| Merit Packaging Limited |
|
|
|
|
|
|
|
| Annual
Report 2000 |
|
|
| CONTENTS |
|
|
| Company
Information |
|
| Notice
of Meeting |
|
| Directors'
Report |
|
| Auditors'
Report |
|
| Balance
Sheet |
|
| Profit
& Loss Account |
|
| Cash
Flow Statement |
|
| Statement
of Changes in Equity |
|
| Notes
to the Accounts |
|
| Pattern
of holding of Shares |
|
|
|
| Company
Information |
|
|
| BOARD
OF DIRECTORS |
|
|
| IQBALALI
LAKHANI |
Chairman |
|
| ZULFIQARALI
LAKHANI |
|
| AMIN
MOHAMMED LAKHANI |
|
| TASLEEMUDDIN
AHMED BATLAY |
|
| AZIZ
EBRAHIM |
|
| AKHTAR
MAHMOOD |
|
| MUHAMMAD
ASIF |
|
| MOHAMMAD
SHAHID |
Chief Executive |
|
|
| ADVISOR |
|
| SULTANALI
LAKHANI |
|
|
| COMPANY
SECRETARY |
|
| M.K.
NAWAZ |
|
|
| AUDITORS |
|
| FORD,
RHODES, ROBSON, MORROW |
|
| Chartered
Accountants |
|
|
| REGISTERED
OFFICE |
|
| LAKSON
SQUARE, BUILDING NO. 2, |
|
| SARWAR
SHAHEED ROAD |
|
| KARACHI-74200 |
|
|
| FACTORY |
|
| 17-B,
SECTOR 29 |
|
| KORANGI
INDUSTRIAL TOWNSHIP |
|
| KARACHI |
|
|
|
| Notice
of Meeting |
|
|
| NOTICE
IS HEREBY GIVEN that the 20th Annual General Meeting of Merit Packaging
Limited will be held |
|
| on
Tuesday, December 05, 2000 at 10.00 a.m. at Avari Towers Hotel, Fatima Jinnah
Road, Karachi to |
|
| transact
the following business: |
|
|
| 1.
To receive, consider and adopt the audited Balance Sheet and Profit and Loss
Account for the year |
|
| ended
June 30, 2000 and the Directors' and Auditors' Reports thereon. |
|
|
| 2.
To declare a dividend @ 10% i.e. Re. 1.00 per share of Rs. 10/- each. |
|
|
| 3.
To appoint Auditors and fix their remuneration. |
|
|
|
By order of the Board |
|
|
|
|
|
M.K. NAWAZ |
|
| Karachi:
October 26, 2000 |
|
Company Secretary |
|
|
| NOTES: |
|
|
| 1.
The share transfer books of the Company will remain closed from November 23,
2000 to December |
|
| 5,
2000 both days inclusive. Transfers received in order at the registered
office of the Company |
|
| situated
at Lakson Square, Building No. 2, Sarwar Shaheed Road, Karachi, upto November
22, |
|
| 2000
will be considered in time for entitlement of dividend. |
|
|
| 2.
A member who has deposited his/her shares into Central Depository Company of
Pakistan Limited, |
|
| must
bring his/her participant's ID number and account/sub-account number
alongwith original |
|
| National
Identity Card (NIC) or original Passport at the time of attending the
meeting. |
|
|
| 3.
A member of the Company entitled to attend and vote may appoint another
member as his/her |
|
| proxy
to attend, speak and vote instead of him/her. |
|
|
| 4.
If a proxy is granted by a member who has deposited his/her shares in Central
Depository Company |
|
| of
Pakistan Limited, the proxy must be accompanied with participant's ID number
and account/sub- |
|
| account
number alongwith attested copies of the NIC or the Passport of the beneficial
owner. |
|
| Representatives
of corporate members should bring the usual documents required for such
purpose. |
|
|
| 5.
Forms of proxy, in order to be effective, must be received at the registered
office of the Company |
|
| not
later than 48 hours before the time of the meeting. |
|
|
| 6.
Members are requested to notify the Company promptly of any change in their
addresses. |
|
|
| 7.
Form of proxy is enclosed herewith. |
|
|
|
| Directors'
Report |
|
|
| The
Directors of your Company are pleased to present the audited annual accounts
of the Company for the |
|
| year
ended June 30, 2000. |
|
|
|
Rupees |
|
|
|
|
| Profit
after taxation |
|
2,324,230 |
|
| Unappropriated
profit brought forward |
|
44,164 |
|
| Transfer
from general reserve |
|
400,000 |
|
|
------------------ |
|
| Profit
available for appropriation |
|
2,768,394 |
|
|
|
|
| APPROPRIATIONS: |
|
| Proposed
Cash dividend @ 10% |
|
2,749,477 |
|
|
------------------ |
|
| Unappropriated
profit carried forward |
|
18,917 |
|
|
========== |
|
|
| OPERATING
RESULTS |
|
| The
Company's performance during the year under review remained satisfactory
despite depressed economic |
|
| conditions
in the country and tough competition within the industry. The turnover
amounted to Rs. 207.270 |
|
| million
for the year ended June 30, 2000 as compared to Rs. 232.215 million for the
year ended June 30, |
|
| 1999.
The gross profit for the year was Rs. 22.183 million as compared to Rs.
22.996 million for the same |
|
| period
last year. The drop in gross profit was due to change in product mix and
decline in business volume |
|
| on
account of adverse market conditions. |
|
|
| Customer
demand for improved quality necessitates deployment of more technologically
advanced machines |
|
| in
order to maintain and improve sales quantum in the face of intense
competition. In line with this essential |
|
| requirement,
your company imported a 5-colour offset machine with in-line coating facility
to strengthen |
|
| its
production line and to improve quality of products. Due to import of this
costly equipment the financial |
|
| charges
and depreciation increased considerably resulting in a lowered pre-tax
profit. However, this investment |
|
| is
expected to pay back in the shape of sustained and improved results. The
equipment complements our |
|
| range
and supports our business model. It has improved our capabilities to meet
customers demand for |
|
| higher
print and gloss qualities to ensure continued business volumes. |
|
|
| FUTURE
OUTLOOK |
|
| Keeping
the enterprise viable remains an uphill task in the midst of over capacity in
the printing and packaging |
|
| industry.
However undaunted by this challenge, your company has taken measures to
further improve production |
|
| efficiencies
and to reduce production costs. Accordingly, the directors are confident that
the company's share |
|
| in
the printing and packaging industry will be maintained if not increased. |
|
|
| ACKNOWLEDGEMENT |
|
| The
company is extremely grateful to all its shareholders, customers, bankers,
vendors and employees whose |
|
| continuous
support provides the source of strength needed to run the project
satisfactorily. |
|
|
| AUDITORS |
|
| The
present Auditors Ford, Rhodes, Robson, Morrow retire and being eligible,
offer themselves for |
|
| reappointment. |
|
|
|
| PATTERN
OF SHARE HOLDING |
|
| The
pattern of share holding in the prescribed form is included in this report. |
|
|
|
On behalf of the Board of Directors |
|
|
|
|
|
IQBALALI LAKHANI |
|
| Karachi:
October 20, 2000 |
|
Chairman |
|
|
|
|
|
| Auditors'
Report to the Members |
|
|
| We
have audited the annexed balance sheet of MERIT PACKAGING
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 2.9 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; 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. |
|
|
|
FORD, RHODES, ROBSON, MORROW |
|
| Karachi:
October 20, 2000 |
|
Chartered Accountants |
|
|
|
| Balance
Sheet as at June 30, 2000 |
|
|
|
2000 |
1999 |
|
| ASSETS |
|
Note |
Rupees |
Rupees |
|
|
|
| NON-CURRENT
ASSETS |
|
| Tangible
fixed assets |
|
3 |
47,040,961 |
24,671,326 |
|
| Capital
work-in-progress |
|
-- |
200,642 |
|
| Long
term deposits |
|
2,934,660 |
777,994 |
|
|
------------------ |
------------------ |
|
|
49,975,621 |
25,649,962 |
|
| CURRENT
ASSETS |
|
| Stores
and spares |
|
4 |
13,933,284 |
10,981,156 |
|
| Stock-in-trade |
|
5 |
36,775,117 |
31,861,073 |
|
| Trade debts |
|
6 |
12,788,406 |
7,868,606 |
|
| Advances
and other receivables |
7 |
11,736,898 |
15,677,571 |
|
| Prepayments |
|
|
588,189 |
801,003 |
|
| Cash
and bank balances |
|
8 |
109,928 |
453,369 |
|
|
------------------ |
------------------ |
|
|
75,931,822 |
67,642,778 |
|
|
------------------ |
------------------ |
|
| TOTAL
ASSETS |
|
125,907,443 |
93,292,740 |
|
|
|
========== |
========== |
|
|
|
|
|
| EQUITY
AND LIABILITIES |
|
|
|
| SHARE
CAPITAL AND RESERVES |
|
| Authorised
capital |
|
| 8,000,000
ordinary shares of Rs. 10 each |
|
80,000,000 |
80,000,000 |
|
|
========== |
========== |
|
|
|
|
| Issued,
subscribed and paid-up capital |
9 |
27,494,770 |
27,494,770 |
|
| Reserves |
|
10 |
15,918,917 |
16,344,164 |
|
|
|
------------------ |
------------------ |
|
|
|
43,413,687 |
43,838,934 |
|
| NON-CURRENT
LIABILITIES |
|
|
|
|
|
| Liabilities
against assets subject to finance lease |
11 |
15,518,401 |
1,002,053 |
|
| Deferred
liabilities |
|
12 |
3,998,894 |
3,264,362 |
|
|
------------------ |
------------------ |
|
|
19,517,295 |
4,266,415 |
|
|
| CURRENT
LIABILITIES |
|
| Current
portion of liabilities against assets |
|
| subject
to finance lease |
|
11 |
4,049,955 |
757,791 |
|
| Short
term finances |
|
13 |
39,640,309 |
25,498,699 |
|
| Creditors,
accrued and other liabilities |
14 |
16,536,720 |
14,806,686 |
|
| Proposed
dividend |
|
|
2,749,477 |
4,124,215 |
|
|
|
------------------ |
------------------ |
|
|
|
62,976,461 |
45,187,391 |
|
| CONTINGENCIES
AND COMMITMENTS |
15 |
|
|
|
|
------------------ |
------------------ |
|
| TOTAL
EQUITY AND LIABILITIES |
|
125,907,443 |
93,292,740 |
|
|
|
========== |
========== |
|
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
|
IQBALALI LAKHANI |
|
MOHAMMAD SHAHID |
|
|
Chairman |
|
Chief Executive |
|
|
|
| Profit
& Loss Account for the year ended June 30, 2000 |
|
|
|
|
2000 |
1999 |
|
|
Note |
Rupees |
Rupees |
|
|
| Net sales |
|
16 |
207,270,420 |
232,215,375 |
|
| Cost
of goods sold |
|
17 |
(185,087,655) |
(209,219,674) |
|
|
------------------ |
------------------ |
|
| Gross profit |
|
22,182,765 |
22,995,701 |
|
|
| Establishment
expenses |
|
18 |
(7,581,334) |
(7,109,104) |
|
| Selling
and distribution expenses |
19 |
(2,542,164) |
(2,466,828) |
|
|
|
------------------ |
------------------ |
|
|
|
(10,123,498) |
(9,575,932) |
|
|
|
------------------ |
------------------ |
|
| Operating
profit |
|
12,059,267 |
13,419,769 |
|
| Other
income |
|
20 |
1,323,098 |
896,158 |
|
|
|
------------------ |
------------------ |
|
|
|
13,382,365 |
14,315,927 |
|
|
|
------------------ |
------------------ |
|
| Financial
charges |
|
21 |
(7,960,082) |
(5,361,270) |
|
| Other
charges |
|
22 |
(612,053) |
(789,900 |
|
|
|
------------------ |
------------------ |
|
|
|
(8,572,135) |
(6,151,170) |
|
|
|
------------------ |
------------------ |
|
| Profit
before taxation |
|
|
4,810,230 |
8,164,757 |
|
| Taxation |
|
23 |
(2,486,000) |
(2,399,560) |
|
|
|
------------------ |
------------------ |
|
| Profit
after taxation |
|
2,324,230 |
5,765,197 |
|
| Unappropriated
profit brought forward |
|
44,164 |
53,182 |
|
| Transfer
from general reserve |
|
400,000 |
-- |
|
|
|
------------------ |
------------------ |
|
| Profit
available for appropriation |
|
2,768,394 |
5,818,379 |
|
|
|
|
|
| Appropriations: |
|
|
|
| Proposed
cash dividend @ 10% (1999: 15%) |
2,749,477 |
4,124,215 |
|
| General
reserve |
|
10 |
-- |
1,650,000 |
|
|
|
------------------ |
------------------ |
|
|
|
2,749,477 |
5,774,215 |
|
|
|
------------------ |
------------------ |
|
| Unappropriated
profit carried forward |
|
18,917 |
44,164 |
|
|
|
========== |
========== |
|
| Earnings
per share |
|
27 |
0.85 |
2.10 |
|
|
|
|
========== |
========== |
|
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
IQBALALI LAKHANI |
|
MOHAMMAD SHAHID |
|
|
Chairman |
|
Chief Executive |
|
|
|
| Cash
Flow Statement for the year ended June 30, 2000 |
|
|
|
|
|
|
2000 |
1999 |
|
|
Note |
Rupees |
Rupees |
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Cash
generated from operations |
24 |
9,269,330 |
15,153,472 |
|
| Tax paid |
|
469,854 |
(5,543,222) |
|
| Financial
charges on short term finances paid |
(5,135,958) |
(4,761,413) |
|
| Long
term deposits |
|
(2,156,666) |
(283,750) |
|
| Payment
of gratuity |
|
(45,739) |
(16,404) |
|
|
------------------ |
------------------ |
|
| Net
cash inflow from operating activities |
2,400,821 |
4,548,683 |
|
|
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
| Capital
expenditure |
|
(29,327,536) |
(1,072,624) |
|
| Proceeds
from sale of assets |
3.3 |
1,540,440 |
1,142,000 |
|
|
------------------ |
------------------ |
|
| Net
cash (outflow) / inflow from investing activities |
(27,787,096) |
69,376 |
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Obligation
under finance lease |
|
21,792,452 |
-- |
|
| Repayment
of leasing finance |
|
(6,769,155) |
(1,053,340) |
|
| Term
finance |
|
(20,000,000) |
20,000,000 |
|
| Payment
of dividend |
|
(4,122,073) |
(182,624) |
|
|
------------------ |
------------------ |
|
| Net
cash (outflow) / inflow from financing activities |
(9,098,776) |
18,764,036 |
|
|
|
------------------ |
------------------ |
|
| Net
(decrease) / increase in cash and cash equivalents |
(34,485,051) |
23,382,095 |
|
| Cash
and cash equivalents at the beginning of the year |
(5,045,330) |
(28,427,425) |
|
|
|
------------------ |
------------------ |
|
| Cash
and cash equivalents at the end of the year |
(39,530,381) |
(5,045,330) |
|
|
|
========== |
========== |
|
|
|
| CASH
AND CASH EQUIVALENTS COMPRISE OF: |
|
|
| Cash
and bank balances |
|
8 |
109,928 |
453,369 |
|
| Running
finance utilised under mark-up arrangements |
13.1 |
(39,640,309) |
(5,498,699) |
|
|
------------------ |
------------------ |
|
|
(39,530,381) |
(5,045,330) |
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
IQBALALI LAKHANI |
|
MOHAMMAD SHAHID |
|
|
Chairman |
|
Chief Executive |
|
|
|
| Statement
of Changes in Equity |
|
| for
the year ended June 30, 2000 |
|
|
|
Issued, subscribed |
Reserves |
|
|
|
and paid-up |
|
Unappropriated |
|
|
|
capital |
Capital |
Revenue |
profit |
Total |
|
|
|
Rupees |
|
|
| Balance
as at July 1, 1998 |
23,908,500 |
3,586,270 |
14,650,000 |
53,182 |
42,197,952 |
|
| Profit
after taxation |
-- |
-- |
-- |
5,765,197 |
5,765,197 |
|
| Bonus
shares issued during the year |
3,586,270 |
(3,586,270) |
-- |
-- |
-- |
|
| Proposed
dividend |
-- |
-- |
-- |
(4,124,215) |
(4,124,215) |
|
| Transfer
to general reserve during the year |
-- |
-- |
1,650,000 |
(1,650,000) |
-- |
|
|
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
|
| Balance
as at June 30, 1999 |
27,494,770 |
-- |
16,300,000 |
44,164 |
43,838,934 |
|
|
|
|
|
|
|
| Profit
after taxation |
-- |
-- |
-- |
2,324,230 |
2,324,230 |
|
| Transfer
from general reserve during |
|
|
| the year |
|
-- |
-- |
(400,000) |
400,000 |
-- |
|
| Proposed
dividend |
-- |
-- |
-- |
(2,749,477) |
(2,749,477) |
|
|
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
|
| Balance
as at June 30, 2000 |
27,494,770 |
-- |
15,900,000 |
18,917 |
43,413,687 |
|
|
========== |
========== |
========== |
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
IQBALALI LAKHANI |
|
MOHAMMAD SHAHID |
|
|
Chairman |
|
Chief Executive |
|
|
|
| Notes
to the Accounts |
|
| for
the year ended June 30, 2000 |
|
|
| 1.
THE COMPANY AND ITS OPERATIONS |
|
| The
company was incorporated on January 28, 1980 in Pakistan as a public limited
company and is |
|
| listed
on the Karachi Stock Exchange. The company is mainly engaged in the
manufacture and sale of |
|
| printing
and packaging materials. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
|
| 2.1
Accounting convention |
|
| These
accounts have been prepared under the historical cost convention. |
|
|
| 2.2
Tangible fixed assets and depreciation |
|
| These
are stated at cost less accumulated depreciation except leasehold land and
capital |
|
| work-in-progress
which are stated at cost. |
|
|
| Depreciation
charge on operating fixed assets is based on reducing balance method except
for |
|
| imported
dies which are depreciated on a straight line basis over its estimated useful
life. A full |
|
| year's
depreciation is charged in the year of addition whereas no depreciation is
charged in the |
|
| year
of disposal. |
|
|
| Rates
of depreciation which are disclosed in note 3.1 are designed to write off the
cost over the |
|
| estimated
useful lives of the assets. |
|
|
| Maintenance
costs and normal repairs are charged to profit and loss account as and when
incurred. |
|
| Major
renewals and improvements are capitalised. |
|
|
| Gains
and losses on disposal of fixed assets are taken to the profit and loss
account. |
|
|
| 2.3
Accounting for leases |
|
| Assets
held under finance leases are stated at cost less depreciation. |
|
|
| The
outstanding obligations under the lease less finance charges allocated to
future periods are |
|
| shown
as a liability. |
|
|
| The
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
is charged at the same rates as company owned assets. |
|
|
| Lease
rentals payable on assets held under operating leases are charged to the
profit and loss |
|
| account. |
|
|
| 2.4
Stores and spares |
|
| Stores
and spares are stated at cost which is determined by the moving average
method except |
|
| those
in transit and in bond which are valued at actual cost. |
|
|
| 2.5
Stock-in-trade |
|
| Raw
materials, work-in-process and finished goods are stated at the lower of cost
and estimated |
|
| net
realizable value. Cost is arrived at by using the moving average basis except
for goods in transit |
|
| and
in bond which are valued at actual cost. Cost of work-in-process and finished
goods include |
|
| an
appropriate portion of production overheads. |
|
|
| 2.6
Trade debts |
|
| Debts
considered irrecoverable are written off and provision is made for debts
considered doubtful. |
|
|
