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Bannu Woollen Mills Limited
Annual Report 2000
CONTENTS
Company's Profile
Notice of Annual General Meeting
Directors' Report to the Members
Decade at a Glance
Graphic Illustrations
Auditors' Report
Balance Sheet
Profit & Loss Account
Cash Flow Statement
Statement of Changes in Equity
Notes to the Accounts
Pattern of Shareholding
COMPANY'S PROFILE
BOARD OF DIRECTORS RAZA KULI KHAN KHATTAK
Chairman
MUHAMMAD AZHAR KHAN
Chief Executive
LT. GEN. (RETD.) ALI KULI KHAN KHATTAK
AHMED KULI KHAN KHATTAK
MUSHTAQ AHMAD KHAN FCA
MRS. ZEB GOHAR AYUB KHAN
MRS. SHAHNAZ SAJJAD AHMAD
MRS. SHAHEEN TARIQ KHALIL
MANZOOR AHMED SHEIKH (NIT)
MS. FARZANA MUNAF (NIT)
SECRETARY AMIN-UR-RASHEED
(Secretary & Sr. Manager, Corporate Affairs)
AUDITORS HAMEED CHAUDHRI & CO.,
Chartered Accountants
BANKERS National Bank of Pakistan
Bank of Khyber
Pakistan Industrial Credit
& Investment Corporation
MILLS D.I. KHAN ROAD, BANNU
Phone: (0928) 613151-613250
Fax: (0928) 611450
REGISTERED OFFICE Bannu Woollen Mills Limited
& SHARE OFFICE Habibabad,
Kohat
Phone: (0922) 510063 - 512930,
Fax: (0922) 510474
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that 40th Annual General Meeting of BANNU WOOLLEN MILLS LIMITED
will be held at Registered Office, Habibabad - Kohat on Saturday the 31st March, 2001 at 11:45 A.M. to transact
the following business:-
A. ORDINARY BUSINESS
1. To confirm minutes of the 39th Annual General Meeting held on 30th March, 2000.
2. To receive, consider and adopt the annual audited accounts of the company for the year ended
30 September, 2000 together with the Director's and Auditors' reports there on.
3. To consider and approve the payment of final cash dividend for the year ended 30th September,
2000, as recommended by the Board of Directors of the company. The Directors have
recommended the final dividend @ 30% in addition to the interim dividend already declared and
paid @ 20%, making total dividend @ 50% i.e. Rs. 5/- per share for the year ended 30th
September, 2000.
4. To appoint auditors for the year ending 30 September, 2001 and fix their remuneration.
5. To consider any other business which may be placed before the Shareholders with the
permission of the chair.
B. SPECIAL RESOLUTIONS
To consider and if thought fit, to pass the following resolutions and special resolutions with or
without amendments.
(i) Resolved that the consent of the company is hereby granted under section 208 of the
Companies Ordinance, 1984 to the Chief Executive of the company for advancing loans/
amounts in cash or otherwise to the tune of Rs. 5.00 million to its associated companies
namely Babri Cotton Mills Limited, Janana De Malucho Textile Mill Limited and
Rahman Cotton Mills Limited to meet the business transactions involving
payments/reimbursement of the branch offices expenses, for purchase and sale of raw
materials, stores & spares and for sharing other expenses incurred on behalf of the
company, subject to the conditions that the company will charge mark up at the rates not
less then the borrowing cost of the company on such advances and all such
loans/advances shall be repaid/adjusted after every five years & shall be renewable for
the next five years again.
(ii) Further resolved that the words "Rs. 500' in clause 67 of the Articles of Association of
the Company shall be replaced with the words "Rs. 3000".
By order of the Board
AMIN-UR-RASHEED
Company Secretary
&
Dated 9th March, 2001 Manager Corporate Affairs
NOTES:
1. The shares Transfer Books of the company shall remain closed from 23rd March, to 29th March, 2001
both days inclusive.
2. Shares received in the Company's Registered Office before close of business on 22 March, 2001 will be
considered in order for registration in the names of the transferees to receive the dividend.
3. Any member eligible to attend and vote at this meeting, shall be entitled to appoint any other person as
his/her proxy to attend and vote in respect of him/her and proxy instrument dully completed in all respect
shall be received by the company not later than 48 hours before the meeting.
4. Statement of material facts u/s 160/1 (b) of the Companies Ordinance, 1984 regarding special business
vide paras (b) (i) and (ii) above is detailed here in below:-
(B) (i) (a) In order to run the business of the company efficiently and economically, the Board of
Directors of the Company have decided that all the group companies of the textile division
will share the branch offices expenses and instead of investing huge amounts in the stores
spares and stocks of the company, the company shall be buying the required items as and
when required from the sister companies and in order to meet the share office expenses who
is conducting and looking after the affairs of the other companies of the textile division and
for the proportionate reimbursement of branch offices expenses and for sharing other
expenses on behalf of the company. This resolution is being proposed to reduce the
overheads of the company, instead of engaging individuals and independent office/offices in
major cities of the country.
b) It is further stated that the financial position of the associated companies is very sound in
accordance with the results of their published balance sheets as on 30th September, 2000.
c) Mark up shall be charged on these advances at the rates not less then the company's own
borrowing cost.
d) Keeping in view the sound financial position of the companies, the Board of Directors have
not asked for any collateral security to be obtained from the above referred companies.
e) The amount shall be advanced from the surplus funds available with the company.
f) These loans shall be adjustable after every five years & these shall be renewable for next five
years again.
g) The purpose of such advances is to reduce the overhead expenses of the company in order to
run the affairs of the company economically instead of hiring individuals/offices in all major
cities of the country.
h) The total advances to the associated companies shall be within 30% of the paid up capital
plus free reserve of the company
B) (ii) The Directors of the company have increased their meeting fee from Rs 500 to Rs. 3000 per
meeting which is necessitated to make amendments in Article 67 of the Articles of Association
of the company. The meeting fee has been enhanced keeping in view the depreciated value of
Pak rupee. The Directors are only interested to the extent of receiving this meeting fee as and
when they will attend the Board meeting.
DIRECTORS' REPORT TO THE SHAREHOLDERS
Dear Shareholders,
The Directors of your-Company are pleased to present to you, the 40th Annual Report with the
Annual Audited Accounts. These include Balance Sheet as on 30 September, 2000, Profit and Loss
Account for the year ended 30 September, 2000 and the Auditors' Report to Shareholders on these
Accounts. We are pleased to inform you that the operating performance of your Company has further
improved as compared to the previous year 1999, as it has earned a Net Profit before Taxation
Rs. 51.501 million (Net Profit 1999-Rs 37.654 million) The Net profit for the year has considerably
increased by 36.77% over the last year. This has been achieved due to increase in gross sales, by
Rs. 24.520 million, despite the payment of sale Tax increased by the Government from 15% to 16.5%
on Gross Sales and your Company had to pay Rs. 4.300 million (Rs. 43. Lac) additional amount of
Sales Tax during the year under Report. However, these commendable results were achieved in the
Woollen Industry due to increased demand of Mills quality products, reasonable sales prices and sound
planning of your professional management team.
FINANCIAL RESULTS
Gross Sales for the year 2000 amounted to Rs. 244.164 million (1999- Rs. 219.645 million).
The Net Sales revenue (after payment of Sales Tax, Commission and Trade Discounts Rs. 39.832
million) amounted to Rs. 204.332 million (1999 - Rs. 184.949 million after Sales Tax etc. Rs. 34.696
million). The cost of sales increased to Rs. 132.250 million (1999 - Rs. 128.012 million) an increase of
only 4.238 million against this sales increased by Rs. 19.383 million. The Gross Profit for the year
amounted to Rs. 72.082 million as compared to Rs. 56.936 million of the last year 1999. The Gross
Profit percentage works out to 35.28% of the sales against 30.78% of the previous year.
The Company during the year earned an operating Profit (with other income) of Rs. 59.255
million (1999 - Rs. 43. 147 million) and after adjustment/deduction of Rs. 7.753 million on account of
other charges (1999 - Rs. 5.493 million) and provision of Tax Rs. 14.900 million (1999-Rs. 9.063
million), the current year net profit available for appropriation amounted to Rs. 36.601 million (1999-
Rs. 28.591 million).
OPERATING PERFORMANCE
The Company's Plant Capacity is 2338 Woollen Spindles and 44 Shuttle-less Looms. The
production of Woollen yarn for Fabrics and Blankets was 1295046 Kgs (1999 - 1150707 Kgs) and
production of Woollen greasy cloth was 1330429 meters (of 30 picks) (1999 - 1,224,019 meters). This
increase in production was due to improved attendance of workers and increase in shifts worked/lower
stoppage of the machines during the year under review.
NEW INVESTMENT IN PLANT & MACHINERY-Rs. 40.00 million (Rs. 4.00 crore)
Your Directors are pleased to report that letters of Credit have been established in 2000, for
import of One Ring Frame, One Woollen Card and Four Shuttle-Less Looms amounting to Rs. 38.000
million in order to enhance the production of fine Fabrics by about 25% of the existing capacity. Four
Shuttle-Less looms have already stated commercial production during the month of November, 2000
and the commercial production of Woollen Card and Ring Frame shall commence from April 2001
Another Rs. 2.5 million will be invested in the new factory building during the year 2001-2002. This
investment in Plant & Machinery is being financed from our own Cash Resources and shall improve
the profitability by about 20% of current year's profit.
DIVIDEND
Your Directors feel pleasure to inform you as under:
i) We approved the payment of interim dividend @ 20% during September, 2000 for the
first time in the history of the Company. This interim dividend has already been paid to
all the Shareholders of the Company.
ii) We are further pleased to recommend to you to approve payment of final cash dividend
@ 30% of the current year profit of the Company.
The total provision for cash dividend shall amount to Rs. 19.500 million i.e. 53.28% of the
current year Net Profit after taxation against statutory requirement of 40% under Section 12(9A) of the
Income Tax Ordinance, 1979. The Directors have also recommended to approve the transfer of
Rs. 17.900 million to General Reserve of the Company. This will improve the Shareholders Equity to
Rs. 130.925 million against paid up capital of Rs. 39.000 million only in addition to surplus on
revaluation of fixed assets of Rs. 201.013 million.
AUDITORS
The auditors of your company M/s Hameed Chaudhri & Co., Chartered Accountants, H.M.
House, 7-Bank Square, Lahore retire and offer their services for re-appointment for the next financial
year.
ACKNOWLEDGEMENT
The board of directors acknowledge with thanks the efforts and cooperation of the team of
management and the labour. It also appreciates the tradition of good relations between them going back
to 40 years.
For the future the directors expect that with good quality raw material and investment in
machinery despite increase in wool prices in the following year, the company will keep on making
progress and earn higher profits.
The board of directors also expresses gratitude to the financial institutions, i.e. National bank
of Pakistan, The Bank of Khyber and PICIC for their cooperation and financial help to the Company.
For & on behalf of the Board of Directors
RAZA KULI KHAN KHATTAK
Dated: March 01,2001 Chairman
DECADE PERFORMANCE AT A GLANCE
1991 to 2000
2000 1999 1998 1997 1996 1995 1994 1993 1992 1991
Sales - net 204 185 178 164 143 135 118 121 113 84
Profit before tax 52 38 31 25 26 21 22 24 22 15
Wages to employees 34 38 27 25 23 23 20 17 15 14
Taxes & duties to Govt. 46 42 37 40 37 30 27 29 25 22
Dividend to 20 16 12 12 12 12 12 10 10 5
Shareholders
Rate-% 50% 40% 30% 30% 30% 30% 30% 30% 10% 30%
& 30%
Continuous since 1981 Bonus
SHARE HOLDERS' EQUITY:-
Share Capital 39 39 39 39 39 39 39 33 25 16
Reserves &
Unappropriated 92 75 62 50 46 38 36 20 23 6
Fixed Assets-cost 354 352 158 139 137 121 88 82 74 71
Rupees
Break-up value-per
share of Rs. 10 each 33.57 30.18 25.85 22.91 21.74 19.76 19.37 16.28 19.23 13.66
Earning per share of
Rs. 10 each 9.38 7.33 5.95 4.16 4.98 3.39 3.80 4.48 5.23 3.47
PERCENTAGE
Profit before tax
% to sales 25.20 20.36 17.68 15.36 18.32 15.45 19.02 19.68 18.57 17.97
Return on equity-% 27.95 25.12 23.00 18.17 22.92 17.17 19.65 27.54 27.29 29.29
AUDITOR'S REPORT TO THE MEMBERS
We have audited the annexed balance sheet of BANNU WOOLLEN MILLS LIMITED as at 30 September,
2000 and the related profit and loss account, cash flow statement and statement of changes in equity together
with the notes foxing 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
supposing 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 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) our opinion and to the best of our information and according to the explanations given to us,
the balance sheet, profit and loss accounts 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 30 September, 2000 and of the profit, its cash flows and
changes in equity for the year then ended; and
(d) in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of
1980), was deducted by the Company and deposited in the Central Zakat Fund established
under Section 7 of that Ordinance.
LAHORE HAMEED CHAUDHRI & CO.,
February 20, 2001 CHARTERED ACCOUNTANTS.
BALANCE SHEET AS AT 30 SEPTEMBER, 2000
2000 1999
Note Rupees Rupees
CAPITAL AND RESERVES
Authorised capital
5,000,000 ordinary shares of
Rs. 10 each 50,000,000 50,000,000
========== ==========
Issued subscribed and
Paid-up-capital 3 39,000,000 39,000,000
Reserves 4 91,900,000 74,000,000
Unappropriated profit 24,487 823,230
------------------ ------------------
130,924,487 113,823,230
SURPLUS ON REVALUATION
OF FIXED ASSETS 5 201,012,962 201,021,420
DEFERRED LIABILITIES
Deferred taxation 6 2,700,000 3,800,000
Provision for gratuity 13,679,947 12,851,361
------------------ ------------------
16,379,947 16,651,361
CURRENT LIABILITIES
Current portion of
long term loan 7 0 1,252,443
Short term finances 8 15,189,487 24,254,247
Creditors, accrued
and other liabilities 9 40,432,531 23,125,940
Workers' welfare fund 1,598,319 1,605,244
Provision for taxation 10 31,250,760 29,468,298
Dividends 11 18,190,762 16,133,539
------------------ ------------------
106,661,859 95,839,711
CONTINGENCIES AND
COMMITMENTS 12
------------------ ------------------
454,979,255 427,335,722
========== ==========
The annexed notes form an integral part of these accounts.
MUSHTAQ AHMAD KHAN, FCA.
Director
TANGIBLE FIXED ASSETS
Operating fixed assets 13 263,733,953 268,369,173
Capital work-in-progress 14 15,935,008 0
------------------ ------------------
279,668,961 268,369,173
LONG TERM
INVESTMENTS 15 6,576,492 6,577,402
LONG TERM LOANS 16 0 104,200
LONG TERM DEPOSITS 205,205 205,205
CURRENT ASSETS
Stores and spares 17 16,117,306 15,943,073
Stock-in-trade 18 47,854,694 37,474,807
Trade debtors 19 57,416,854 57,992,417
Advances, deposits,
Prepayments and
other receivables 20 46,155,886 39,745,586
Cash and bank balances 21 983,857 923,859
------------------ ------------------
168,528,597 152,079,742
------------------ ------------------
454,979,255 427,335,722
========== ==========
MUHAMMAD AZHAR KHAN
Chief Executive
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 SEPTEMBER, 2000
2000 1999
Note Rupees Rupees
SALES -Net 22 204,332,246 184,948,955
COST OF SALES 23 132,250,339 128,012,411
GROSS PROFIT 72,081,907 56,936,544
ADMINISTRATIVE AND SELLING
EXPENSES 24 14,915,553 14,209,555
OPERATING PROFIT 57,166,354 42,726,989
OTHER INCOME 25 2,088,337 419,677
------------------ ------------------
59,254,691 43,146,666
OTHER CHARGES
Financial - Net 26 2,131,227 1,444,528
Miscellaneous 27 480,236 359,721
Donation to Waqf-e-Kuli Khan Trust 1,419,202 1,033,561