| Frontier Ceramics Limited |
|
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| Annual
Report 2000 |
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| Contents |
|
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| COMPANY
INFORMATION |
|
| NOTICE
OF MEETING |
|
| DIRECTORS' REPORT |
|
| AUDITORS'
REPORT |
|
| BALANCE
SHEET |
|
| PROFIT
& LOSS ACCOUNT |
|
| CASH
FLOW STATEMENT |
|
| STATEMENT
OF CHANGES IN EQUITY |
|
|
|
| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
| Mr.
S.U. Durrani |
|
Chairman |
|
| Mr.
Shahid Mehmood (B.E.L.) |
|
| Dr.
Nadeem Inayat (N.D.EC.) |
|
| Mr.
Asadullah Khawaja (I.C.P.) |
|
| Mr.
Shamsul Hassan |
|
Chief Executive |
|
| Mr.
Ansarullah Khan |
|
| Ms.
Zainab Ibrahim |
|
| Mr.
Mohammad Fayyaz Khan |
|
|
| BANKERS |
|
| National
Bank of Pakistan |
|
| United
Bank Limited |
|
| The
Bank of Khyber |
|
| Banker's
Equity Limited |
|
| Pakistan
Industrial Credit & Investment Corporation Limited |
|
| National
Development Finance Corporation |
|
|
| AUDITORS |
|
| Messrs
Rahim Jan & Co. Chartered Accountants |
|
|
| LEGAL
ADVISOR |
|
| Mian
Noor ul Ghani Advocate |
|
|
| REGISTRAR
AND SHARE TRANSFER OFFICE |
|
| Ghafoor
& Co., Chartered Accountants, Rehmat Lane, Saddar Road, Peshawar. |
|
|
| HEAD
OFFICE / REGISTERED OFFICE |
|
| Jamrud
Industrial Estate, Jamrud Road, Peshawar, N.W. EP. |
|
| Tel:
92-91-812360, 812746 Fax: 92-91-812757 |
|
|
| ZONAL
OFFICES |
|
|
| PESHAWAR |
Industrial Estate, Jamrud
Road, Peshawar |
|
|
Tel: 92-91-812360,
812746, 815202 |
|
|
| RAWALPINDI |
82-A, Satellite Town,
Rawalpindi. |
|
|
Tel: 92-51-4410998 Fax:
92-51-4425523 |
|
|
| LAHORE |
61, Shah Jamal, Ferozepur
Road, Lahore |
|
|
Tel: 92-42-7574179 Fax:
92-42-7573090 |
|
|
|
|
| NOTICE
OF THE MEETING |
|
|
| Notice
is hereby given that the Eighteenth Annual General Meeting of FRONTIER
CERAMICS LIMITED |
|
| will
be held at Registered Office, on Saturday, December 23, 2000 at 9:00 a.m. to
transact the following |
|
| business: |
|
|
| 1.
To confirm the minutes of the Seventeenth Annual General Meeting held on
December 27, 1999. |
|
|
| 2.
To receive, consider and approve the Audited Accounts together with the
Directors & Auditors |
|
| Reports
for the year ended June 30, 2000. |
|
|
| 3.
To appoint Auditors for the year ending June 30, 200 I, and fix their
remuneration. |
|
|
| 4.
To transact any other business with the permission of the Chair. |
|
|
|
BY ORDER OF THE BOARD |
|
|
| November
30, 2000 |
|
Company Secretary |
|
|
| NOTES: |
|
| 1.
The Share Transfer Books of the Company will be closed from December 16 to
December 23, 2000 |
|
| (both
days inclusive). |
|
|
| 2.
A member entitled to attend and vote at the General Meeting is entitled to
appoint another member |
|
| as
his/her proxy to attend and vote on his/her behalf. Forms of Proxy must be
deposited at the |
|
| Company's
Registered Office not later than 48 hours before the meeting. |
|
|
| 3.
Members are requested to notify the company or the Share Registrar of the
Company for any change |
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| in
their address immediately. |
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|
|
| DIRECTOR'S
REPORT |
|
|
| During
the year under review, there has been wide and deep recession in the market,
particularly in the |
|
| construction
industry, coupled with shutter down strikes, unchecked dumping of low value
tiles and sani- |
|
| tary-ware
by foreign manufacturers. This seriously damaged your company's competitive
edge to achieve |
|
| desired
sales targets. The large reduction of cash flows forced the company to sell
us products on high |
|
| discount.
Moreover payments amounting to Rs. 61,304 million to Banks and DFI's from
July 1999 left very |
|
| little
for any improvement in the company use and sustenance. The entire cash
generated was paid for- |
|
| wards
DFI's & Banks which also resulted in closure of the factory due to
shortage of funds for import of raw |
|
| materials. |
|
|
| The
company recorded a sales revenue of Rs. 163.601 million during the year as
compared to Rs. 157.243 |
|
| million
in 1999. This was mainly due to the reduction in sales price. Finished goods
inventory has been |
|
| reduced
by I 0% from Rs. 87.055 million to Rs. 78.2 million. Financial expenses
increased substantially from |
|
| Rs.
18.607 million to Rs. 27.328 million in 2000. The net loss for the year was
Rs. 20.934 million as summarised |
|
| below: |
|
|
| APPROPRIATIONS |
|
|
(Rs. in
Million) |
|
|
|
2000 |
1999 |
|
| Sales |
|
163.601 |
157.243 |
|
| Gross Profit |
|
30.330 |
33.347 |
|
| Less:
Admin, Selling & Distribution Expenses |
|
29.725 |
31.528 |
|
| Operating
Profit/(Loss) |
|
0.605 |
1.819 |
|
| Add:
Other Income |
|
6.814 |
0.970 |
|
|
------------ |
------------ |
|
|
7.419 |
2.789 |
|
|
|
|
| Financial
Expenses |
|
27.328 |
18.607 |
|
| Pr0vi~i0n
for Taxation |
|
1.025 |
0.786 |
|
| Profit/(Loss)
for the Year |
|
(20.934) |
(16.604) |
|
| Prior
Year Adjustment |
|
(1.747) |
25.04 |
|
| Accumulated
Loss Brought Forward |
|
(43.859) |
(52.297) |
|
|
------------ |
------------ |
|
| Profit/(Loss)
carried to Balance Sheet |
|
(66.540) |
(43.859) |
|
|
========== |
========== |
|
|
| FUTURE
OUTLOOK |
|
| In
view of prevailing economic conditions and continued recession, we foresee
that serious pressure will |
|
| continue
on the profitability of the company. However, efforts are being made to
reduce expenses and |
|
| improve
the efficiency of the plant which has become essential due to continuous
increase in energy costs |
|
| and
higher input costs. |
|
|
| DIVIDEND |
|
| In
view of the current financial position of your company, the Directors are not
recommending a dividend |
|
| for
the year 1999-2000. |
|
|
| ACKNOWLEDGEMENT |
|
| The
Board acknowledges the devotion and hard work of the Company's staff during
the year. |
|
|
| AUDITORS |
|
| The
present Auditors, M/s. Rahim Jan & Co. Chartered Accountants have been
providing auditing services |
|
| to
the Company since incorporation. The question of an acceptable change is
proposed to be discussed. |
|
|
|
On behalf of the Board of
Directors |
|
|
|
S.U. DURRANI |
|
|
Chairman |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of FRONTIER CERAMICS 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
explanation which, to the best of our knowledge and belief, were necessary
for the purpose 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 and opinion on |
|
| these
statements based on our audit. |
|
|
| We
conducted our audit in accordance with the auditing standards as applicable
in Pakistan. These stan- |
|
| dards
require that we plan and perform the audit to obtain reasonable assurance
about whether the above |
|
| said
statements are free of any material misstatements. An audit includes
examining, on a test basis, evi- |
|
| dence
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 above |
|
| opinion
and, after due verification, we reported that: |
|
|
| (a)
In our opinion proper books of accounts have been kept by the company as
required by the Compa- |
|
| nies
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 confirmatory with the Companies Ordinance, 1984, and are further in
accordance |
|
| with
accounting policies consistently applied. |
|
|
| (ii)
The expenditure incurred during the year was the purpose of the company's
business, and |
|
|
| (iii)
The business conducted, investments made and expenditure incurred during the
year were in |
|
| accordance
with the object of the company. |
|
|
| (c)
In our opinion and to the best of our information and according to the
explanation given to us, |
|
| balance
sheet, profit and loss account, cash flow statements and statements of
changes in equity |
|
| together
with notes forming part thereof conform with approved accounting standards as
applicable |
|
| in
Pakistan, and give the information required by 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 30th June |
|
| 2000
and the profit/loss, its cash flows and changes in equity for the year then
ended; and |
|
|
| (d)
No Zakat was deductible at source under Zakat and Ushr Ordinance, 1980. |
|
|
|
RAHIM JAN & COMPANY |
|
| Dated: |
October 2000 |
|
Chartered Accountants |
|
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 2000 |
|
|
|
NOTES |
2000 |
1999 |
|
|
|
(Rs.) |
(Rs.) |
|
| PROPERTY
AND ASSETS |
|
| Fixed
Assets - at cost less depreciation |
|
12 |
335,459,859 |
366,899,704 |
|
| Long
Term Deposits |
|
13 |
105,750 |
752,700 |
|
|
| CURRENT
ASSETS |
|
| Stores,
spares and loose tools - act cost |
|
14 |
27,208,863 |
28,480,339 |
|
| Stock
in Trade - at cost |
|
15 |
155,881,632 |
159,089,354 |
|
| Trade Debtors |
|
16 |
67,561,765 |
72,774,831 |
|
| Advances,
Deposits, Pre-payments & |
|
|
|
| Other
receivables |
|
17 |
21,770,740 |
28,619,178 |
|
| Cash
and Bank Balances |
|
18 |
11,852,645 |
14,363,342 |
|
|
------------ |
------------ |
|
|
284,275,645 |
303,327,044 |
|
|
| CURRENT
LIABILITIES |
|
| Finance
under Mark-up Arrangements: |
|
8 |
90,402,942 |
90,187,167 |
|
| Current
Portion of L/Term Loan Liabilities |
|
9 |
46,402,134 |
50,895,854 |
|
| Creditors,
Accrual and other Liabilities |
|
10 |
43,931,365 |
47,488,604 |
|
|
------------ |
------------ |
|
|
180,736,441 |
188,571,625 |
|
|
------------ |
------------ |
|
| Working
Capital |
|
103,539,204 |
114,755,419 |
|
|
------------ |
------------ |
|
| Total Assets |
|
439,104,813 |
482,407,823 |
|
| Less:
Long Term Loans (PICIC / NDFC) |
|
7 |
54,794,630 |
66,330,350 |
|
| Long
Term Loan BEL Consortium |
|
6 |
47,470,713 |
51,000,000 |
|
| Deferred
Liabilities |
|
5 |
42,041,258 |
47,598,997 |
|
|
------------ |
------------ |
|
| Net Assets |
|
294,798,212 |
317,478,476 |
|
|
========== |
========== |
|
| REPRESENTED
BY |
|
| Issued,
Subscribed and Paid up Capital |
|
3 |
77,412,000 |
77,412,000 |
|
| Surplus
on Revaluation of fixed assets |
|
4 |
283,925,776 |
283,925,776 |
|
| Profit
& Loss - Debit Balance |
|
(66,539,564) |
(43,859,300) |
|
|
------------ |
------------ |
|
|
294,798,212 |
354,197,076 |
|
|
========== |
========== |
|
| Contingencies
and Commitments |
|
11 |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
ANSARULLAH KHAN |
|
ZAINAB IBRAHIM |
|
|
Chief Executive |
|
Director |
|
|
|
|
|
| PROFIT
& LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
|
NOTES |
2000 |
1999 |
|
|
|
(Rs.) |
(Rs.) |
|
| Sales - Met |
|
19 |
163,600,945 |
157,242,701 |
|
| Cost of Sales |
|
20 |
133,270,755 |
123,895,586 |
|
|
------------ |
------------ |
|
| Gross Profit |
|
30,330,190 |
33,347,115 |
|
|
------------ |
------------ |
|
| OPERATING
EXPENSES |
|
| Administrative
expenses |
|
21 |
17,450,344 |
17,316,456 |
|
| Selling
and Distribution Expenses |
|
22 |
12,275,055 |
14,211,663 |
|
|
------------ |
------------ |
|
|
29,725,399 |
31,528,119 |
|
|
------------ |
------------ |
|
| Operating
Profit / (Loss) |
|
604,791 |
1,818,996 |
|
| Profit
/ (Loss) on Sale on fixed Assets |
|
23 |
6,395,887 |
(40,859) |
|
| Profit
on PLS Saving Account |
|
400,489 |
,007,859 |
|
| Other Income |
|
18,138 |
3,098 |
|
|
------------ |
------------ |
|
|
6,814,514 |
970,098 |
|
|
7,419,305 |
2,789,094 |
|
| Financial
Expenses |
|
24 |
27,327,713 |
18,607,285 |
|
| Taxation
Current |
|
25 |
1,025,264 |
786,214 |
|
|
------------ |
------------ |
|
| (Loss)
for the year |
|
(20,933,672) |
(16,604,405) |
|
| Prior
year adjustment |
|
26 |
(1,746,592) |
(25,041,700) |
|
| Accumulated
Loss Brought Forward |
|
(43,859,300) |
(52,296,595) |
|
|
------------ |
------------ |
|
| Accumulated
Loss Carried to Balance Sheet |
|
(66,539,564) |
(43,859,300) |
|
|
========== |
========== |
|
| The
Annexed Notes form an integral part of these accounts. |
|
|
|
ANSARULLAH KHAN |
|
ZAINAB IBRAHIM |
|
|
Chief Executive |
|
Director |
|
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) FOR THE YEAR ENDED JUNE 30, 2000 |
|
|
|
2000 |
1999 |
|
|
(Rs.) |
(Rs.) |
|
| Cash
collected from customers |
|
168,814,011 |
154,709,440 |
|
| Cash
paid to suppliers |
|
(103,816,370) |
(94,120,082) |
|
| Administrative
Expenses paid |
|
(16,808,785) |
(16,516,314) |
|
| Selling
& Distribution expenses paid |
|
(12,275,055) |
(14,211,663) |
|
| Bank
Charges paid |
|
(640,523) |
(346,206) |
|
| Other
Income received |
|
6,814,514 |
970,098 |
|
| Decrease
/ (Increase) in pre-payments and |
|
|
|
| other
receivables |
|
6,848,438 |
(23,981) |
|
| Increase/Decrease
in accruals and other liabilities |
|
(2,526,523) |
(85,740) |
|
| (Decrease)
/ Increase in loan (net) |
|
5,689,608 |
-- |
|
| (Decrease)
/ Increase in finance under |
|
|
|
| mark-up
arrangements |
|
215,775 |
3,865,011 |
|
| Decrease
/ (Increase) in inventory |
|
4,479,198 |
(11,050,314) |
|
|
----------- |
----------- |
|
| Cash
generated from operation |
|
56,794,288 |
23,190,249 |
|
|
|
|
| CASH
(OUTFLOWS) INFLOWS FROM |
|
|
|
| INVESTING
ACTIVITIES |
|
|
|
| Addition
in fixed assets |
|
(117,400) |
(315,064) |
|
| Change
due to sale of fixed assets |
|
1,465,134 |
70,859 |
|
| Long
Term Deposits |
|
646,950 |
(10,000) |
|
|
----------- |
----------- |
|
|
1,994,684 |
(254,205) |
|
| CASH
(OUTFLOWS) INFLOWS FROM |
|
| FINANCE
ACTIVITIES |
|
| Deferred
Mark-up |
|
(7,187,364) |
-- |
|
| Long
Term Loan PICIC |
|
(11,535,720) |
-- |
|
| NDFC |
|
(4,272,000) |
-- |
|
| BEL
& Consortium |
|
(10,547,340) |
(2,984,116) |
|
| Interest
Expenses |
|
(27,761,412) |
(18,261,079) |
|
|
----------- |
----------- |
|
|
(61,303,836) |
(21,245,195) |
|
| Net-
Increase/(Decrease) in Cash & Cash equivalent |
|
(2,510,697) |
1,690,849 |
|
| Cash
and Cash equivalent as at July I st |
|
14,363,342 |
12,672,493 |
|
|
----------- |
----------- |
|
| Cash
and Cash equivalent as June 30th |
|
11,852,645 |
14,363,342 |
|
|
========== |
========== |
|
|
|
|
|
ANSARULLAH KHAN |
|
ZAINAB IBRAHIM |
|
|
Chief Executive |
|
Director |
|
|
|
| STATEMENT
OF CHANGES IN EQUITY |
|
| FOR
THE YEAR ENDED 30TH JUNE 2000 |
|
|
|
Issued Subscribed |
|
Revaluation |
Accumulated |
|
|
|
and Paid-up Capital |
|
Reserve |
Profit / (Loss) |
Total |
|
|
| Balance
at 30th June 1998 |
|
77,412,000.00 |
|
283,925,776.00 |
(52,296,595.00) |
309,041,181.00 |
|
| Issue
of Shares Capital |
|
-- |
|
-- |
-- |
-- |
|
| Surplus
on revaluation of Properties |
-- |
|
-- |
-- |
-- |
|
| Net
profit/(loss) for the year |
|
-- |
|
-- |
843,729,500 |
843,729,500 |
|
|
------------ |
|
------------ |
------------ |
------------ |
|
| Balance
at 30th June 1999 |
|
77,412,000.00 |
|
283,925,776.00 |
(43,859,300.00) |
317,478,476.00 |
|
| Issue
of Shares Capital |
|
|
|
|
|
| Surplus
on revaluation of Properties |
-- |
|
-- |
-- |
-- |
|
|
|
|
|
|
| Net
profit/(Loss) for the year |
|
-- |
|
-- |
(22,680,264.00) |
(22,680,264.00) |
|
|
------------ |
|
------------ |
------------ |
------------ |
|
| Balance
at 30th June 2000 |
|
77,412,000.00 |
|
283,925,776.00 |
(66,539,564,00) |
294,798,212.00 |
|
|
========== |
|
========== |
========== |
========== |
|
|
|
ANSARULLAH KHAN |
|
ZAINAB IBRAHIM |
|
|
Chief Executive |
|
Director |
|
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
| 1.
THE COMPANY AND ITS OPERATIONS |
|
| Frontier
Ceramics Limited was incorporated in Pakistan in July 1982 as a Public
Limited Company, and |
|
| was
listed on the Karachi and Lahore Stock Exchange in March 1992. |
|
|
| 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
| 2.01
Basis of Preparation of Financial Statements |
|
| These
financial statement have been prepared in accordance with International
Accounting |
|
| standard
as applicable in Pakistan, and under the historical cost convention a
modified by |
|
| capitalisation
of certain exchange difference in the cost of relevant assets without any
adjust- |
|
| ments
for the effects of inflation, except plant and machinery which has been
re-valued Note |
|
| No. 4). |
|
|
| 2.02
Staff Retirement Benefits |
|
| The
Company operates a provident fund scheme for all its employees, contributions
in re- |
|
| spect
thereof are made in accordance with the terms of the scheme. |
|
|
| 2.03 Taxation |
|
|
| Charge
for current taxation in the accounts is based on taxable income of the
Company after |
|
| taking
into account rebate, if any allowable to the company. The company accounts
for de- |
|
| ferred
taxation using liability method arising on all major timing differences. |
|
|
| 2.04
Fixed Assets |
|
| Fixed
assets are stated at cost-less accumulated depreciation, except leasehold
land and capi- |
|
| tal
work in progress, which are stated at cost. Depreciation is charged on
reducing balance |
|
| method
at the rates specified in Note No. 12. Full year depreciation is charged on
fixed |
|
| assets,
purchased during the first half of the accounting year, but no depreciation
is charged |
|
| on
fixed assets acquired during the second half of the accounting year. No
depreciation is |
|
| charged
if the assets are disposed off/deleted in the first half of the accounting
year but charged |
|
| if
disposal/deletion is made in the second half of the accounting year. |
|
|
| Normal
repairs and maintenance are charged to expenses, as and when incurred, while
major |
|
| renewals
and replacements are capitalised. Gains and losses on disposal of fixed
assets are |
|
| taken
to Profit and Loss Account currently. |
|
|
| 2.05
Stock in Trade, Stores, Spares and Loose Tools |
|
| These
are stated as follows: |
|
|
| Stores,
Spares ad Loose Tools |
At average cost |
|
| Raw
& Packing Materials |
|
At average cost, except
in transit, which are stated |
|
|
at actual cost. |
|
| Work
in Process |
|
At cost |
|
| Finished
Goods |
|
At lower of cost or
market value. |
|
|
|
|
| 2.06
Rate of Exchange |
|
| Foreign
currency loans and other foreign currency transactions are recorded at the
rate pre- |
|
| vailing
on the date of transaction. Repayment of foreign currency loans are made at
the rate at |
|
| which
the same were disbursed because of exchange risk having been covered. |
|
|
| 2.07
Revenue Recognition |
|
| Sales
are recorded on dispatch of goods to customers. |
|
|
NOTES |
2000 |
1999 |
|
|
|
(Rs.) |
(Rs.) |
|
| SHARE
CAPITAL |
|
| AUTHORISED |
|
|
|
| 8,000,000
Ordinary Shares Rs. 10/- each |
|
3 |
80,000,000 |
80,000,000 |
|
| Issued
Subscribed and Paid-up Capital 7,741,200 |
|
========== |
========== |
|
|
|
|
| Ordinary
shares of Rs. I 0/- each issued for cash |
|
77,412,000 |
77,412,000 |
|
|
========== |
========== |
|
| SURPLUS
ON REVALUATION |
|
| OF
FIXED ASSETS |
|
4 |
283,925,776 |
283,925,776 |
|
|
========== |
========== |
|
| Revaluation
of plant & machinery has been carried out as on June 30, 1996 by an
independent valuer, M/s |
|
| Global
Engineers (Pvt) Ltd. Faisalabad, and duly certified by R.H. & Co.
Chartered Accountants, a firm |
|
| approve
by the State Bank of Pakistan for the purpose of revaluation of fixed assets.
Revaluation has been |
|
| carried
out on the basis of depreciated replacement value (Refer to note No. 12). |
|
|
| DEFERRED
LIABILITIES |
|
5 |
|
| a.
Remission/Waiver of PICIC Mark-up |
|
| loan
restructured |
|
45,995,640 |
45,995,640 |
|
| Less:
Remission / Waiver adjusted |
|
6,814,172 |
-- |
|
|
----------- |
----------- |
|
|
39,181,468 |
45,995,640 |
|
|
| b.
Add: Deferred Mark-up |
|
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