| The Hilal Tanneries Limited |
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| Annual
Report 2000 |
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| CONTENTS |
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|
| Company
Information |
|
|
| Notice
of Annual General Meeting |
|
| Directors'
Report |
|
|
| Auditors'
Report |
|
|
| Balance Sheet |
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| Profit
and Loss Account |
|
|
| Cash
Flow Statement |
|
|
| Statement
of Changes in Equity |
|
|
| Notes
to the Accounts |
|
| Pattern
of holding of the Shares |
|
|
| Pattern
of holding of the Shares (CDC) |
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|
|
| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
|
|
| Mr.
Shahid Hussain |
|
| Chief Executive |
|
|
| Ch.
Ahmad Javed |
|
| Ch.
Ahmad Mukhtar |
|
| Mr.
Zahid Hussain |
|
| Mr. Arif Saeed |
|
| Mr.
Shahid H. Kardar |
|
| Mr.
Babar Farooq Khan |
|
|
| SECRETARY |
|
| Mr.
Sultan Anwar |
|
|
| BANKERS |
|
| Muslim
Commercial Bank Ltd. |
|
| The
Bank of Khyber |
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|
| AUDITORS |
|
| S.
M. Masood & Co. |
|
| Chartered
Accountants |
|
|
| REGISTERED
OFFICE |
|
| Servis House, |
|
| 2-Main
Gulberg, Lahore - 54662 |
|
|
| FACTORY |
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| G.
T. Road, Gujrat. |
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|
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| NOTICE
OF ANNUAL GENERAL MEETING |
|
|
| Notice
is hereby given that the Annual General Meeting of Shareholders of THE HILAL
TANNERIES |
|
| LIMITED
will be held on Tuesday 26th December, 2000 at 11.00 a.m. at the registered
office of the |
|
| Company,
Servis House, 2-Main Gulberg, Lahore to transact the following business. |
|
|
| Ordinary
Business: |
|
|
| 1.
To confirm the minutes of the last Annual General Meeting held on 22-12-1999. |
|
|
|
|
| 2.
To receive, consider and adopt the Profit and Loss Account and Balance Sheet
for the year ended |
|
| 30-06-2000
and the Directors' Report and Auditors' Report thereon. |
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|
|
|
| 3.
To appoint Auditors and to fix their remuneration. |
|
|
| Special
Business: |
|
|
| 4.
To consider and if deemed fit and proper, pass the following resolution as
special resolution: |
|
|
| RESOLVED
that the company should be de-listed from the Karachi and Lahore Stock
Exchanges |
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| as
recommended by the Board of Directors and approved by the Karachi Stock
Exchange at buy |
|
| back
price of Rs. 17/- per share. Mr. Shahid Hussain, Chief Executive and Mr.
Ahmad Javed, |
|
| Director
of the Company be and hereby authorized to take necessary action as deemed
fit in this |
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| regard. |
|
|
| 5.
To transact any other business with the permission of the Chair. |
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|
|
By Order of the Board |
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|
SULTAN ANWAR |
|
| Lahore:
29-11-2000 |
|
Secretary |
|
|
| NOTES: |
|
|
| 1.
The Share Transfer Books of the Company will remain closed from 20-12-2000 to
26-12-2000 (both |
|
| days inclusive). |
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|
|
|
| 2.
A member entitled to vote at the meeting may appoint another member as
his/her proxy. Proxies |
|
| in
order to be effective, must be received at the registered office of the
Company duly stamped, |
|
| signed
and witnessed not later than 48 hours before the meeting. |
|
|
| 3.
Any individual Beneficial Owner of the Central Depository Company, entitled
to vote at this meeting |
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| must
bring his/her National Identity Card with him/her to prove his/her identity,
and in case of |
|
| proxy
must enclose an attested copy of his/her National Identity Card.
Representatives of |
|
| corporate
members should bring the usual documents required for such purpose. |
|
|
| 4.
Shareholders are requested to notify the Company of any change in their
address. |
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|
|
| DIRECTORS'
REPORT TO THE SHAREHOLDERS |
|
|
| The
Directors are pleased to present Annual Report of the Company and the Audited
Accounts for the |
|
| year
ended 30th June, 2000. |
|
|
| The
period under report saw a lot of disturbance and pessimism in the domestic
economy. Enforcement |
|
| of
sales tax and surveys caused a drop in sale in the market. Despite these
conditions, during the year |
|
| under
review, we were able to increase our sale to Rs. 174.2 million against Rs.
156.96 million of |
|
| 30.6.1999.
The increased sale had a healthy effect on our pretax profit, which improved
to Rs. 2.58 |
|
| million
from Rs. 1.16 million for the previous year. |
|
|
| During
the period under report the company obtained ISO 9001 Certification. We also
managed to |
|
| reduce
the financial expenses to Rs. 5.4 million from Rs. 7.2 million in the
previous year. |
|
|
| Although,
there is considerable improvement over the previous period, however, after
provision for |
|
| income
tax, we are not left with any significant amount for major improvement in the
Company |
|
| operations.
We will continue to follow the current policy of improvement in quality and
product line and |
|
| hope
that the company will soon come out of its present situation. |
|
|
| APPROPRIATION: |
|
| Financial
results for 30-06-2000 are summarized below:- |
|
|
|
|
|
Rupees |
|
|
| Profit
before taxation |
|
|
2,588,026 |
|
| Provision
for taxation |
|
|
(872,257) |
|
| Prior
year adjustment |
|
|
(137,197) |
|
|
|
|
------------------ |
|
| Profit
after taxation |
|
|
1,578,572 |
|
| Add
deficit brought forward |
|
|
(15,259,998) |
|
|
|
|
------------------ |
|
| Net
deficit C/F to Balance Sheet |
|
|
(13,681,426) |
|
|
------------------ |
|
|
| APPOINTMENT
OF AUDITORS: |
|
| Messrs
SM. Masood & Company, Chartered Accountants have retired as Auditors and
being eligible |
|
| have
offered themselves for re-appointment. |
|
|
| MANAGEMENT
AND WORKERS RELATIONSHIP: |
|
| The
relationship between the Management and Staff and Workers remained extremely
cordial |
|
| throughout
the year. The Management would like to put on record their appreciation for
the continued |
|
| hard
work put in by the staff and workers. |
|
|
| PATTERN
OF SHAREHOLDING |
|
| The
pattern of shareholding of the Company as on 30-06-2000 is enclosed. |
|
|
|
|
For and on behalf of the |
|
|
|
Board of Directors |
|
|
|
|
|
|
| Dated:
29-11-2000 |
|
SHAHID HUSSAIN |
|
| Place: Lahore |
|
|
Chief Executive |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed Balance Sheet of THE HILAL TANNERIES 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 account have been kept by the company as
required by the |
|
| Companies
Ordinance, 1984; |
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|
|
|
|
| (b)
in our opinion: |
|
|
|
| (i)
the Balance Sheet and Profit & Loss Account together with the Notes
thereon have been |
|
| drawn
up in conformity with the Companies Ordinance, 1984, and are in agreement
with the |
|
| books
of account and are further in accordance with accounting policies
consistently |
|
| applied; |
|
|
|
|
| (ii)
the expenditure incurred during the year was for the purpose of the company's
business; and |
|
|
|
| (iii)
the business conducted, investments made and the expenditure incurred during
the year |
|
| were
in accordance with the objects of the company; |
|
|
| (c)
in our opinion and to the best of our information and according to the
explanations given to us, the |
|
| Balance
Sheet, Profit & Loss Account, Cash Flow Statement and the 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; and |
|
|
| (d)
in our opinion, no Zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980. |
|
|
| Date:
29-11-2000 |
|
S.M. MASOOD & CO. |
|
| Place: Lahore |
|
|
Chartered Accountants |
|
|
|
|
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 2000 |
|
|
|
|
2000 |
1999 |
|
|
Note |
Rupees |
Rupees |
|
|
|
| Share
Capital & Reserves |
|
|
|
| Share capital |
|
3 |
15,397,090 |
15,397,090 |
|
| Share
premium account |
|
|
139,219 |
139,219 |
|
| General reserve |
|
|
10,800,000 |
10,800,000 |
|
| Accumulated
loss |
|
|
(13,681,426) |
(15,259,998) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
12,654,883 |
11,076,311 |
|
|
|
|
| Long
Term Liabilities |
|
|
|
| Bank loan |
|
4 |
97,500 |
292,500 |
|
| Liabilities
against assets subject to |
|
|
| finance lease |
|
5 |
0 |
218,165 |
|
| Sponsors loan |
|
6 |
16,000,000 |
16,000,000 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
16,097,500 |
16,510,665 |
|
|
| Deferred
Liabilities |
|
| Staff gratuity |
|
7 |
485,730 |
471,168 |
|
|
| Current
Liabilities |
|
|
|
| Current
portion of long term bank loan |
4 |
195,000 |
195,000 |
|
| Current
portion of liabilities against |
|
|
| assets
subject to finance lease |
|
5 |
218,165 |
293,782 |
|
| Short
term running finance from banks |
8 |
48,480,033 |
29,930,307 |
|
| Creditors,
accrued expenses & |
|
|
|
| other liabilities |
|
9 |
86,411,250 |
88,792,465 |
|
| Tax payable |
|
10 |
1,657,064 |
2,164,692 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
136,961,512 |
121,376,246 |
|
| Contingencies
& commitments |
|
11 |
0 |
0 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
166,199,625 |
149,434,390 |
|
|
|
========== |
========== |
|
|
| Tangible
Fixed Assets |
|
|
|
| Operating
fixed assets |
|
12 |
14,835,385 |
14,842,594 |
|
| Fixed
assets subject to finance lease |
13 |
171,869 |
437,804 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
15,007,254 |
15,280,398 |
|
|
|
|
|
|
| Security
Deposits |
|
14 |
664,645 |
661,645 |
|
|
|
|
|
|
|
| Current Assets |
|
| Stores,
spares & loose tools |
|
15 |
8,964,994 |
7,681,336 |
|
| Stock in trade |
|
|
16 |
107,570,089 |
102,854,755 |
|
| Trade debts |
|
|
17 |
25,958,680 |
10,181,422 |
|
| Advances,
deposits, prepayments & |
|
|
| other
receivables |
|
18 |
7,741,055 |
10,730,771 |
|
| Cash
& bank balances |
|
19 |
292,908 |
2,044,063 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
150,527,726 |
133,492,347 |
|
|
------------------ |
------------------ |
|
|
|
166,199,625 |
149,434,390 |
|
|
========== |
========== |
|
| Annexed
notes from 1 to 33 form an integral part of these accounts. |
|
|
|
Sultan Anwar |
|
Shahid Hussain |
|
Ch. Ahmad Javed |
|
|
Chief Accountant |
|
Chief Executive |
|
Director |
|
|
| Date:
29-11-2000 |
|
| Place: LAHORE |
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
|
|
2000 |
1999 |
|
|
Note |
Rupees |
Rupees |
|
|
|
|
| Sales |
|
|
20 |
174,200,013 |
156,964,977 |
|
| Cost
of goods sold |
|
21 |
157,685,385 |
141,660,406 |
|
|
|
|
------------------ |
------------------ |
|
| Gross Profit |
|
|
16,514,628 |
15,304,571 |
|
|
|
| Operating
Expenses |
|
|
|
| Selling
expenses |
|
22 |
865,477 |
734,126 |
|
| Administrative
expenses |
|
23 |
7,717,279 |
6,106,870 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
8,582,756 |
6,840,996 |
|
|
------------------ |
------------------ |
|
| Operating
Profit |
|
|
7,931,872 |
8,463,575 |
|
| Financial
expenses |
|
24 |
5,403,442 |
7,239,298 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
after Operating & Financial Expenses |
|
2,528,430 |
1,224,277 |
|
| Other income |
|
|
25 |
251,405 |
26,500 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
2,779,835 |
1,250,777 |
|
|
|
|
------------------ |
------------------ |
|
| Workers'
profit participation fund |
|
138,992 |
62,539 |
|
| Workers'
welfare fund |
|
52,817 |
23,765 |
|
|
------------------ |
------------------ |
|
|
|
|
191,809 |
86,304 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
Before Taxation |
|
|
2,588,026 |
1,164,473 |
|
| Provision
for taxation - Turnover tax |
|
872,257 |
784,807 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
After Taxation |
|
|
1,715,769 |
379,666 |
|
| Prior
year adjustment |
|
26 |
(137,197) |
(298,855) |
|
| Unappropriated
Profit/(Loss) brought forward |
|
(15,259,998) |
(15,340,809) |
|
|
|
|
------------------ |
------------------ |
|
| Accumulated
Loss transferred to Balance Sheet |
|
(13,681,426) |
(15,259,998) |
|
|
========== |
========== |
|
| Basic
Earning Per Share |
|
27 |
1.03 |
0.05 |
|
|
|
Sultan Anwar |
|
Shahid Hussain |
|
Ch. Ahmad Javed |
|
|
Chief Accountant |
|
Chief Executive |
|
Director |
|
|
|
|
| Date:
29-11-2000 |
|
| Place: LAHORE |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
|
|
|
2000 |
1999 |
|
|
|
|
Rupees |
Rupees |
|
|
| Cash
Flow from Operating Activities |
|
|
|
| Profit
before taxation and extra ordinary items |
|
2,588,026 |
1,164,473 |
|
| Adjustments
for: |
|
|
|
| Depreciation |
|
1,779,491 |
1,724,094 |
|
| Profit
on sale of fixed assets |
|
(251,405) |
(26,500) |
|
| Interest
Expense |
|
5,279,249 |
7,025,855 |
|
| Amortization |
|
265,935 |
565,370 |
|
| Gratuity
provision |
|
185,062 |
237,371 |
|
| Prior
year adjustment |
|
(137,197) |
(298,855) |
|
|
|
------------------ |
------------------ |
|
| Operating
profit before working capital changes |
|
9,709,161 |
10,391,808 |
|
|
| (Increase)/decrease
in stores, spares and loose tools |
(1,283,658) |
(224,505) |
|
| (Increase)/decrease
in stock in trade |
|
(4,715,334) |
(13,578,998) |
|
| (Increase)/decrease
in trade debts |
|
(15,777,258) |
(5,019,086) |
|
| (Increase)/decrease
in advances, deposits, |
|
|
|
| prepayments
and other receivables |
|
2,989,716 |
(2,711,860) |
|
| Increase/(decrease)
in creditors, accrued expenses |
|
|
|
| and
other liabilities |
|
(3,652,741) |
36,232,520 |
|
| Gratuity paid |
|
(170,500) |
(264,946) |
|
|
------------------ |
------------------ |
|
| Cash
generated from operations |
|
(12,900,614) |
24,824,933 |
|
| Interest paid |
|
(5,387,608) |
(7,630,270) |
|
|
|
------------------ |
------------------ |
|
| Net
cash (used in)/from operating activities |
|
(18,288,222) |
17,194,663 |
|
|
------------------ |
------------------ |
|
|
| Cash
Flow from Investing Activities |
|
| Additions
to fixed assets |
|
|
(1,790,442) |
(3,270,850) |
|
| Security
deposits |
|
|
(3,000) |
(573,000) |
|
| Sale
proceeds on disposal of fixed assets |
|
269,565 |
31,837 |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash used in investing activities |
|
(1,523,877) |
(3,812,013) |
|
|
------------------ |
------------------ |
|
| Cash
Flow from Financing Activities |
|
| Payment
of long term loans |
|
|
(195,000) |
(195,000) |
|
| Payments
of finance lease liabilities |
|
(293,782) |
(764,031) |
|
| Increase/(decrease)
in running finances |
|
18,549,726 |
(11,190,014) |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash (used in)/from financing activities |
|
18,060,944 |
(12,149,045) |
|
|
|
|
------------------ |
------------------ |
|
| Net
(decrease)/increase in cash & cash equivalents |
(1,751,155) |
1,233,605 |
|
| Cash
& cash equivalents at beginning of the period |
2,044,063 |
810,458 |
|
|
|
|
------------------ |
------------------ |
|
| Cash
& cash equivalents at close of the period |
|
292,908 |
2,044,063 |
|
|
========== |
========== |
|
|
|
|
| STATEMENT
OF CHANGES IN EQUITY |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
|
Share Capital |
Share |
General |
Accumulated |
Total |
|
|
|
Premium A/c |
Reserve |
Loss |
|
|
|
|
|
|
|
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
|
|
|
|
| Balance
as on July 01, 1998 |
15,397,090 |
139,219 |
10,800,000 |
(15,340,809) |
10,995,500 |
|
| Transferred
from Profit & Loss A/c |
0 |
0 |
0 |
80,811 |
80,811 |
|
|
|
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
|
| Balance
as on June 30, 1999 |
15,397,090 |
139,219 |
10,800,000 |
(15,259,998) |
11,076,311 |
|
| Transferred
from Profit & Loss A/c |
0 |
0 |
0 |
1,578,572 |
1,578,572 |
|
|
|
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
|
| Balance
as on June 30, 2000 |
15,397,090 |
139,219 |
10,800,000 |
(13,681,426) |
12,654,883 |
|
|
|
========== |
========== |
========== |
========== |
========== |
|
|
| Annexed
notes from 1 to 33 form an integral part of these accounts. |
|
|
|
Sultan Anwar |
|
Shahid Hussain |
|
Ch. Ahmad Javed |
|
|
Chief Accountant |
|
Chief Executive |
|
Director |
|
|
|
| NOTES
TO THE ACCOUNTS |
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| FOR
THE YEAR ENDED JUNE 30, 2000 |
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| 1.
THE COMPANY AND ITS OPERATIONS |
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| The
Hilal Tanneries Limited is a public limited company incorporated in Pakistan.
Its shares are |
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| quoted
on Lahore and Karachi stock exchanges in Pakistan. The principal activity of
the Company |
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| is
processing of hides and skins and selling of finished leather. |
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| The
Company is in process of de-listing of its shares from Karachi and Lahore
Stock exchange and |
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| the
buy back price approved by the Karachi Stock Exchange is Rs. 17.00 per share. |
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| 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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| The
Policies adopted by the Company, which are consistent with those of the
previous year are as |
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| follows: |
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| 2.1
Accounting Convention: |
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| These
accounts have been prepared under the historical cost convention and comply
with |
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| International
Accounting Standards, where applicable and mandatory in all material aspects. |
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| 2.2
Retirement Benefits: |
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| The
Company maintains a recognized Provident Fund for its employees.
Contributions based |
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| upon
salaries and wages are made monthly to the Provident Fund Trust to cover the |
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| obligation. |
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| There
is an unfunded gratuity scheme for those who are not members of the Provident
Fund. |
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| Liability
for gratuity is based on graduated scale and is calculated with reference to
the length |
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| of
service and last drawn salary and average wages of the employees. |
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|
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| Managerial
employees are entitled to participate in both the schemes. |
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| The
Company also operates a contributory pension scheme for employees who were
not |
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| members
of the Employees' Old-age Benefit Scheme under the rules applicable before
July |
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| 01, 1986. |
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| 2.3 Taxation: |
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| The
charge for current taxation is based on taxable income at the current rates
of taxation |
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| after
taking into account tax credits, tax rebates and other allowances available
for set off, if |
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| any
or minimum tax liability, whichever is less. |
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| The
Company accounts for deferred taxation, using the liability method, on all
major timing |
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| differences
if they are expected to reverse in the foreseeable future, but does not
recognise |
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| deferred
tax debits. |
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| 2.4
Contingencies & Commitments: |
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| These
are recognized only when they become due. |
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| 2.5
Foreign Currencies: |
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| Export
sales are translated into Rupees at estimated rates, differences arising on
subsequent |
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| realization
are adjusted against sales. |
