| Ghandhara Nissan Limited |
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| Annual
Report 2000 |
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| Contents |
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| Company Profile |
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| Notice
of Meeting |
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| Chairman
and Directors' Report |
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| Auditors'
Report to the Members |
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| Balance Sheet |
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| Profit
& Loss Account |
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| Cash
Flow Statement |
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| Statement
of Changes in Shareholders' Equity |
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| Notes
to the Accounts |
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| Pattern
of Shareholding |
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| Company
Profile |
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| BOARD
OF DIRECTORS |
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| Mr.
Raza Kuli Khan Khattak |
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Chairman |
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| Lt.
Gen. (Retd) Ali Kuli Khan Khattak |
Chief Executive |
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| Mr.
Ahmed Kuli Khan Khattak |
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| Begum
Tehmina H. Khan |
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| Mr.
Mushtaq Ahmed Khan |
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| Mr.
Jamil A. Shah |
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| Mr.
Anis Wahab Zuberi |
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| Mr. M. Doi |
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| Mr.
Pervez I. Khan |
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| COMPANY
SECRETARY |
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| Mr.
Mohammad Saleem Baig |
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| REGISTERED
OFFICE |
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| Ghandhara
House |
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| 109/2,
Clifton Karachi |
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| BANKERS
OF THE COMPANY |
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| Allied
Bank of Pakistan Limited |
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| Societe
Generale The French & International Bank |
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| The
Hong Kong & Shanghai Banking Corp. |
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| United
Bank Limited |
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| American
Express Bank Limited |
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| The
Muslim Commercial Bank Limited |
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| The
Bank of Tokyo - Mitsubishi Limited |
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| Askari
Commercial Bank |
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| Bank Al-Falah |
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| Union
Bank Limited |
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| LEGAL
& TAX ADVISOR |
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| Shaukat
Law Associates |
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| 217-218,
Central Hotel Annexe |
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| Abdullah
Haroon Road, Karachi |
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| AUDITORS |
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| M/s.
Hameed Chaudhary & Co. |
M/s. Muniff Ziauddin
& Co. |
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| Chartered
Accountants |
Chartered Accountants |
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| 5th
Floor, Karachi Chambers |
5, Victoria Chambers |
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| Hasrat
Mohani Road |
Abdullah Haroon Road |
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| Karachi |
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Karachi |
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| SHARE
REGISTRAR |
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| T.H.K.
Associates (Pvt) Ltd. |
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| Ground
Floor, Sheikh Sultan |
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| Trust
Building No. 2, |
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| Beaumont
Road, Karachi |
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| NOTICE
OF ANNUAL GENERAL MEETING |
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| Notice
is hereby given that the 18th Annual General Meeting of Shareholders of |
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| Ghandhara
Nissan Limited will be held on Saturday, the 30th December, 2000 |
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| at
3.00 P.M., at Hotel Avari Towers, Fatima Jinnah Road, Karachi, to transact |
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| the
following business: |
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| 1.
To receive and consider the Audited Accounts of the Company for the year |
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| ended
30th June, 2000. |
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| 2.
To appoint Auditors for the year ending 30th June, 2001 and to fix their |
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| remuneration.
The retiring Auditors, Messrs Hameed Chaudhri & Co., |
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| Chartered
Accountants and Muniff Ziauddin & Co., Chartered |
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| Accountants,
being eligible, offer themselves for reappointment. |
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| 3.
To transact any other business with the permission of the Chairman. |
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By Order of the Board |
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M. SALEEM BAIG |
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| Karachi:
9th December, 2000 |
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COMPANY SECRETARY |
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| NOTES: |
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| 1.
The Share Transfer Books of the company will remain closed from 29th |
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| December,
2000 to 4th January, 2001 (both days inclusive). |
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| 2.
Shareholders are requested to intimate any change in their address to our |
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| Share
Registrars, Messrs THK Associates (Pvt) Ltd., Share Department, |
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| Ground
Floor, Sheikh Sultan Trust Building No. 2, Beaumont Road, |
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| Karachi. |
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| 3.
A member entitled to attend and vote at the Annual General Meeting may |
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| appoint
another member as his/her Proxy to attend and vote instead of |
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| him/her.
Form of Proxy is enclosed with the Annual Report. Votes may be |
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| given
personally or by Proxy or by Attorney or, in case of a Corporation, by a |
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| representative.
The instrument of Proxy, duly stamped, signed and |
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| witnessed,
should be lodged at the Registered Office of the Company at |
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| Ghandhara
House, 109/2, Clifton, Karachi, not later than 48 hours before |
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| the
time of the meeting. |
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| CDC
Account Holders will further have to follow the under-mentioned |
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| guidelines
as laid down in Circular - 1 dated January 26, 2000 issued by the |
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| Securities
and Exchange Commission of Pakistan. |
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| (a)
For Attending the Meeting |
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| i)
In case of individuals, the account holder or sub-account holder and/or |
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| the
person whose securities are in group account and their registration |
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| details
are uploaded as per the regulations, shall authenticate his/her |
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| identity
by showing his original National Identity Card (NIC) at the time |
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| of
attending the meeting. |
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| ii)
In case of corporate entity, the Board of Directors' resolution/power of |
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| attorney
with. specimen signature of the nominee shall be produced |
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| (unless
it has been provided earlier) at the time of the meeting. |
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| (b)
For Appointing Proxies |
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| i)
In case of individuals, the account holder or sub-account holder and/or |
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| the
person whose securities are in group account and their registration |
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| details
are uploaded as per the Regulations, shall submit the proxy form |
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| as
per the above requirement. |
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| ii)
Attested copies of NIC of the beneficial owners and the proxy shall be |
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| furnished
with the proxy form. |
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| iii)
The proxy shall produce his original NIC at the time of the meeting. |
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| Chairman
and Directors' Report |
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| For
the year ended 30th June 2000 |
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| I
am pleased to welcome you all on behalf of the Board of Directors to the |
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| eighteenth
Annual General Meeting of shareholders of the company to present |
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| to
you the Annual Report for the year ended 30th June, 2000. |
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| Economy |
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| The
country staged a modest recovery on economic front during the year |
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| 1999-2000.
The real GDP grew by 4.5 percent against 3.2 percent preceding |
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| year,
but fall short against the target of 5.0 percent for the year. GNP grew by |
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| 3.9
percent during the year under review as against 3.2 percent last year. |
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| The
recovery was mainly attributed to the agriculture sector, where as the |
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| performance
of manufacturing sector in general and large scale |
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| manufacturing
in particular remained weak. |
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| Financial
Restructuring |
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| In
order to regularize the project lease debts, the management has |
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| successfully
negotiated restructuring with the lease syndicate members, |
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| resultantly;
company's leverage has also been reduced. The highlights of the |
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| financial
restructuring are as under: |
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| *
Increase in Paid-up Capital from Rs100 million to Rs150 million under |
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| section
86(1) of the Companies Ordinance 1984. |
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| *
Sale of non-core investment i.e. 2.9 million shares of Ghandhara Leasing |
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| Company
Ltd., to A1-Zamin Leasing Modaraba Ltd., @ Rs.8.675 per share. |
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| *
Payments made to lease syndicate members - Rs80 million. |
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| *
Repayment of medium term loan- Rs 36 million. |
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| *
Negotiated waiver of mark-up - Rs 114 million. |
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| *
Debt repayment has been rescheduled for 6 years inclusive of grace period |
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| of
1 year for payment of interest and 2 years for repayment of principal. |
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| *
Mark-up rates have been reduced from 21% to 17%. |
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| As
a result of above financial restructuring, the company's debts have been |
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| reduced
to Rs380 million. |
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| Contract
Assembly Business |
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| In
order to attain the optimum plant capacity utilisation and to generate |
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| additional
revenue, the management entered into a contract assembly |
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| agreement
with World Korean Motors Limited (WKM) for the assembly of |
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| Daewoo
vehicles at GNL car plant. The assembly was to commence from |
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| second
quarter of year 2000, but has been delayed on part of WKM. |
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| However,
jigs and fixtures for Musso 4x4 vehicles have arrived at Karachi port |
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| and
the erection of required assembly line at GNL plant is underway. |
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| Review
of Operations |
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| The
year under review was the difficult one, as the company faced severe |
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| threats
from creditors, bankers and principals due to its financial crisis. The |
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| plant's
capacity remained under utilized due to lack of working capital lines; |
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| the
production also suffered due to change of Nissan Sunny model. Hence, |
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| during
the year the company sold 94 units only. |
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| The
company has been able to launch its new model of Nissan Sunny in June |
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| 2000,
which has been well received. by the market. |
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| The
fixed factory overheads remained unabsorbed due to low production |
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| volume.
Further, high financial charges, exchange loss on foreign currency |
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| liability
due to Yen - Rupee parity, incorporation of GNL's share in associated |
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| company's
loss; all contributed towards the loss for the year. |
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| A
summary of financial results for the year is as under: |
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|
(Rs. '000) |
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| Turnover |
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66,541 |
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| Marginal Profit |
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6,642 |
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| Unabsorbed
Factory Overheads |
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81,486 |
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| Gross
Profit / (Loss) |
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(74,844) |
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| Financial
charges |
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99,420 |
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| Profit
/ (Loss) for the year before taxation |
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(137,065) |
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| Provision
for Taxation |
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467 |
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| Profit
/ (Loss) for the year after taxation |
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(137,532) |
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| Profit
/ (Loss) brought forward |
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(522,632) |
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| Profit
/ (Loss) carried forward |
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(660,164) |
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| Profit
/ (Loss) per share (Rupees) |
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(13.20) |
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| Associated
Company |
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| Ghandhara
Nissan Diesel Limited |
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| During
the year under review, the heavy commercial market remained |
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| depressed
and-the overall market size shrunk. Resultantly, Ghandhara |
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| Nissan
Diesel Limited's sales declined due to adverse market conditions and |
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| suffered losses. |
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| Future Outlook |
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| The
performance of manufacturing sector during the year remained weak; |
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| however,
the automobile sector attained consistent growth. Therefore, with |
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| the
arrangement of working capital lines, GNL will also enhance its operation |
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| level. |
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| Further,
the new management is confident to revive the company's operations |
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| by
supplementing its revenue through assembly of other makes under |
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| contract
assembly arrangements besides Nissan. |
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| Directors'
Comments on the Auditors' Report |
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| Your
directors have carefully considered the audit report to the shareholders |
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| and
are pleased to reply item wise as under. |
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| Item
(c) of the Report |
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| The
company has entered into a Memorandum of Understanding with the |
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| lease
syndicate members for the re-scheduling of its lease and LMM financing |
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| facilities
on 29th June 2000 and the principal lenders have agreed to waive |
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| Rs98.70
million in outstanding mark-up as on 31st March 2000. |
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| The
MOU is signed by the company with all the lease syndicate members. |
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| However,
formal documentation is under execution. |
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| Item
(d) of the Report |
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| The
Company could not pay the engineering & technical fee to Nissan Motor |
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| Company
and Tomen Corporation on which they have claimed a mark-up of |
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| Rs19.22
million. The management is negotiating the terms of repayment in a |
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| longer
period. We are hopeful that upon payment of engineering & technical |
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| fee
total mark-up will be waived by our principles. |
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| Item
(g) of the Report |
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| The
directors are of the opinion that company is a going concern for the |
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| reasons
that subsequently it has launched its new model of Nissan Sunny Car |
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| in
June 2000 and established letter of credits for CKD kits, further it has also |
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| re-scheduled
its long-term debts and making all efforts for the assembly of |
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| Daewoo
vehicles at their car plant for which jigs & fixtures have been arrived |
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| at site. |
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| Acknowledgement |
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| The
Board of Directors would like to bring on record their acknowledgement |
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| for
the support extended by Nissan Motor Company, Tomen Corporation, |
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| dedicated
workers, committed staff, supportive vendors and creditors who |
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| understood
company's problem and continued their support in such difficult |
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| times. |
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| Pattern
of Shareholding |
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| Pattern
of Shareholding is annexed. |
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| Auditors |
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| The
present Auditors M/s. Hameed Chaudhari & Co., Chartered Accountants |
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| and
Muniff Ziauddin & Co., Chartered Accountants have retired and being |
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| eligible,
offered themselves for re-appointment. |
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| Karachi |
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|
Raza Kuli Khan Khattak |
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| 7th
December, 2000 |
|
Chairman |
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| AUDITORS'
REPORT TO THE MEMBERS |
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| We
have audited the annexed Balance Sheet of GHANDHARA NISSAN LIMITED as at |
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| 30
June, 2000 and the related profit and loss account, cash flow statement and |
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| statement
of changes in equity, together with the notes forming part thereof, for the
year |
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| then
ended and except for the matter noted in para (c) and (d) below, we state
that we |
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| have
obtained all the information and explanations which to the best of our
knowledge |
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| and
belief were necessary for the purposes of our audit. |
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| It
is the responsibility of the company's management to establish and maintain a
system |
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| of
internal control, and prepare and present the above said statements in
conformity with |
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| the
approved accounting standards and the requirements of the Companies
Ordinance, |
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| 1984.
Our responsibility is to express an opinion on these statements based on our
audit. |
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| We
conducted our audit in accordance with the auditing standards as applicable
in |
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| Pakistan.
These standards require that we plan and perform the audit to obtain |
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| reasonable
assurance about whether the above said statements are free of any material |
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| misstatement.
An audit includes examining, on a test basis, evidence supporting the |
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| amount
and disclosures in the above said statements. An audit also includes
assessing |
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| the
accounting policies and significant estimates made by management, as well as, |
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| evaluating
the overall presentation of the above said statements. We believe that our |
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| audit
provides a reasonable basis for our opinion and, after due verification, we
report |
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| that: |
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| (a)
in our opinion, proper books of account have been kept by the Company as
required |
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| by
the Companies Ordinance, 1984; |
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| (b)
in our opinion: |
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| (i)
the Balance Sheet and Profit and Loss Account together with the notes |
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| thereon
have been drawn up in conformity with the Companies Ordinance, |
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| 1984
and are in agreement with the books of account and are further in |
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| accordance
with accounting policies consistently applied; |
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|
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| (ii)
the expenditure incurred during the year was for the-purpose of the |
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| Company's
business; and |
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| (iii)
the business conducted, investments made and the expenditure incurred |
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| during
the year were in accordance with the objects of the Company; |
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| (c)
as more fully explained in note 12 to the financial statements, we have not
received |
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| confirmation
of outstanding balances from the members of the syndicate in respect of |
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| rescheduled
amount of locally manufactured machinery (LMM) financing facility and |
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| lease
finances by the leasing companies / financial institutions for their
rescheduled |
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| balances
as at 30 June, 2000 and waiver of financial charges. |
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| (d)
as more fully explained in note 11 to the financial statements, in view of
the pending |
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| negotiations,
Tomen Corporation and Nissan Motor Company have not confirmed the |
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| outstanding
balances including the engineering and technical fee payable. Mark-up |
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| amounting
to Rs. 19.222 million has been claimed on engineering and technical fees |
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| payable
which has not been accounted for and the fee has been classified as a long |
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| term
liability. The out come of the mark-up and classification of liability is
dependent |
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| on
ongoing negotiations; |
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|
| (e)
in our opinion and to the best of our information and according to the
explanations |
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| given
to us, the balance sheet, profit and loss account, cash flow statement and |
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| statement
of changes in equity, together with the notes forming part thereof, |
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| give
the information required by the Companies Ordinance, 1984 in the manner |
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| so
required and except for classification and carrying value of liabilities as
referred |
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| to
in para (c) and (d) above, respectively give a true and fair view of the
state of the |
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| Company's
affairs as at 30 June, 2000 and of the loss, its cash flows and changes in |
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| equity
for the year then ended; and |
|
|
| (f)
in our opinion, no zakat was deductible at source under the Zakat and Ushr |
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| Ordinance, 1980. |
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|
| (g)
without qualifying our opinion we draw attention to note 2 to the financial |
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| statements.
The company has incurred a net loss of Rs. 137.532 million during the |
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| year
ended 30 June 2000 and, as of that date, the Company's current liabilities |
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| exceeded
its current assets by Rs. 236.451 million and its total liabilities exceeded
its |
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| total
assets by Rs. 269.433 million. However, the financial statements have been |
|
| prepared
under going concern assumption in view of the matters stated in note 2; and |
|
|
| (h)
without qualifying our opinion we draw attention that corresponding year
accounts |
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| have
been audited by Taseer Hadi Khalid & Co., Chartered Accountants and Nasim |
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| Akhter
& Co., Chartered Accountants. |
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|
|
HAMEED CHAUDHRI & CO., |
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MUNIFF ZIAUDDIN & CO., |
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|
CHARTERED ACCOUNTANTS |
|
CHARTERED ACCOUNTANTS |
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|
| Date:
7th December 2000 |
|
| KARACHI |
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|
|
| BALANCE
SHEET AS AT 30 JUNE, 2000 |
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|
|
Rupees in
thousand |
|
|
Note |
2000 |
1999 |
|
|
| SHARE
CAPITAL |
|
|
| Authorised
Capital |
|
| 80,000,000
ordinary shares of |
|
| Rs. 10/- each |
|
|
|
800,000 |
800,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed & paidup capital |
4 |
150,000 |
100,000 |
|
|
|
|
|
|
|
| RESERVES |
|
|
|
| Share
premium reserve |
|
5 |
40,000 |
40,000 |
|
| Accumulated
loss |
|
|
(660,164) |
(522,632) |
|
|
|
|
|
|
| Shareholders'
Equity |
|
|
(470,164) |
(382,632) |
|
| SURPLUS
ON REVALUATION OF FIXED ASSETS |
6 |
200,731 |
200,731 |
|
| ADVANCE
AGAINST EQUITY |
|
7 |
-- |
47,735 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
(269,433) |
(134,166) |
|
|
|
|
|
| LOAN
FROM' DIRECTOR / SPONSORS |
8 |
188,578 |
160,000 |
|
| LONG
TERM DEPOSITS |
|
9 |
18,111 |
14,111 |
|
| LONG
TERM LOANS |
|
10 |
91,687 |
57,925 |
|
| ENGINEERING
& TECHNICAL FEE PAYABLE |
11 |
81,911 |
70,738 |
|
| OBLIGATION
UNDER FINANCE LEASE |
12 |
282,451 |
2,539 |
|
| DEFERRED
LIABILITY FOR STAFF GRATUITY |
13 |
4,856 |
5,620 |
|
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Finance
under markup arrangements |
14 |
156,231 |
194,680 |
|
| Current
maturity of long term liabilities |
15 |
5,660 |
12,265 |
|
| Bills
payable against letters of credit |
|
46,043 |
2,105 |
|
| Creditors,
provisions, accrued charges & other liabilities: |
16 |
213,144 |
587,510 |
|
| Taxation |
|
|
17 |
467 |
3,569 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
421,545 |
800,129 |
|
| CONTINGENCIES |
|
18 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
819,706 |
976,896 |
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of the accounts. |
|
|
| FIXED
CAPITAL EXPENDITURE |
|
| Operating
fixed assets |
|
19 |
569,137 |
641,479 |
|
| Capital
work-in-progress |
|
20 |
9,000 |
9,000 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
578,137 |
650,479 |
|
|
| LONG
TERM DEPOSITS AND DEFERRED COST |
21 |
2,982 |
3,086 |
|
|
|
|
|
| LONG
TERM INVESTMENTS |
|
22 |
53,493 |
116,981 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores,
spares and loose tools |
|
23 |
35,748 |
39,677 |
|
| Stocks-in-trade |
|
24 |
104,955 |
103,081 |
|
| Trade
debtors - unsecured considered good |
|
2,957 |
8,510 |
|
| Advances,
deposits, prepayments and |
|
|
| other
receivables |
|
25 |
40,312 |
52,003 |
|
| Cash
& bank balances |
|
26 |
1,122 |
3,079 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
185,094 |
206,350 |
|
|
------------------ |
------------------ |
|
|
|
819,706 |
976,896 |
|
|
========== |
========== |
|
|
|
|
|
Lt. Gen. (Retd.) Ali Kuli Khan Khattak |
|
|
Jamil A. Shah |
|
|
Chief Executive |
|
|
Director |
|
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED 30 JUNE, 2000 |
|
|
|
|
Rupees in
thousand |
|
|
Note |
2000 |
1999 |
|
|
| SALES
AND SERVICES |
|
27 |
66,541 |
290,951 |
|
|
|
|
|
|
| COST
OF SALES |
|
28 |
|
|
| Cost
including fixed overheads |
|
|
(59,899) |
(267,562) |
|
| Unabsorbed
fixed overheads |
|
|
(81,486) |
(79,565) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(141,385) |
(347,127) |
|
|
|
|
------------------ |
------------------ |
|
| GROSS LOSS |
|
|
|
(74,844) |
(56,176) |
|
|
|
|
|
| OPERATING
EXPENSES |
|
|
|
| Administrative
and Selling |
|
29 |
(19,392) |
(35,403) |
|
|
|
|
------------------ |
------------------ |
|
| OPERATING
LOSS |
|
|
(94,236) |
(91,579) |
|
|
|
| SHARE
OF LOSS OF ASSOCIATED COMPANIES |
30 |
(26,069) |
(34,484) |
|
| MISCELLANEOUS
REVENUE |
|
31 |
941 |
939 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
(119,364) |
(125,124) |
|
|
|
|
|
| OTHER
CHARGES |
|
| Financial
expenses |
|
32 |
(99,420) |
(156,055) |
