be a good corporate citizen
in order to fulfill social responsibility.
CONTENTS
Company Information
Notice of Meeting
Chairman's Review
Directors' Report
Auditors' Report
Balance Sheet
Profit and Loss Account
Statement of Changes in Financial Position
Statement of Changes in Equity
Notes to the Accounts
Pattern of Shareholding
Atlas Group Companies
COMPANY INFORMATION
Chairman Yusuf H. Shirazi
Chief Executive Officer S.V.H. Naqvi
Directors Aamir H. Shirazi
Farzana Munaf
Jawaid Iqbal Ahmed
Mohammad Habib-ur-Rehman
M. Mazharuddin
Shahid Anwar
Company Secretary Mohammad Atta Karim
GROUP EXECUTIVE COMMITTEE
Chairman Yusuf H. Shirazi
Members Jawaid Iqbal Ahmed
Frahim Ali Khan
Iftikhar H. Shirazi
Aamir H. Shirazi
Saquib H. Shirazi
Secretary Amjad Hussain
GROUP PERSONNEL COMMITTEE
Chairman Yusuf H. Shirazi
GROUP AUDIT COMMITTEE
Chairman Sanaullah Qureshi
MANAGEMENT COMMITTEE
Chief Executive Officer S.V.H. Naqvi
Director Finance Mohammad Atta Karim
General Manager Marketing Shameem Ahmad
General Manager Plant Lt. Col.(R) Sultan Ahmad (TIM)
COMPANY INFORMATION
Auditors Ford, Rhodes, Robson, Morrow,
Chartered Accountants
Tax Adviser Mahmood Law Associates
Legal Advisors Mohsin Tayebaly & Co.
Advocate Incorporation
Bankers Standard Chartered Grindlays Bank Limited
Al-Baraka Islamic Bank
Habib Bank Limited
Muslim Commercial Bank Limited
National Bank of Pakistan
United Bank Limited
Registered Office (Factory) 15th Mile, National Highway, Landhi,
Karachi-75120
NOTICE OF MEETING
Notice is hereby given that the 38th Annual General Meeting of Allwin Engineering Industries Limited will be
held at Corporate Office at 8th floor Adamjee House, I.I. Chundrigar Road, Karachi on 18th December, 2000 at
9:00 a.m. to transact the following business:
ORDINARY BUSINESS
1. To confirm the minutes of the thirty-seventh Annual General Meeting held on 20th December, 1999.
2. To receive, consider and adopt the Audited Accounts of the Company together with the Directors' and
Auditors' Reports thereon for the year ended 30th June, 2000.
3. To appoint Auditors for the year 2000-2001 and to fix their remuneration.
4. To transact any other business with the permission of the chair.
SPECIAL BUSINESS
5. To approve the remuneration of the Chief Executive Officer.
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
Karachi: 15th November, 2000 Company Secretary
NOTES:
1. The Share Transfer Books of the Company will remain closed from 11th December, 2000 to 18th December,
2000 (both days inclusive).
2. A member entitled to attend and vote at the meeting may appoint another member as his/her proxy to
attend and vote on his/her behalf. The instrument appointing a proxy must be received at the Company's
Registered Office not less than 48 hours before the time of holding of the meeting.
STATEMENT UNDER SECTION 160 OF THE COMPANIES ORDINANCE, 1984.
Approval is being sought for fixing the remuneration of the Chief Executive Officer working with the Company.
The Chief Executive Officer is interested only in the remuneration payable to him.
CHAIRMAN'S REVIEW
It is my pleasure to present to you the 38th Annual
Report and review of the performance of your
company for the year ended 30th June, 2000.
THE ECONOMY
The year ending June 30, 2000 remained under the
shadow of the international and domestic political and
economic situation prevailing in the year 1999.
Nuclear detonation, Kargil issue and ultimately army
take over have had its impact on the political,
economic and social fabric of the country. Good
cotton, rice and wheat crops, however did help in
raising the GDP growth but inept pricing and other
policy measures could not yield the desired
socio-economic benefits at the grass roots so as to
uplift the economy on the whole. It was against this
background that the National Budget for the year
2000-2001 was presented as a part of 3 years
Perspective Plan aimed at achieving a 6% GDP
growth and budgetary deficit below 5% by the year
ending 2003.
The GDP growth for the year 1999-2000 was 4.8%,
agriculture being highest at 7.2%, manufacturing the
lowest at 1.1% and service sector at 4.5%. Inflation
was claimed to be 3.6% which was the lowest in the
past decade. The GDP growth target set for the year
2000-2001 vis-a-vis 1999-2000 is at 5%, up 0.2%
from the previous year. Agriculture growth is
projected at 3.9%, services at 5.2%, and the
manufacturing at 5.9%. The target growth rates are
an encouraging sign. The inflation for the year 2000-
2001 is estimated at 4.5%, 0.9% higher than last
year. Despite government's emphasis on agriculture
sector, a projection of lower growth as compared to
last year seems reasonably cautious keeping in view
the current water shortage and vagaries of the
weather. In the present circumstances, the growth in
manufacturing at 5.9% seems to be optimistic but
achievable! Similarly, the budgetary deficit target set
at 4.6% of GDP vis-a-vis 6.5% of last year and 6.6%
average of the last 4 years seems to be somewhat
realistic though with a lot of focus on the rough edges
of the economy. The revenue target hinges on
collection of an extra Rs.100 bn. It is essential that
all these targets are met in the wake of prevailing
economic situation particularly the IMF
conditionalities and the overall external pressures,
which are becoming increasingly arduous for the
borrowing nations with Pakistan the most hard hit at
the present time.
On the other hand, in July 2000 the State Bank of
Pakistan chose to remove the restrictions on the inter
bank market and freed the rupee-dollar parity which
caused the rupee to fall from Rs.52.36 to Rs.59.30 a
dollar in early October 2000, about a 13.3%
devaluation within a period of 10 weeks. In the kerb
market, the rupee went as low as Rs.63 to a dollar-
resulting in cost-push pressures in the long run. This
was stated to meet one of the IMF conditionalities -
before any settlement with them in sight. There is
thus no alternative but to come out of the vicious
circle of ever rising debts, falling rupee, debt servicing
and costlier imports, consequently rendering exports
incompetitive due to rising internal costs. This can
only be done by a better business environment,
which promotes greater investment and savings. The
devaluation has indeed made everything costlier
without a corresponding increase in investment and
production - productivity, value addition and volume
growth. Full utilization of capacity needs to be the
focus, which alone will bring the cost down and result
in export competitiveness.
In order to revive the economy, the world financing
agencies prescription may be just marginal. It has
hardly helped any developing country so far. A
recommendation in this connection to phase out
seven main industries in Pakistan - steel, fertiliser,
sugar, oil refineries, chemicals, pharmaceuticals and
automobile, constituting over 50% of the economy,
being not competitive by world standards, will further
damage the economy as a whole. What will then
remain for achieving self-reliance, a view the
Government does espouse. Unemployment is
'becoming a bigger concern and challenge day by
day. Similarly, a report that localization programmes
will be done away will only discourage investment.
Equally important is the competitive advantage of the
local industry being eroded without which localization
is effected. Imagine the rate of custom duty is being
reduced from 35% to 25%, without a corresponding
reduction in raw material duty which remains at 10%.
Since the automobile engineering industry clearly
does not come under the world financing institutions
and other regulatory agencies - WTO - there is no
reason to succumb to any pressure from any other
international agency. Otherwise such policies will
suspend investment, production and export - and
above all, any entrepreneurial initiatives in these
industries, to say the least, unless the situation is
rectified or clarified in bold letters:
(The state secrets are the preservatives of the statesmen)
THE INDUSTRY
During the year under review, however, the
automobile industry in general did not perform well
except the tractor segment. The production of
tractors increased to 34,559 units from 26,644 units
in the previous year, up 30%. The sales at 33,201
units were, up 21%, from 27,414 units in the previous
year, mainly due to support from the agricultural sector.
The tractor industry has the highest deletion ratio i.e.
84%. Therefore, the increase in volume during the
year indicates the capacity and capability of the
vending industry, which is geared to meet the
challenge of the growth. Your company also
contributed to the growth in tractor industry in their
localization initiatives and is further geared to play the
role whenever relevant.
Production of the cars on the whole, however, was at
32,461 units against 38,682 units in the previous
year, down 16%. The sale was also down 15% to
31,759 units from 37,262 units in the previous year.
However, the industry witnessed rise in the
production of cars in the category of 1300 cc and
above - and stood at 17,326 units by June 2000
against 15,190 units by June 1999, up 14%. The
sales also increased to 17,452 units against 14,653
units of the last year, up 19%. The production of the
motorcycle fell to 86,959 units from 87,504 units of
the previous year, down 0.62%.
Following are the relevant production figures relating
to the automobile industry, as a whole, for the year
under review:
Particulars 2000 1999 Incr(Decr) %age
Cars 32,461 38,682 (6,221) -16.08
Motorcycles 86,959 87,504 (545) -0.62
Tractors 34,559 26,644 7,915 + 29.71
Buses, trucks & LCVs 9,409 10,908 (1,499) -13.75
Total 163,388 163,738 (350) -0.21
------------------ ------------------ ------------------ ------------------
Source: PAMA
This year also witnessed few new models of the old
makes and new car manufacturers entering the
market, particularly in the category of 1000 cc and
below, making competition severer in the coming
years. Suzuki launched "Cultus" in 1000 cc category
and Daihatsu launched "Cuore" in 850 cc in March
this year. South Korea also entered the market with
small cars launching "Santro" and started production
in June 2000. Fiat is scheduled to enter the market soon.
In bigger cars sector also the new models are in
offing in early next year. This created competition
among the major players in price and quality. On the
other hand, the process of indigenization was
affected as the deletion programmes were frozen a
year before, as allowed under the Industry Specific
Deletion Programmes (ISDP) in force. The
Engineering Development Board is, therefore,
expected to review the policy of the "New Models" so
that the Deletion Programmes are not rolled back.
There is no doubt that the survival of the automotive
industry lies in the localization and not in mere y
"assembly" plants as some would suggest. However,
the Government has clearly stated that the world
financial and other regulatory institutions
conditionalities are not applicable in the Automobile
Industry. So a reasonable protection to the industry
as determined by the Government itself should
continue and so the localization programmes!
The Government is preparing the next 5 years
deletion programme, which we believe will be
economically viable both for the assemblers and the
vending industry. Government must also remove the
anomaly in the rates of custom duty at 35% being
same for the CKD units and spare parts. This is all
the more necessary for the competitive advantage
that is always required for localization.
MARKET REVIEW
Be it as it may, the year under review, however, was
no less difficult than the previous year. The large
manufacturing sector, with the exception of textiles,
witnessed a sharp decline. Inspite of a bumper
cotton crop, no economic benefit was passed on to
the farmers due to the low cotton rates - also
because of the excess stocks imported last year - so
as to benefit the economy at its grassroots. Though
the government expressed a desire to establish the
cotton prices but this vital issue was not settled in
time; the growers were left alone at the mercy of the
market forces'! At a later stage, the T.C.P. did
intervene and fixed the cotton prices, which, however,
were much lower than the expectations of the
growers. Payment of cotton purchased by T.C.P. was
also not made timely. All this resulted in deprivation
of the customer in the rural areas, in particular, the
cotton belt - the backbone of the economy.
The government also started tax survey in order to
document the economy, covering 13 big cities, to
begin with. The government has targeted about Rs.
100 billion additional revenue collection from this
survey. Tax amnesty scheme resulted in additional
collection of revenue of over Rs. 10 billion. This
scheme had the highest response over all the
previous such schemes. With the collection of Rs. 10
billion, wealth of Rs. 100 billion came into the net of
regular economy, a welcome step indeed. Although
there has been unrest among the traders and the
stockist in the market which has affected normal
business activities, it is hoped that the matter will be
settled sooner than better!
However, your company being in the organized
sector has challenges from the spurious
manufacturers, smuggling, irregular imports through
Afghan trade and under-invoicing. The menace has
yet to be rooted out; the several steps taken by the
government have not yielded the desired results so
far. The concerted effort by the regime can only
produce results.
A statement showing the vehicle population in
Pakistan is given below:
VEHICLE POPULATION
Nos. in '000
YEAR TOTAL CARS JEEPS STN TRACTORS BUSES TAXIS VANS TRUCKS MOTOR OTHERS
WAGONS CYCLES
1994 2672 548 44 102 374 61 50 77 8 1343 65
1995 2879 576 47 111 403 66 55 82 14 1457 68
1996 3097 605 50 119 434 70 60 87 21 1580 71
1997 3335 636 54 129 468 76 65 92 28 1713 74
1998 3671 681 57 141 539 80 71 103 34 1882 83
1999 3916 742 61 149 566 85 76 109 36 2004 88
2000 4146 773 65 158 601 87 81 116 37 2135 93
This indicates the volume of commercial parts market
in the country in which your company is striving hard
to get its due share. Whatever the circumstances
may be, your company is determined to meet the
challenges in the short and the long term.
COMPANY PRODUCT AND TECHNOLOGY
Allwin is a leading company in the engineering
industry. It's range of product includes diesel engine
pistons, cylinder liners, petrol (gasoline) pistons,
automotive radiator assemblies, radiator cores, and 
scores of fully-machined grey and ductile cast iron parts.
Well-equipped iron and aluminum foundry, in-house
tool making and machining facilities, chemical and
metallurgical laboratories, standards room, and a
good quality assurance system have enabled Allwin
to earn the reputation of a reliable manufacturer and
supplier of good quality automobile and tractor parts.
The company was the first to develop its line of diesel
engine pistons and cylinder liners in 1967 with the
technical assistance of Associated Engineering
Limited, U.K., who are one of the largest
manufacturers of pistons, liners and others engine
components. Associated Engineering Limited is now
merged with Federal Mogul Powertrain Systems, U.K.
Other technical assistance agreements that Allwin
Engineering has entered into during the last ten years
are with Honda Foundry Go. Ltd., Japan, for
production of petrol pistons, since 1996; U.E.
Automotive Manufacturing, Inc., Philippines, for
production of automobile radiator assemblies, since
1997; and F.C.C. Co. Ltd., Japan, for production of
motorcycle clutch assembly, since 1999.
The Company supplies its products to all OEMs as
well as to the commercial market and export. The
company has, thus, made a significant contribution to
import substitution thereby saving foreign exchange
and earning foreign exchange through export.
INVESTMENTS
The facilities at Allwin have been extended and
modernized steadily over the last decade in order to
take full share of the industry growth, quality
improvement and higher productivity, and are
amongst the best in the engineering sector of the
country. The company, infact, has been following a
prudent policy of investment in technology and
balancing and modernisation and replacement with a
view to ensure customer satisfaction and provide the
market automotive pads with the latest technology for
which your company has the unique distinction.
Following this policy, your company invested Rs.
23.26 mn in Piston Project, Rs. 35.79 mn in Radiator
Plant and Rs. 10.76 mn in C.I. Parts machinery
besides Rs. 46.88 mn in power generation project.
Your company had made an investment of Rs.
171.38 mn since the control of the company was
acquired by the Atlas Group in 1981 to 1991, while
during 1992 to 2000, an additional investment of Rs.
207.10 mn was made, making a total investment of
Rs. 378.48 mn, a no mean achievement in the given
circumstances. We continue to do this upgradation
of equipment and technology, year after year, in order
to provide the customer the right quality, all the times.
COMPANY OPERATIONS
Despite several constraints your company did quite
well for the year under review. Sales revenue for the
year was 414.18 mn as compared to Rs. 375.33 mn
in the previous year, up 10.4%, on account of volume
growth and better sales mix. The gross profit,
however, was 14.9% as against 16.7% in the
previous year. The fierce competition, smuggling,
irregular imports and under invoicing did not allow the
company to pass the cost increase - also due to
general inflation and increase in utility charges. In
order to meet the competition, the price of radiators
in replacement market had to be revised downward.
Thus the volume increase could not contribute fully to
the gross profit.
The operating expenses were under control and
increase, if any, was in line with enhanced operating
activity of the company. These expenses as a ratio
of sales work out to 7.72% in 1999-2000, down as
compared to 8.06% in the last year.
The financial expenses for the year stood at Rs.
23.53 mn down 37% against Rs. 37.63 mn in the
previous year. The major reason for the decrease
was that all lease finances having high mark up rates
ranging from 21% to 23% were paid in advance.
Your sponsors provided the required funds of Rs.
40.0 mn as interest free loan to the company in
addition to Rs. 70.0 mn contributed earlier as deposit
for right shares, totaling Rs. 110.0 mn. Further, the
management in its efforts to reduce financial cost,
arranged finance facilities from banks of Rs. 15.0 mn
at lower mark up rate of 17% and paid off the
expensive bank borrowing obtained at 21%.
The net profit before tax for the year was recorded at
Rs. 7.95 mn against Rs. 44,000 of the previous year.
Earning per share before tax worked out to Rs. 1.61
as against Rs. 0.01last year.
Your company contributed Rs. 77.02 mn to the
Government revenues in the form of custom duty,
sales tax, income tax, etc., being 18.60% of the sales
value during the year and Rs. 415 mn in the last decade.
(Rs. in mn)
Particulars 1991 1996 1997 1998 1999 2000
Sales 245 390.08 300.06 301.47 375.33 414.18
Profit/(Loss) A.T. 7.16 5.63 -49.02 -42.98 -1.54 5.90
Taxes Paid 37.53 26.50 68.51 50.38 66.54 77.02
HUMAN RESOURCE
The Group Personnel Committee headed by the
Chairman is continuously working to shape group
personnel policies, so that the employees are
motivated and rewarded according to their
contribution in meeting the company's objectives.
Further, all benchmark job descriptions were written
in accordance with the Hay's format and then
evaluated. Consequently, your company is being
restructured to meet the challenges of the millennium
and to be competitive in the face of globalisation. It
is only through a world class team that the company
will be able to compete globally.
The emphasis on human resource development is
the hallmark of the Atlas Group of which your
company is a constituent member. This is based on
strategic vision dovetailed with operational efficiency,
team work and individual performance. Individual
compensation has been linked with individual
performance with executive bonus being on an
agreed basis for the team as a whole. This year our
emphasis is more on the role of leadership,
management practices and integrity in terms of
executive profile, with a view to further improve our
performance. In order to implement the Hay's
system, the company reviewed and restructured the
management salaries to make them competitive in
the market. This will enable the company to recruit,
train and retain the right employees and a motivated
team to face the fast approaching globalisation.
A very congenial and satisfactory relationship
between the management and the dedicated workers
of your company remained the source of strength for
the company throughout the year.
FUTURE OUTLOOK
The current uncertainty in the industry as explained
above continues to affect further growth. The Pak
rupee devaluation against other currencies - about
12.5%, increase in price of gas at 15% and petroleum
products at 12%, increase in base price of raw
materials by Pakistan Steel Mills at 13% and other
international suppliers will push cost, 30% L/C margin
by the banks (now withdrawn) and likely increase in
mark-up rates after recent hike in discount rates of
2% by the State Bank of Pakistan will further increase
the cost of production. There will be little chance of
any substantial price increase in view of the
depressed market condition and continued import
through irregular channels, smuggling and under
invoicing not subject to any duty or sales tax which
your company pays.
The Government has, however, taken a number of
major steps for revival of the economy which are
beginning to take effect. The indicators have a
upward trend and are expected to continue to
improve. The indicators from the agriculture sector -
particularly the cotton crop - which constitutes 25%
(services 50% and manufacturing 25% being the
other constituents) of the country's GDP are again
positive and thus generally encouraging for the
economy. Agriculture is the backbone of our
economy catering to the socio-economic well being
of 70% of the population. The timely announcement
of support prices for cotton and wheat and the
relevant economic policies of the Government in
support of the agriculture sector are expected to help
the economy to perform better in the ensuing year.
The number of tax payers from the current figure of
1.3 mn is targeted to increase to 3 mn and will
generate more revenue to bridge the deficit, a
welcome trend to lower the debt burden. The
Automotive Parts Industry is thus expected to grow
and we are determined to take full advantage of this
opportunity.
Your management is quite aware of the challenges
and taking action to minimize the effects of these
negative influences by re-enforcing cost discipline,
quality standards and further relying on export. Your
company is blessed with a dedicated team of staff
and workers. We have further linked reward with
performance, which is a great motivator. Encouraged
by all these factors and augmented by further
customer satisfaction, we foresee a better future of
your company and, as such, a fair shareholders value
and reward to the company employees.
ACKNOWLEDGEMENT
May I thank your CEO Mr. S. V. H. Naqvi and his
team for their performance in one of the worst
circumstances faced by your company. I must also
thank the Board of Directors and Group Executive
Committee Members for their valuable contribution
and the customers and suppliers for their
encouragement and co-operation. I also wish to
place on record my appreciation for help and support
provided by foreign technical collaborators, banks,
financial institutions and shareholders.
YUSUF H. SHIRAZI
DIRECTOR'S REPORT
Your Directors take pleasure in submitting herewith their report together with the Audited Accounts and Auditor's
Report thereon for the year ended 30th June, 2000.
OPERATING RESULTS
2000 1999
Rupees Rupees
in '000 in '000
Net Profit before Tax 7,949 44
Provision for Taxation (2,045) (1,581)
------------------ ------------------
Net Profit / (Loss) after tax 5,904 (1,537)
Balance brought forward (60,853) (59,316)
------------------ ------------------
Balance carried forward (54,949) (60,853)
========== ==========
CHAIRMAN'S REVIEW
The review included in the Annual Report deals inter alia, with the performance of the company for the year
ended 30th June, 2000 and future prospects. The Directors endorse the contents of the review.
PATTERN OF SHARE HOLDING
The pattern of shareholding of the company is annexed.
AUDITORS
The present Auditors M/s. Ford, Rhodes, Robson, Morrow, Chartered Accountants retire and being eligible offer
themselves for re-appointment.
for and on behalf of the
BOARD OF DIRECTORS
S.V.H. Naqvi Yusuf H. Shirazi Aamir H. Shirazi
Chief Executive Officer Chairman Director
AUDITORS' REPORT TO THE MEMBERS
We have audited the annexed balance sheet of ALLWIN ENGINEERING INDUSTRIES LIMITED as at June 30,
2000 and the related profit and loss account, cash flow statement and statement of changes in equity 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.
It is the responsibility of the company's management to establish and maintain a system of internal control, and
prepare and present the above said statements in conformity with the approved accounting standards and the
requirements of the Companies Ordinance, 1984. Our responsibility is to express an opinion on these
statements based on our audit.
We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards
require that we plan and perform the audit to obtain reasonable assurance about whether the above said
statements are free of any material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the above said statements. An audit also includes assessing the
accounting policies and significant estimates made by management, as well as, evaluating the overall
presentation of the above said statements. We believe that our audit provides a reasonable basis for our
opinion and, after due verification, we report that:
(a) in our opinion, proper books of accounts 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 2.3 with which we concur;
(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, cash flow statement and statement of changes in equity together
with the notes forming part thereof conform with approved, accounting standards as applicable in
Pakistan, and, 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,
2000 and of the profit, its cash flows and changes in equity for the year then ended;
(d) in our opinion no zakat was deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980).
FORD, RHODES, ROBSON, MORROW
Karachi: 15th November, 2000 Chartered Accountants
BALANCE SHEET AS AT JUNE 30, 2000
2000 1999
Rupees Rupees
Note in '000 in '000
NON-CURRENT ASSETS
Operating fixed assets 3 283,753 295,156
LONG TERM DEPOSITS 4 1,105 2,183
DEFERRED COST 5 717 1,076
CURRENT ASSETS
Stores, spares and loose tools 6 20,620 18,973
Stock-in-trade 7 60,493 58,598
Trade debts 8 45,585 38,890
Loans, advances, deposits, prepayments
and other receivables 9 16,779 18,132
Cash and bank balances 10 1,375 284
------------------ ------------------
144,852 134,877
------------------ ------------------
TOTAL ASSETS 430,427 433,292
========== ==========
SHARE CAPITAL AND RESERVES
Authorized capital
10,000,000 (1999:10,000,000) ordinary
shares of Rs. 10/- each 100,000 100,000
========== ==========
Issued, subscribed and paid-up capital 11 49,347 49,347
Deposit for right shares 12 70,000 70,000
Unappropriated loss (54,949) (60,853)
------------------ ------------------
64,398 58,494
SURPLUS ON REVALUATION OF LEASEHOLD LAND 13 118,680 118,680
LONG TERM LOANS 14 23,533 35,505
LOAN FROM DIRECTOR AND OTHERS 15 40,000 --
OBLIGATIONS AND ADVANCE
UNDER FINANCE LEASE 16 -- 22,321
DEFERRED LIABILITY
Gratuity 5,139 4,139
CURRENT LIABILITIES
Short term finances 17 30,888 48,865
Current portion of long term liabilities 18 29,154 28,397
Creditors, accrued and other liabilities 19 116,565 114,988
Provision for taxation 2,070 1,903
------------------ ------------------
178,677 194,153
CONTINGENCIES AND COMMITMENTS 20 -- --
------------------ ------------------
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 430,427 433,292
========== ==========
The annexed notes form an integral part of these accounts.
S.V.H. Naqvi Yusuf H. Shirazi Aamir H. Shirazi
Chief Executive Officer Chairman Director
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED JUNE 30, 2000
2000 1999
Rupees Rupees
Note in '000 in '000
Sales 414,180 375,329
Less: Cost of sales 21 352,314 312,682
------------------ ------------------
Gross profit 61,866 62,647
------------------ ------------------
Less: Administrative expenses 22 195,811 18,285
Selling and distribution expenses 23 12,411 11,989
------------------ ------------------
31,992 30,274
------------------ ------------------
Operating profit 29,874 32,373
------------------ ------------------
Less: Financial expenses 25 23,947 376,301
Workers' profit participation fund 418 --
------------------ ------------------
23,947 37,630
Other Income 26 2,022 5,301
------------------ ------------------
Profit for the year 7,949 44
------------------ ------------------
Taxation - current 27 2,070 1,903
                - prior (25) (322)
------------------ ------------------
2,045 1,581
------------------ ------------------
Profit/(Loss) after taxation 5,904 (1,537)
Un-appropriated loss brought forward (60,853) (59,316)
Accumulated losses carried forward (54,949) (60,853)
========== ==========
Basic earnings per share 28.1 1.20 (0.31)
Diluted earnings per share 28.2 0.49 (0.13)
========== ==========
The annexed notes form an integral part of these accounts.
S.V.H. Naqvi Yusuf H. Shirazi Aamir H. Shirazi
Chief Executive Officer Chairman Director
STATEMENT OF CHANGES IN FINANCIAL POSITION
(CASH FLOW STATEMENT) FOR THE YEAR ENDED JUNE 30, 2000
2000 1999
Rupees Rupees
in '000 in '000
CASH FLOW FROM OPERATING ACTIVITIES
Profit before taxation 7,949 44
Adjustment for non cash charges and other items:
Depreciation 18,796 16,707
Profit on sale of fixed assets (1,325) (3,528)
Deferred cost written off 359 359
Gratuity 1,378 1,053
Financial expenses 23,529 37,630
Liabilities written back (622) (1,773)
------------------ ------------------
42,115 50,448
------------------ ------------------
Profit before working capital changes 50,064 50,492
Movement in working capital:
(Increase)/decrease in current assets
Stock-in-trade (3,542) 9,152
Trade debts (6,695) (386)
Loans, advances, deposits, prepayments and
other receivables 1,353 5,675
Increase/(decrease) in current liabilities
Creditors, accrued and other liabilities 5,969 8,334
------------------ ------------------
(2,915) 22,775
------------------ ------------------
Cash generated from operations 47,149 73,267
Payments for:
Financial expenses (27,299) (36,822)
Taxes (1,878) (1,508)
Gratuity (379) (134)
------------------ ------------------
Net cash inflow from operating activities 17,593 34,803
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from sale of fixed assets 1,821 17,077
Fixed capital expenditures (7,888) (13,344)
Decrease in long term deposits 1,078 2,781
------------------ ------------------
Net cash (outflow)/inflow from investing activities (4,989) 6,514
CASH FLOW FROM FINANCING ACTIVITIES
Repayments of short term finances (17,977) (17,507)
Repayments of long term loans (3,389) (30,285)
Repayments of finance lease liability (30,147) (25,756)
Deposit for right shares -- 30,000
Proceeds from Director and others loan 40,000 --
------------------ ------------------
Net cash (outflow) from financing activities (11,513) (43,548)
------------------ ------------------
Net increase/(decrease) in cash and cash equivalents 1,091 (2,231)
Cash and cash equivalents at the beginning of the year 284 2,515
------------------ ------------------
Cash and cash equivalents at the end of the year 1,375 284
========== ==========
S.V.H. Naqvi Yusuf H. Shirazi Aamir H. Shirazi
Chief Executive Officer Chairman Director
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED JUNE 30, 2000
Issued, subscribed Deposit for Unappropriated
& paid up capital right shares Profit/(Loss) Total
Rupees in '000 Rupees in '000 Rupees in '000 Rupees in '000
Balance as at June 30, 1998 49,347 40,000 (59,316) 30,031
Deposit for right shares -- 30,000 -- 30,000
Loss for the year -- -- (1,537) (1,537)
------------------ ------------------ ------------------ ------------------
Balance as at June 30, 1999 49,347 70,000 (60,853) 58,494
Profit for the year -- -- 5,904 5,904
------------------ ------------------ ------------------ ------------------
Balance as at June 30, 2000 49,347 70,000 (54,949) 64,398
========== ========== ========== ==========
S.V.H. Naqvi Yusuf H. Shirazi Aamir H. Shirazi
Chief Executive Officer Chairman Director
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED JUNE 30, 2000
1. NATURE OF BUSINESS
The company was incorporated in Pakistan as a private limited company in 1963 and was converted into
a public limited company on July 15, 1966. Its shares are listed on the Karachi and Lahore stock
exchanges. It is engaged in manufacturing of components and parts for automotive vehicles and tractors.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Accounting convention
These accounts have been prepared under the historical cost convention except that leasehold
land has been included at revalued amount referred to in note 2.5.
2.2 Staff retirement benefits
The company operates a provident fund scheme for all permanent employees eligible for the
benefit and contributions thereto are made in accordance with the terms of the scheme.
The company operated a gratuity scheme before the introduction of the provident fund in 1974.
On introduction of the provident fund the employees were given the option to either continue with
the gratuity scheme or join the provident fund. Those employees who opted to join the provident
fund were entitled to gratuity upto the period of joining the provident fund and provision in this
respect was duly made. Liability in respect of remaining employees entitled for gratuity has also
been provided upto date. The company entered into an agreement with the collective bargaining
agent (CBA), whereby the workers who opted for the provident fund scheme are also entitled to
gratuity for four days for each completed year of service. Liability in respect of above has also
been provided upto date.
2.3 Employees' compensated absences
During the year, the revised International Accounting Standard 19 relating to Employee Benefits
became applicable on the company. This standard requires that an enterprise should provide for
absences accumulated by its employees. Previously no accrual was taken for accumulated
absences as encashment was allowed only at the time when the employee leaves the company.
Accordingly the management has decided to change its accounting policy and has decided to
make provision in respect of these absences. The liability of the company in respect of these
absences as at June 30, 2000 amounted to Rs.2.3 million which has been fully provided in the
current year. Had the above policy not been revised the profit before taxation for the year would
have been higher by Rs.2.3 million.
2.4 Taxation
Current
Provision for current taxation is based on taxable income at the current rates of taxation after
taking into account applicable tax credits and rebates or at the rate of 0.5% of turnover whichever
is higher.
Deferred
The company accounts for deferred taxation using the liability method on all significant timing
differences, excluding tax effect on those timing differences which are not likely to reverse in the
foreseeable future. However, as a matter of prudence, the company does not account for deferred
tax debit in the accounts.
2.5 Operating fixed assets and depreciation
Owned
Fixed assets except leasehold land are stated at cost less accumulated depreciation. Leasehold
land is stated at revalued amount and is not being amortised over its lease period. Cost of certain
fixed assets comprises of historical cost and the cost of borrowings during construction period in
respect of loans taken for specific projects.
Depreciation is charged to income applying the reducing balance method by using rates stated in
note 3 to the accounts. Depreciation on additions is charged from the month in which the asset is
put to use and on disposals upto the month of disposal.
Dies, jigs etc. manufactured for own use are included in fixed assets and are valued at cost of raw
material consumed plus direct and a proportion of indirect manufacturing overheads.
Maintenance and normal repairs are charged to income as and when incurred.
Gains or losses on disposal of fixed assets are included in income currently.
Leased
Assets subject to finance lease
These are stated at lower of present value of minimum lease payments under the lease agreements
and the fair value of the assets acquired on lease. The related obligations under the lease are
accounted for as liability. Financial charges are allocated to accounting periods in a manner so as
to provide a constant periodic rate of charge on the outstanding liability.
Depreciation on assets subject to finance lease is provided in the same manner as owned fixed assets.
Assets Subject to operating lease
Rentals for assets held under operating lease are charged to income currently.
2.6 Capital work-in-progress
This includes costs pertaining to the acquisition, construction, erection and installation of plant and
machinery.
2.7 Capitalisaton of borrowing costs
The company capitalises borrowing costs relating to capital projects, excluding normal capital
expenditure.
2.8 Stores, spares and loose tools
These are valued at the lower of cost and net realisable value determined on a moving average
basis.
2.9 Stocks
These are valued on the following basis:
a) Raw and ancillary materials and work in process
At the lower of cost and net realisable value determined on a moving average basis. Goods
in bonded warehouse are stated at invoice value plus other charges paid thereon excluding
customs duty.
b) Finished goods
Finished goods are being valued at the lower of cost and net realisable value determined
on a moving average basis.
2.10 Foreign currency translation
Assets and liabilities in foreign currencies are translated into Pak rupee at the rates of exchange
prevailing at the balance sheet date except the liabilities covered by forward exchange contracts
where the respective contract rate is applied.
2.11 Revenue recognition
Revenue is recognised when goods are dispatched.
3. OPERATING FIXED ASSETS
COST/REVALUATION DEPRECIATION Written Rate of
down value depreciation
As at July Adjustments/ As at June As at July On adjustments/ Charge for As at June as at June on written
01, 1999 Additions (Disposals) 30, 2000 01, 1999 (Disposals) the year 30, 2000 30, 2000 down value
Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees %
in '000 in '000 in '000 in '000 in '000 in '000 in '000 in '000 in '000
OWNED
Leasehold land (note 3.2 & 3.3) 118,840 -- -- 118,840 -- -- -- -- 118,840 --
Factory building 36,707 -- -- 36,707 25,733 -- 1,098 26,831 9,876 10
Generator building 3,741 -- -- 3,741 1,172 -- 257 1,429 2,312 10
Residential building 365 -- -- 365 278 -- 4 282 83 5
Office building 1,745 -- -- 1,745 1,033 -- 36 1,069 676 5
Machinery and plant 180,096 734 36,110 216,940 93,056 4,556 11,887 109,499 107,441 10
Power generator 32,581 -- 14,299 46,880 10,048 4,539 3,229 17,816 29,064 10
Electrical fittings 4,238 522 -- 4,760 2,670 -- 187 2,857 1,903 10
Office equipment 2,181 -- -- 2,181 1,570 -- 92 1,662 519 15
Computer 2,683 97 (68) 2,712 2,050 (53) 197 2,194 518 30
Furniture and fixtures 3,401 8 -- 3,409 2,676 -- 73 2,749 660 10
Vehicles 5,086 2,878 (975) 6,989 2,201 (495) 662 2,368 4,621 20
Waterline and drainage 670 -- -- 670 596 -- 7 603 67 10
Sui gas line 576 -- -- 576 330 -- 25 355 221 10
Measuring instruments, dies,
jigs, patterns and other equipments  18,657 3,649 -- 22,306 14,312 -- 1,042 15,354 6,952 20
Bicycles 2 -- -- 2 2 -- -- 2 -- 20
------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
411,569 7,888 49,366 468,823 157,727 8,547 18,796 185,070 283,753
------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Assets Subject to Finance lease
Power generator (note 3.5) 14,299 -- (14,299) -- 4,539 (4,539) -- -- -- 10
Machinery and plant (note 3.5) 36,110 -- (36,110) -- 4,556 (4,556) -- -- -- 10
------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
50,409 -- (50,409) -- 9,095 (9,095) -- -- --
------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
461,978 7,888 (1,043) 468,823 166,822 (548) 18,796 185,070 283,753
========== ========== ========== ========== ========== ========== ========== ========== ==========
As at June 30, 1999 450,474 52,412 (40,908) 461,978 177,475 (27,360) 16,707 166,822 295,156
========== ========== ========== ========== ========== ========== ========== ========== ==========
3.1 All the buildings are on leasehold land.
3.2 Leasehold land costing Rs. 0.16 million was revalued by Razzaque Umrani & Co., Engineers and Surveyors on June 20, 1998 resulting in surplus amounting
to Rs. 118.68 million which has been credited to surplus on revaluation on leasehold land account.
3.3 As stated in note 2.5 leasehold land has not been amortised. Had leasehold land been amortised the charge for the year and to date would have amounted
to Rs. 2.33 million and Rs. 7.066 million respectively.
3.4 The depreciation charge for the year has been allocated as follows:
2000 1999
Rupees Rupees
in 000 in 000
Cost of sales- note 21.1 18,514 16,456
Administrative expenses- note 22 188 167
Selling and distribution expenses- note 23 94 84
------------------ ------------------
18,796 16,707
========== ==========
3.5 The above assets were transferred to owned asset as the related leases were settled during the year.
3.6 The following assets were disposed off during the year:
Cost/lease Accumulated Written Sale
Assets residual Depreciation down/lease Proceeds Mode of Disposal Particulars of Buyers
value residual Value
Rupees Rupees Rupees Rupees
Computer 38,453 29,485 8,968 8,968 Under Co's. Policy Mr. S.V.H. Naqvi
-do- 30,000 23,415 6,585 6,585 Under Co's. Policy Mr. Zakir Habib
Vehicles- Car 736,546 495,195 241,351 241,351 Under Co's. Policy Mr. S.V.H. Naqvi
Vehicles- Motorcycle 6,100 -- 6,100 24,986 Under Co's Policy Mr. Hashim Khan
-do- 6,100 -- 6,100 24,986 Under Co's Policy Mr. Ameeruddin
-do- 5,130 -- 5,130 21,012 Under Co's Policy Mr. Jawaid Iqbal
-do- 5,130 -- 5,130 21,012 Under Co's Policy Mr. Moeenuddin
-do- 5,130 -- 5,130 21,013 Under Co's Policy Mr. Samiullah Firozvi
-do- 5,130 -- 5,130 21,012 Under Co's Policy Mr. Ashfaq Hussain
-do- 5,130 -- 5,130 21,012 Under Co's Policy Mr. Fareeduddin
-do- 5,130 -- 5,130 21,012 Under Co's Policy Mr. Mirza Shoib Ahmed
-do- 5,130 -- 5,130 21,012 Under Co's Policy Mr. S.M Masud-ul-Haq
-do- 5,130 -- 5,130 21,012 Under Co's Policy Mr. Muhammad Khurshid
-do- 5,130 -- 5,130 21,013 Under Co's Policy Mr. Jalil Ahmed
-do- 5,080 -- 5,080 20,808 Under Co's Policy Mr. Nadir Hussain
-do- 5,080 -- 5,080 20,808 Under Co's Policy Mr. Safiur Rehman
-do- 5,080 -- 5,080 20,808 Under Co's Policy Mr. Mohammad Anwer Khan
-do- 5,080 -- 5,080 20,808 Under Co's Policy Mr. Sagheeruddin
-do- 5,080 -- 5,080 20,808 Under Co's Policy Mr. Mohammad Basharat
-do- 5,080 -- 5,080 20,808 Under Co's Policy Mr. Mohammad Naeem
-do- 5,080 -- 5,080 20,808 Under Co's Policy Mr. Khursheed Ahmed
-do- 5,080 -- 5,080 20,808 Under Co's Policy Mr. Firasat Ali
-do- 5,080 -- 5,080 20,808 Under Co's Policy Mr. Jamaluddin
-do- 5,080 -- 5,080 20,808 Under Co's Policy Mr. Wall Khan
-do- 6,140 -- 6,140 25,149 Under Co's Policy Mr. S. Anwar Hussain
-do- 6,120 -- 6,140 61,400 Under Co's Policy Mr. Mohammad Muzaffar
-do- 5,080 -- 5,080 50,800 Under Co's Policy Mr. Feroze
-do- 5,080 -- 5,080 50,800 Under Co's Policy Mr. Zakirullah
-do- 5,080 -- 5,080 50,800 Under Co's Policy Mr. Ishtiaq Ahmed
-do- 5,080 -- 5,080 50,800 Under Co's Policy Mr. Noor Paras Khan
-do- 5,080 -- 5,080 50,800 Under Co's Policy Mr. Mohammad Miskeen
-do- 5,080 -- 5,080 50,800 Under Co's Policy Mr. Munawar
-do- 5,080 -- 5,080 50,800 Under Co's Policy Mr. Nisar Ahmed Awan
-do- 5,080 -- 5,080 50,800 Under Co's Policy Syed Zahid Mian
-do- 5,080 -- 5,080 50,800 Under Co's Policy Mr. Makhan
-do- 5,080 -- 5,080 50,800 Under Co's Policy Mr. Haji Salahuddin
-do- 5,080 -- 5,080 50,800 Under Co's Policy Mr. Baqar Khan
-do- 5,080 -- 5,080 50,800 Under Co's Policy Mr. Muhammad Yaqoob
-do- 5,080 -- 5,080 50,800 Under Co's Policy Mr. Muneer Ahmed
-do- 5,080 -- 5,080 50,800 Under Co's Policy Mr. Ameer Jan
-do- 5,080 -- 5,080 40,640 Under Co's Policy Mr. Faheem-ul-Haque
-do- 5,080 -- 5,080 30,345 Under Co's Policy Mr. Mahboob Alam
-do- 5,080 -- 5,080 30,345 Under Co's Policy Mr. Rashid Ali Siddiqui
-do- 5,080 -- 5,080 30,345 Under Co's Policy Mr. Tariq Nafis Siddiqui
-do- 5,080 -- 5,080 32,512 Under Co's Policy Syed Zafar Ali
-do- 5,080 -- 5,080 51,868 Under Co's Policy Mr. Sarfraz
-do- 5,130 -- 5,130 51,300 Under Co's Policy Mr. Tariq Sami Khan
-do- 5,130 -- 5,130 30,643 Under Co's Policy Mr. S. M. Khurshid Alam
-do- 5,130 -- 5,130 21,013 Under Co's Policy Mr. Munir Ahmed
------------------ ------------------ ------------------ ------------------
1,043,439 548,095 495,344 1,820,826
========== ========== ========== ==========
2000 1999
Rupees Rupees
in '000 in '000
4. LONG TERM DEPOSITS - UNSECURED
Leasing companies -- 1,096
Utilities 639 639
Suppliers 231 264
Others 235 184
------------------ ------------------
1,105 2,183
========== ==========
5. DEFERRED COST
Balance as on July 1 1,076 1,435
Addition during the year -- --
------------------ ------------------
1,076 1,435
Amortized during the year 359 359
------------------ ------------------
Balance as at June 30 717 1,076
========== ==========
The above cost has been incurred on Radiator Plant and is being amortised over the period of four years
commencing from the start of commercial production of Radiator Plant.
6. STORES, SPARES AND LOOSE TOOLS
Spare parts and other materials:
In hand 9,463 8,964
In transit 9 196
------------------ ------------------
9,472 9,160
Loose tools 9,561 8,159
Packing materials 808 940
Electrical goods 779 714
------------------ ------------------
20,620 18,973
========== ==========
7. STOCK - IN - TRADE
Raw and ancillary materials:
In hand 23,460 29,043
In transit 536 1,423
In bonded warehouse 1,678 --
------------------ ------------------
25,674 30,466
Work-in-process 19,022 12,504
Finished goods 15,797 15,628
------------------ ------------------
60,493 58,598
========== ==========
8. TRADE DEBTS - unsecured - considered good
The amount due from associated undertakings at year end amounted to Rs. 5.308 million (1999:
Rs. 2.878 million). The maximum amount due at the end of any month during the year was
Rs. 12.264 million (1999: Rs. 7.508 million)
2000 1999
Rupees Rupees
in '000 in '000
9. LOANS, ADVANCES, DEPOSITS, PREPAYMENTS
AND OTHER RECEIVABLES
Loans and advances (considered good)
Loans to employees (interest bearing) 974 1,070
Advances to:
- employees against salary 335 270
- employees against expenses 122 123
- Suppliers 5,511 1,336
------------------ ------------------
6,942 2,799
Deposits, prepayments and other receivables
Security and trade deposits 908 939
L/C and guarantee margin deposits 66 542
Prepayments and other receivables 2,107 1,972
Income-tax deducted at source 6,756 11,880
------------------ ------------------
9,837 15,333
------------------ ------------------
16,779 18,132
========== ==========
10. CASH AND BANK BALANCES
Cash in hand 25 11
At bank - current accounts 1,285 208
- deposit accounts 65 65
------------------ ------------------
1,375 284
========== ==========
11. ISSUED, SUBSCRIBED AND PAID-UP CAPITAL
1,871,571 (1999: 1,871,571) ordinary shares
of Rs. 10/-each issued for cash 18,716 18,716
49,800 (1999: 49,800) ordinary shares of Rs.10/-
each issued for consideration other than cash 498 498
3,013,300 (1999:3,013,300) ordinary shares
of Rs. 10/- each issued as bonus shares 30,133 30,133
------------------ ------------------ ------------------
4,934,671 49,347 49,347
========== ========== ==========
12. DEPOSIT FOR RIGHT SHARES
Director 17,500 17,500
Others 52,500 52,500
------------------ ------------------
70,000 70,000
========== ==========
This represents amount received in advance from certain individuals for proposed issue of right shares.
13. SURPLUS ON REVALUATION OF LEASEHOLD LAND
This represents surplus over book value resulting from the revaluation of leasehold land (note: 3)
14. LONG TERM LOANS - SECURED
From financial institutions:
Foreign currency loans 14.1 5,248 7,324
Local currency loans
Loan l 14.2 2,182 41,741
Loan II 14.3 3,591 4,578
------------------ ------------------
5,773 8,752
From Banks:
Local Currency Loan-I 14.4 26,666 40,000
Local Currency Loan-II 14.5 15,000 --
------------------ ------------------
52,687 56,076
Less: Current maturity shown under current liabilities
Foreign currency loans 2,422 2,077
Local currency loans 26,732 18,494
------------------ ------------------
29,154 20,571
------------------ ------------------
23,533 35,505
========== ==========
14.1 The salient features in respect of this loan are:
a) The long term loan is secured by a mortgage on present and future assets of the company
ranking pari-passu with charges already created.
The foreign currency loan has been converted into Pakistani rupees at the rate of exchange
prevailing on the date of the respective disbursements as under the terms of the agreement the
loan is repayable in Pakistani rupees. It carries interest at 16% per annum including exchange risk
fee and is repayable in sixteen half yearly installments last being due on January 01,2002.
14.2 This loan has been obtained under mark-up arrangements. Pursuant to the agreement, the financial
institution has agreed to purchase the company's assets as and when acquired for Rs. 15 million and
has agreed to sell the same to the company for Rs. 23.890 million.
The salient features in respect of this loan agreement are:
(a) The purchase price is secured by mortgage and floating charge on present and future assets of
the company ranking pari-passu with charges already created.
b) The purchase price is payable in ten half yearly equal installments, last being due on June
07, 2000.
c) In case of late payment fine at the rate of sixty six paisas per thousand rupees per day shall be
payable by the company for the defaulted amount.
14.3 This loan has been obtained under mark-up arrangements. Pursuant to the agreement the financial
institution has agreed to purchase the company's assets as and when acquired for 5 million and has
agreed to sell the same to the company for Rs. 8.873 million.
The salient features in respect of this loan agreement are:
a) The purchase price is secured by mortgage and floating charge on present and future assets of
the company ranking pari-passu with charges already created.
b) The purchase price is payable in ten half yearly equal installments, last being due on August 22, 2002.
c) In case of late payment fine at the rate of 6.5% per annum above bank rate shall be payable by
the company for the defaulted amount.
14.4 The salient features in respect of this loan are:
a) This loan has been obtained from bank and is secured by way of first pari-passu charge over
company's assets.
b) Loan carries mark-up rate at 17% and is repayable in thirty six monthly installments, last being
due on December 31, 2002.
c) Payment is made after the expiry date, liquidated damages of upto 25% of the outstanding balance
shall be payable by the company.
14.5 The salient features in respect of this loan are:
a) This loan has been obtained from a bank and is secured by way of second pari-passu charge over
company's fixed assets and, joint hypothecation charge over stocks & book debts.
b) Loan carries mark-up at 15% per annum and is repayable in four half yearly installments, last
being due on December 31, 2002.
c) In case of late payment liquidated damages at the rate of 5% shall be payable by the company.
15. LOAN FROM DIRECTOR AND OTHERS - UNSECURED
Director 10,000 --
Others 30,000 --
------------------ ------------------
40,000 --
========== ==========
This represents amount received from Director and their relatives without any mark-up or security.
16. OBLIGATIONS AND ADVANCE UNDER FINANCE LEASE
See note 3.5.
17. SHORT TERM FINANCES - SECURED
From Banks:
Running finances 17.1 18,476 48,865
Murabaha 17.2 12,412 --
------------------ ------------------
30,888 48,865
========== ==========
17.1 These are under mark-up arrangements and are secured by joint hypothecation of stocks and
book debts. The rate of mark-up ranges between 15.0% to 17.0% (1999:17.15% to 21.0%) per
annum and is payable currently.
The facility for short-term running finance from banks amounts to Rs. 24 million (1999:Rs. 54 million)
17.2 The facility is secured by first pari passu charge over stocks and book debts. The murabaha
facility from bank amounts to Rs. 15 million (1999: Rs. Nil)
18. CURRENT PORTION OF LONG TERM LIABILITIES
Long term loans 29,154 20,571
Obligations under finance lease 16 -- 7,826
------------------ ------------------
29,154 28,397
========== ==========
19. CREDITORS, ACCRUED AND OTHER LIABILITIES
Creditors 27,217 21,716
Bills Payable 4,369 11,369
Accrued liabilities 45,449 36,293
Mark-up accrued on obligations and advance
under finance lease -- 3,192
Interest/Mark-up accrued on secured long term loans 2,913 2,827
Mark-up accrued on secured short term finances 1,249 2,232
Interest accrued on advances from customers 459 140
Security deposits 65 65
Advances from customers (interest bearing) 1,180 2,510
Advances from customers (interest free) 19.1 27,179 28,755
Worker's profit participation fund 418 --
Unclaimed dividends 112 112
Others 5,955 5,777
------------------ ------------------
116,565 114,988
========== ==========
19.1 Amount due to an associated undertaking at the year end aggregated Rs.26.777 million
(1999: Rs. 28.344 million)
20. CONTINGENCIES AND COMMITMENTS
20.1 Contingencies
(a) Bank guarantees
(i) For difference in custom duties on imported material 91 91
(ii) Sui Southern Gas Company against deposit 5,847 5,847
------------------ ------------------
5,938 5,938
========== ==========
(b) Post dated cheques for difference in custom duties 16,461 12,064
========== ==========
(c) Insurance company guarantees
(i) Advances from customers 900 2,653
(ii) For difference in custom duties 353 486
(iii) Karachi Electric Supply Corporation 4,000 4,000
------------------ ------------------
5,253 7,139
========== ==========
d) Electricity charges
Karachi Electric Supply Corporation Limited (KESC) raised a demand of Rs. 12.285 million on
the plea that they erred in billing, which the company has contended and the case is before
the Honourable High Court of Sindh. The Honourable Court issued stay order on May 26, 1989
for making payments against the remaining disputed demand. The company till the date of
stay order had .paid under protest Rs. 7.850 million. In addition, an insurance company has
issued a guarantee in the sum of Rs. 4 million to the K.E.S.C.
20.2 Commitments
a) Bank letters of credit
For import of materials etc. 32,915 38,148
========== ==========
b) Rentals payable under lease agreements for motor vehicles are:
Payable within one year 370 1,579
Payable after one year -- 370
21. COST OF SALES
Opening stock of finished goods 15,628 26,169
Cost of goods manufactured 21.1 352,483 302,141
------------------ ------------------
368,111 328,310
Less: Closing stock of finished goods 15,797 15,628
------------------ ------------------
352,314 312,682
========== ==========
21.1 Cost of goods manufactured
Opening work-in-process 12,504 17,840
Raw and ancillary materials consumed 21.2 179,226 138,982
Salaries, wages and benefits 85,285 74,731
Spare parts and other maintenance 21,539 20,962
Packing materials consumed 6,716 5,086
Fuel, water and power 36,923 29,269
Rent, rates and taxes 239 248
Insurance 1,439 1,353
Training expenses 25 72
Repairs and maintenance of factory building
and electrical fittings 1,516 1,724
Depreciation 18,514 16,456
Royalties and technical fee 5,381 5,231
Printing and stationery 578 522
Postage, telephone and telegrams 507 598
Subscriptions 101 431
General expenses 627 510
Repairs and maintenance of furniture
fittings and office equipment 165 368
Expenses on apprentices training scheme 220 262
------------------ ------------------
371,505 314,645
Less: Closing work-in-process (19,022) (12,504)
------------------ ------------------
352,483 302,141
========== ==========
21.2 Raw and ancillary materials consumed
Opening stock 29,043 19,522
Add: Purchases 173,643 148,503
------------------ ------------------
202,686 168,025
Less: Closing stock 23,460 29,043
------------------ ------------------
179,226 138,982
========== ==========
22. ADMINISTRATIVE EXPENSES
Salaries and allowances 11,984 10,624
Directors' meeting fee 7 19
Lease rentals 1,648 2,419
Printing and stationery 405 365
Postage, telephone and telegrams 381 548
Entertainment 115 96
Subscriptions 200 199
Travelling and conveyance 1,939 1,284
Insurance 661 621
General expenses 363 350
Legal and professional expenses 280 368
Donation 22.1 13 10
Medical expenses 308 300
Training expenses 206 9
Tax on calling and professions 24 52
Advertisement and publicity 95 164
Repairs and maintenance of furniture
fittings and office equipment 295 231
Depreciation 188 167
Auditor's remuneration 22.2 110 100
Deferred cost written off 359 359
------------------ ------------------
19,581 18,285
========== ==========
22.1 No donation was made to any person or institution in which a director or his spouse has any
interest.
22.2 Auditor's remuneration and expenses
Audit fee 110 100
Expenses (included in general expenses) 25 19
------------------ ------------------
135 119
========== ==========
23. SELLING AND DISTRIBUTION EXPENSES
Salaries and allowances 3,441 3,027
Rent, rates and taxes 91 180
Lease rental 186 269
Cartage and octroi 3,109 3,661
Printing and stationery 173 157
Postage, telephone and telegrams 152 186
Entertainment 78 110
Subscriptions 53 43
Travelling and conveyance 1,171 1,105
Insurance 260 244
General expenses 103 68
Medical expenses 120 132
Tax on callings and professions 8 17
Advertisement and publicity 1,365 1,410
Sales Promotion 1,966 1,222
Repairs and maintenance of furniture,
fittings and office equipment 41 74
Depreciation 94 84
------------------ ------------------
12,411 11,989
========== ==========
24. RETIREMENT BENEFITS
Salaries, wages and allowances charged in the accounts include retirement benefits of Rs. 5,843,963
(1999: Rs. 5,313,276)
25. FINANCIAL EXPENSES
Interest/mark-up on long term loans 10,347 12,824
Mark-up on short term finances 5,920 12,040
Interest on advances from customers 673 446
Bank and other charges 1,510 2,012
Interest on technical fee 1,140 1,265
Interest from loan to employees (117) (103)
Mark-up on Lease finance 4,056 9,146
------------------ ------------------
23,529 37,630
========== ==========
26. OTHER INCOME
Liabilities considered no more payable written back 98 201
Income on sale and lease back 524 1,572
Profit on sale of fixed asset 1,325 3,528
Rental income 75 --
------------------ ------------------
2,022 5,301
========== ==========
27. TAXATION
Current
The company's income tax assessments have been finalized upto and including assessment year
1999-2000.
The tax liability based on taxable income works out to be lower than the minimum tax based on turnover.
The provision for taxation is, therefore, based on turnover @ 0.5% as provided under section 80D of the
Income Tax Ordinance, 1979.
Deferred
Cumulative deferred taxation upto June 30, 2000 on major timing differences relating to accelerated tax
depreciation allowances and carry forward of losses amounts to Rs.4.058 million debit (1999:Rs.2 million
debit), of which Rs.2.058 million debit relates to the current year (1999:Rs.9.189 million credit). As a
matter of prudence, the company has not accounted for this favourable deferred tax debit.
28. EARNINGS PER SHARE
28.1 Basic earnings per share
Basic earnings per share has been computed by dividing net profit for the year after taxation with
the number of ordinary shares issued by the company.
28.2 Diluted earnings per share
Diluted earnings per share has been computed' by dividing net profit for the year after taxation
with the number of ordinary shares issued by the company adjusted for the effects of deposit for
shares which are to be issued as right shares.
29. REMUNERATION OF CHIEF EXECUTIVE AND EXECUTIVES
(included in administrative expenses)
Chief Executive Executives
2000 1999 2000 1999
Rupees Rupees Rupees Rupees
in '000 in '000 in '000 in '000
Managerial remuneration 1,019 968 5,827 5,491
Rent 458 404 2,622 2,222
Medical expenses 12 12 312 277
Provident fund 112 90 583 414
Reimbursable expenses 109 96 1,039 788
------------------ ------------------ ------------------ ------------------
1,710 1,570 10,383 9,192
========== ========== ========== ==========
Number of persons 1 1 26 23
========== ========== ========== ==========
29.1 The Chief Executive is provided with free use of a company car.
30. TRANSACTIONS WITH ASSOCIATED UNDERTAKINGS
Sales 93,303 56,209
Purchases 6,749 4,190
Expenses charged by 427 503
Insurance and services 4,967 4,534
31. UNUTILISED CREDIT FACILITY
The unutilised credit facility for short term running finance amounts to Rs.5.524 million (1999: Rs. 5.135
million) and murahaba facility amounts to Rs. 2.588 million (1999: Rs. Nil).
32. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES
32.1 Financial assets and liabilities
Interest/Mark-up bearing Non-interest/Mark-up bearing Total
Maturity upto Maturity after Maturity upto Maturity after June 30, June 30,
one year one year Sub-total one year one year Sub-total 2000 1999
FINANCIAL ASSETS
Long term deposits -- -- -- -- 1,105 1,105 1,105 2,183
Loans, advances, deposits, prepayments 974 -- 974 15,805 -- 15,805 16,779 18,132
and other receivable
Trade debts -- -- -- 45,585 -- 45,585 45,585 38,890
Cash and bank balances -- -- -- 1,375 -- 1,375 1,375 284
------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
June 30, 2000 974 -- 974 62,765 1,105 63,870 64,844 59,489
========== ========== ========== ========== ========== ========== ========== ==========
June 30, 1999 1,070 -- 1,070 56,236 2,183 58,419 59,489 --
========== ========== ========== ========== ========== ========== ========== ==========
FINANCIAL LIABILITIES
Long term loans 29,154 23,533 52,687 -- -- -- 52,687 56,076
Loan from Director and Others -- -- -- -- 40,000 40,000 40,000 --
Obligations and Advance under Finance
Lease -- -- -- -- -- -- -- 30,147
Short term running finances 30,888 -- 30,888 -- -- -- 30,888 48,865
Creditors, accrued and other liabilities -- -- -- 116,565 -- 116,565 116,565 114,988
------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
June 30, 2000 60,042 23,533 83,575 116,565 40,000 156,565 240,140 250,076
========== ========== ========== ========== ========== ========== ========== ==========
June 30, 1999 77,262 57,826 135,088 114,988 -- 114,988 250,076 --
========== ========== ========== ========== ========== ========== ========== ==========
32.2 Credit Risk Exposure
The Company manages credit risk relating to trade receivables by limiting significant exposure to any individual
customer, obtaining advances, deposits against sales and coverage under the agreements.
32.3 Interest / mark-up rate exposure
The company is exposed to interest/mark-up rate risk on some of the financial obligations. Significant financial
assets/liabilities which are exposed to various rates of interest are mentioned in the respective notes to the
accounts.
32.4 Foreign exchange risk management
Liabilities exposed to foreign currency risk amount to Rs. 27.99 million.
32.5 Fair value of financial instruments
The carrying value of all the financial instruments reported in the financial statements approximate their fair value.
33. PLANT CAPACITY AND PRODUCTION
The production capacity of the plant cannot be determined as this depends on the relative proportions
of various type of components and parts of vehicles and tractors produced.
34. NUMBER OF EMPLOYEES
The company employed 644 (1999:672) employees at the end of the year.
35. GENERAL
35.1 All figures are in thousands of rupees unless otherwise stated.
35.2 Previous year's figures have been regrouped and/or rearranged wherever considered necessary
for the purposes of comparison.
S.V.H. Naqvi Yusuf H. Shirazi Aamir H. Shirazi
Chief Executive Officer Chairman Director
PATTERN OF SHAREHOLDING AS AT JUNE 30, 2000
Number of Share Holding Total
Shareholders From To Shares held
299 1 -- 100 Shares 10,041
316 101 -- 500 Shares 83,025
145 501 -- 1,000 Shares 117,669
90 1,001 -- 5,000 Shares 184,697
11 5,001 -- 10,000 Shares 80,824
2 10,001 -- 15,000 Shares 21,917
1 15,001 -- 20,000 Shares 16,500
3 20,001 -- 25,000 Shares 68,595
1 45,001 -- 50,000 Shares 48,510
1 140,001 -- 145,000 Shares 141,768
4 195,001 -- 200,000 Shares 788,341
1 255,001 -- 260,000 Shares 257,268
1 390,001 -- 395,000 Shares 390,497
1 1,135,001 -- 1,140,000 Shares 1,136,224
1 1,585,001 -- 1,590,000 Shares 1,588,802
------------------ ------------------
877 4,934,678
========== ==========
Categories of Shareholders Shareholders Shares held Percentage
1. Individuals 850 1,321,604 2,678
2. Investment Companies 4 1,850,411 37.50
3. Insurance Companies 4 545,879 11.06
4. Joint Stock Companies 9 71,631 1.45
5. Financial Institutions 6 1,143,889 23.18
6. Corporate Law Authority 1 1 0.02
7. Abandoned Properties Organisation 1 908
8. Punjabi Saudagar Multipurpose
Co-operative Society Ltd. 1 149 0.01
9. Nazir High Court of Sindh 1 206
------------------ ------------------ ------------------
877 4,934,678 100.00
========== ========== ==========
ATLAS GROUP COMPANIES
Year of Establishment
Acquisition*
Shirazi Investments (Pvt) Ltd. 1962
Atlas Honda Ltd. 1963
Atlas Battery Ltd. 1966
Shirazi Trading Co. (Pvt) Ltd. 1973
Atlas Warehousing (Pvt) Ltd. 1979
Atlas Office Equipment (Pvt) Ltd. 1979*
Muslim Insurance Co. Ltd. 1980*
Allwin Engineering Industries Ltd. 1981*
Atlas Lease Ltd. 1989
Atlas Investment Bank Ltd. 1990
Honda Atlas Cars (Pakistan) Ltd. 1993
Honda Atlas Power Product (Pvt) Ltd. 1997
Total Atlas Lubricants Pakistan (Pvt) Ltd. 1997
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