| Pakistan Paper Products 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 to the Members |
|
| Balance
Sheet |
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| Profit
& Loss Account |
|
| Cash
Flow Statement |
|
| Notes
to the Accounts |
|
| Pattern
of Holding of the Share Holders |
|
|
|
| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
| Chairman / |
|
| Chief
Executive |
Mr. HASHIM B. SAYEED |
|
|
| Directors |
|
Mr. MOHAMMAD ALI SAYEED |
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|
Mr. MAHBOOB G. RAWJEE |
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|
Mr. KH. MANSOOR MUKHTAR
SHAH |
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|
Mr. ABBAS SAYEED |
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|
Mr. BASHIR AHMED |
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|
Mrs. MULEIKA SAYEED |
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|
Mr. ABID SAYEED |
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|
| Auditors |
|
M/s. Z. LAKHANI & CO. |
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|
Chartered Accountants |
|
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| Bankers |
|
HABIB BANK LIMITED |
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|
ANZ GRINDLAYS BANK |
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|
ALLIED BANK OF PAKISTAN
LTD |
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|
MUSLIM COMMERCIAL BANK
LTD |
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|
| Registered
Office |
MEHDI TOWER NO: 304, |
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|
3RD FLOOR, 115-A.
S.M.C.H. SOCIETY, |
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|
SHAHRAH-E-FAISAL, |
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|
KARACHI-74400 |
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| Factory |
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D-58, ESTATE AVENUE, |
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S.I.T.E., KARACHI. |
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| NOTICE
OF MEETING |
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| Notice
is hereby given that the 38th Annual General Meeting of the Shareholders of
Pakistan |
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| Paper
Products Limited, will be held at the registered office of the Company at
Mehdi Towers |
|
| No.
304, 3rd Floor, 115-A, S.M.C.H. Society, Shahrah-e-Faisal, Karachi-74400 on
Saturday |
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| the
25th November 2000 at 12:15 p.m. to transact the following business: |
|
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| 1.
To confirm the minutes of the Annual General Meeting held on 18th December
1999. |
|
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| 2.
To receive and adopt the Audited Accounts of the Company for the year ended
30th June |
|
| 2000
together with the Directors report and Auditors report thereon. |
|
|
| 3.
To approve the Payment of Dividend at rate of Rs. 2.50 per share (25 percent)
as |
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| recommended
by the Directors. |
|
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| 4.
To appoint Auditors for the year 2000-2001 and to fix their remuneration. The
retiring |
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| Auditors
have offered for re-election. |
|
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| 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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| Date:
18th November, 2000 |
|
M.Z.B. CHUGHTAI |
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| Karachi |
|
Company Secretary |
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|
| NOTES: |
|
| 1.
The Share Transfer Books of the Company will remain closed from 18th November
2000 to |
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| 25th
November, 2000 (both days inclusive). |
|
|
| 2.
A member entitled to attend and vote at this meeting, may appoint any other
member as |
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| his/her
proxy to attend the meeting and vote instead of him/her. The Proxies in order
to be |
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| effective
must be received by the Company not less than 48 hours before the meeting. |
|
|
| 3.
The Share-holders are requested to promptly notify any change in their
address. |
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|
| 4.
The share-holders are further requested to quote their folio number in all
correspondence |
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| with
the company and at the time of attending the Annual General Meeting. |
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|
| DIRECTORS
REPORT TO THE SHAREHOLDERS |
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| Your
Directors are pleased to present this report alongwith the audited accounts
of the Company |
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| for
the year ended on 30th June, 2000. |
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|
|
2000 |
1999 |
|
| Net
Profit After Taxation |
|
4,374,932 |
3,131,515 |
|
|
| Unappropriated
Profit Brought Forward |
Rs. |
17,045 |
4,871 |
|
| Profit
Available for Appropriation |
Rs. |
4,391,977 |
3,136,386 |
|
| Appropriations/Adjustments |
|
|
|
| Prior
Year Adjustments |
|
Rs. |
-- |
(109,341) |
|
| Transfer
from Revenue Reserve |
Rs. |
-- |
3,990,000 |
|
| Proposed
Dividend @ 25% (1999: 20%) |
Rs. |
3,750,O00 |
(2,000,000) |
|
| Bonus
Shares given in (1999: 50%) |
Rs. |
-- |
(5,000,000) |
|
|
|
---------- |
---------- |
|
|
Rs. |
(3,750,000) |
(3,119,341) |
|
| Unappropriated
Profit Carried Forward |
Rs. |
641,977 |
17,045 |
|
|
|
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|
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| Your
Directors are pleased to report that in spite of the problems faced during
the year, the |
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| Company
managed to keep up production and sale and came out with a net profit of |
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| Rs.4,374,932/-
compared to Rs. 3,131,515/- last year. With unappropriated profit brought |
|
| forward
of Rs. 17045/- the total profit available for appropriation is Rs.
4,391,977/-. Your |
|
| Directors
propose a dividend of 25% which works out to Rs. 2.50 per share amounting to |
|
| Rs.3,750,000/-
on the current paid up capital of Rs. 15,000,000/-. The balance amount of Rs. |
|
| 641,977/-
is carried forward as unappropriated profit. This achievement is due to
untiring |
|
| efforts
made by the management and the workers of the Company in controlling the cost
and |
|
| achieving
maximum selling prices. |
|
|
| You
are well aware that the Government have not as yet succeeded in imposing GST
across the |
|
| board.
The traders and the unregistered industrial sector is still resenting the GST
and the tax |
|
| system
being proposed by the Government. It is very sad that almost 4 years have
passed and |
|
| the
CBR have not been able to resolve this issue just because they have not made
out a system |
|
| which
is workable and acceptable to all classes of trade and industry. The result
is that we being |
|
| perhaps
the only registered manufacturing unit making Exercise Books and Paper
Products |
|
| continue
to pay Sales Tax and compete in the market where large quantities of Exercise
Books |
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| and
Paper Products are coming without Sales Tax payment. This situation is very
damaging as |
|
| the
market is getting flooded with non-tax paid products due to which there is
resentment in |
|
| accepting
Sales Tax paid products being supplied by us. For the information of the
shareholders |
|
| and
the general public we give below the total Sales Tax that we have paid in the
last 3 years. |
|
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| In
1998 Rs. 8~206,443/-, In 1999 Rs. 10,375,580/-, In 2000 Rs. 11,993,990/. |
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| This
should be an eye opener to the present Government as there are perhaps no
other Exercise |
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| Books
and Paper Products makers who have registered themselves under Sales Tax Act
and |
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| have
paid Sales Tax. It is also an eye opener for the Federal Government to see
the amount of |
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| revenue
that they are losing because of having not succeeded in forcefully enforcing
Sales Tax on |
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| all
makers of Exercise Books and Paper Products. We may humbly submit that in
respect to Sales |
|
| Tax
it must be applicable to everyone irrespective of being small or big as the
tax is on the |
|
| product
and not on the individual. The imposition of taxes and duties must go
alongwith |
|
| accountability
on the part of the Government and this can only be carried through if there
is rule |
|
| of
law, discipline and accountability at all levels. |
|
|
| The
Company need large amount of funds as working capital because of the high
cost of raw |
|
| materials
that have to be imported and procured locally. Then we have to absorb higher
wages |
|
| and
higher tariff for power, gas and fuel. In this way the operating expenses are
increasing |
|
| whereas
flow of funds from the buyers is not coming in regularly thereby causing
problems. |
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| Recovery
of bills from the government and our stockists have also slowed down along
with |
|
| economy.
We hope the present Government would succeed to bring in law and order,
discipline |
|
| and
accountability at all levels so that the overall situation will improve and
your Company would |
|
| be
able to do better. |
|
|
| The
Auditors M/s. Z. Lakhani & Co. Karachi have retired and offered
themselves for |
|
| reappointment
and the Board recommend their reappointment. |
|
|
| The
Directors would like to thank the officers, staff and workers for their hard
work and co- |
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| operation
during the year. We assure the shareholders that the management would do its
best to |
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| make
progress and keep them well informed with the developments. |
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|
|
For and on behalf of the
Board |
|
|
|
HASHIM B. SAYEED |
|
|
Chairman & Chief
Executive |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed Balance Sheet of M/s. PAKISTAN PAPER PRODUCTS |
|
| LIMITED,
Karachi as at 30th June, 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 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 |
|
| approval
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. |
|
|
| (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 accounts and are further in accordance with accounting |
|
| policies
consistently applied except for the changes as stated in note(s) 2.9 with |
|
| which
we concur; |
|
|
| ii)
the expenditure incurred during the year was for the purpose of company's
business: |
|
| and |
|
|
| iii)
the business conducted, investment 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 confirm |
|
| 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 |
|
| 30th
June, 2000 and of the profit/(loss), its cash flow 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. |
|
|
| Date:
20th October, 2000 |
|
Z. LAKHANI & CO. |
|
| Karachi |
|
CHARTERED ACCOUNTANTS |
|
|
|
| BALANCE
SHEET AS AT 30TH JUNE, 2000 |
|
|
|
|
2000 |
1999 |
|
|
Note |
Rupees |
Rupees |
|
| CAPITAL
AND LIABILITIES |
|
|
| SHARE
CAPITAL AND RESERVES' |
|
|
| Share
Capital |
|
| Authorised |
|
| 2,000,000
Ordinary Shares of Rs. 10 each |
|
20,000,000 |
20,000,000 |
|
|
========== |
========== |
|
| Issued,
Subscribed and Paid-up |
|
3 |
15,000,000 |
10,000,000 |
|
| Revenue
Reserve |
|
4 |
24,000,000 |
24,000,000 |
|
| Un-Appropriated
Profit |
|
|
641,977 |
17,045 |
|
|
|
|
---------- |
---------- |
|
|
|
39,641,977 |
34,017,045 |
|
| Surplus
on Revaluation of Fixed Assets |
|
5 |
316,590 |
316,590 |
|
|
|
|
| LIABILITIES
AGAINST ASSET |
|
|
|
|
| SUBJECT
TO FINANCE LEASE |
|
6 |
-- |
862,864 |
|
|
| DEFERRED
LIABILITIES |
|
| Deferred
Taxation |
|
1,317,752 |
907,752 |
|
| Provision
for Gratuity |
|
601,738 |
555,396 |
|
|
---------- |
---------- |
|
|
1,919,490 |
1,463,148 |
|
| CURRENT
LIABILITIES |
|
|
|
| Current
Maturity of Finance Lease |
|
862,864 |
1,836,460 |
|
| Running
Finance under mark-up arrangement |
|
-- |
1,420,262 |
|
| Creditors,
Accrued and Other Liabilities |
|
7 |
9,051,162 |
7,969,215 |
|
| Proposed
Dividend @ 25% |
|
3,750,000 |
2,000,000 |
|
| Proposed
Bonus Shares (1999 @ 50%) |
|
-- |
5,000,000 |
|
|
---------- |
---------- |
|
|
13,664,026 |
18,225,937 |
|
| CONTINGENCIES
AND COMMITMENTS |
8 |
-- |
-- |
|
|
|
---------- |
---------- |
|
|
55,542,083 |
54,885,584 |
|
|
========== |
========== |
|
| PROPERTY
AND ASSETS |
|
| TANGIBLE
FIXED ASSETS |
|
9 |
14,332,345 |
13,891,058 |
|
| CAPITAL
WORK-IN-PROGRESS |
|
10 |
364,119 |
-- |
|
| INVESTMENTS |
|
11 |
10,000 |
10,000 |
|
| CURRENT
ASSETS |
|
|
|
|
| Stores
and Spares |
|
12 |
1,273,038 |
1,522,701 |
|
| Stock-in-Trade |
|
13 |
21,153,013 |
22,710,960 |
|
| Trade
Debtors |
|
14 |
7,926,248 |
13,371,581 |
|
| Advances
and Other Receivables |
|
15 |
2,121,558 |
2,582,052 |
|
| Deposits
and Prepayments |
|
16 |
455,715 |
461,467 |
|
| Cash
and Bank Balances |
|
17 |
7,906,047 |
335,765 |
|
|
|
---------- |
---------- |
|
|
|
40,835,619 |
40,984,526 |
|
|
|
|
|
|
---------- |
---------- |
|
|
55,542,083 |
54,885,584 |
|
|
========== |
========== |
|
|
|
|
| AUDITORS'
REPORT ANNEXED HEREWITH |
|
| The
annexed notes form an integral part of these accounts. |
|
|
| Date:
20th October, 2000 |
|
ABID SAYEED |
|
HASHIM BIN SAYEED |
|
| Karachi |
|
Director |
|
Chief Executive |
|
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR ENDED 30TH JUNE, 2000 |
|
|
|
|
2000 |
1999 |
|
|
Note |
Rupees |
Rupees |
|
|
| SALES |
|
18 |
72,104,300 |
69,469,123 |
|
| COST
OF SALES |
|
19 |
57,989,106 |
57,506,335 |
|
|
|
|
|
| GROSS
PROFIT |
|
|
14,115,194 |
11,962,788 |
|
|
|
|
|
| OPERATING
EXPENSES |
|
|
|
|
| Administrative |
|
20 |
5,864,899 |
5,110,503 |
|
| Sellin9
and Distribution |
|
21 |
676,103 |
661,056 |
|
| Financial |
|
22 |
481,848 |
1,215,119 |
|
| Workers'
Profit Participation Fund |
|
354,617 |
248,806 |
|
| Workers'
Welfare Fund |
|
110,000 |
80,000 |
|
|
----------- |
----------- |
|
|
7,487,467 |
7,315,484 |
|
|
----------- |
----------- |
|
| OPERATING
PROFIT |
|
6,627,727 |
4,647,304 |
|
| OTHER
INCOME |
|
23 |
(88,03l) |
43,284 |
|
|
----------- |
----------- |
|
| NET
PROFIT BEFORE TAXATION |
|
6,539,696 |
4,690,588 |
|
| TAXATION |
|
24 |
(2,164,764) |
(1,559,073) |
|
|
----------- |
----------- |
|
| NET
PROFIT AFTER TAXATION |
|
4,374,932 |
3,131,515 |
|
| UNAPPROPRIATED
PROFIT BROUGHT FORWARD |
17,045 |
4,871 |
|
|
----------- |
----------- |
|
| PROFIT
AVAILABLE FOR APPROPRIATION |
|
4,391,977 |
3,136,386 |
|
|
|
|
| APPROPRIATIONS/ADJUSTMENTS |
|
|
|
| Prior
Year Adjustments |
|
-- |
(109,341) |
|
| Transfer
from / (to) Revenue Reserve |
|
-- |
3,990, O00 |
|
| Proposed
Dividend @ 25% (1999: 20%) |
|
(3,750,000) |
(2,000,000) |
|
| Proposed
Bonus Shares (1999: 50%) |
|
-- |
(5,000,000) |
|
|
----------- |
----------- |
|
|
(3,750,000) |
(3,119,341) |
|
|
----------- |
----------- |
|
| UNAPPROPRIATED
PROFIT CARRIED FORWARD |
|
641,977 |
17,045 |
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
HASHIM BIN SAYEED |
|
ABID SAYEED |
|
|
Chief Executive |
|
Director |
|
|
|
| CASH
FLOW STATEMENT FOR THE YEAR ENDED 30TH JUNE, 2000 |
|
|
|
|
2000 |
1999 |
|
|
Note |
Rupees |
Rupees |
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Cash
Generated From Operations |
|
25 |
17,211,664 |
(436,569) |
|
| Income
Taxes Paid |
|
(1,994,837) |
(2,186,682) |
|
| Gratuity Paid |
|
(51,195) |
(237,593) |
|
|
---------- |
---------- |
|
| Net
Cash from Operating Activities |
|
15,165,632 |
(2,860,844) |
|
|
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
| Acquisition
of Fixed Assets |
|
(2,296,227) |
(277,695) |
|
| Disposal
of Fixed Assets |
|
297,500 |
-- |
|
| Capital
Work-in-Progress |
|
(364,119) |
-- |
|
| Income
from Investment & Deposit Account |
|
2,542 |
(1,315) |
|
|
---------- |
---------- |
|
| Net
Cash used in Investing Activities |
|
(2,360,304) |
(279,010) |
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Finance
Lease |
|
(1,836,460) |
(1,547,772) |
|
| Dividend
Paid |
|
(1,978,324) |
(1,965,581) |
|
|
|
---------- |
---------- |
|
| Net
Cash used in Financing Activities |
|
(3,814,784) |
(3,513,353) |
|
| Net
Increase/(Decrease)in Cash |
|
8,990,544 |
(6,653,207) |
|
| Cash
and cash equivalent at beginning of year |
|
(1,084,497) |
5,568,710 |
|
|
---------- |
---------- |
|
| Cash
and cash equivalent at end of year |
|
7,906,047 |
(1,084,497) |
|
|
========== |
========== |
|
| Cash
and cash equivalent comprise of: |
|
|
|
| Cash
and Bank |
|
7,906,047 |
335,765 |
|
| Short-term
running finance |
|
-- |
(1,420,262) |
|
|
---------- |
---------- |
|
|
7,906,047 |
(1,084,497) |
|
|
========== |
========== |
|
|
|
HASHIM BIN SAYEED |
|
ABID SAYEED |
|
|
Chief Executive |
|
Director |
|
|
|
| NOTES
TO THE ACCOUNTS FOR THE YEAR ENDED 30TH JUNE, 2000 |
|
|
| 1.
THE COMPANY AND ITS OPERATIONS |
|
| The
company was incorporated in July, 1962 as a private limited company and was |
|
| converted
into public limited company and listed on the Karachi Stock Exchange in July, |
|
| 1964.
The Company is principally engaged in the production and sale of sensitised
papers, |
|
| exercise
books & printing of self adhesive labels |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
| 2.1
Basis of Accounting |
|
| These
accounts have been prepared under the historical cost convention as modified
by |
|
| the
revaluation of certain fixed assets in prior years. |
|
|
| 2.2 Taxation |
|
| Provision
for current taxation is based on taxable income on current rates of taxation. |
|
|
| Deferred
liability for taxation is provided by using the liability method on all major
timing |
|
| differences,
expected to reverse in future periods. |
|
|
| 2.3
Staff Retirement Benefits |
|
| The
company operates a provident fund scheme applicable to all employees and an |
|
| unfunded
gratuity scheme covering all eligible employees. Contributions and provisions |
|
| are
made in accordance with the terms of these schemes. |
|
|
| 2.4
Tangible Fixed Assets and Depreciation |
|
| These
are stated at cost or revalued amount (as appropriate) less accumulated |
|
| depreciation
except for leasehold land which is stated at cost. Depreciation is charged to |
|
| income
applying the reducing balance method, using the rates specified in Note 9. |
|
|
| Depreciation
is charged for full year on only those assets remaining with the Company |
|
| at
the end of the year. |
|
|
| Maintenance
and normal repairs are charged to income as and when incurred. Profits or |
|
| losses
on disposal of assets are included in current income. |
|
|
| 2.5
Assets Subject to Finance Lease |
|
| These
are stated at the lower of present value of minimum lease payments under the |
|
| lease
agreements and the fair value of the assets. The related obligation of lease
are |
|
| accounted
for as liabilities. Financial charges are allocated to accounting periods in
a |
|
| manner
so as to provide a constant periodic rate of financial cost on the remaining |
|
| balance
of principal liability for each period. |
|
|
| Depreciation
is charged at the rate stated in note 10 applying the Reducing Balance |
|
| Method. |
|
|
| 2.6
Investment |
|
| These
are stated at cost. |
|
|
| 2.7
Stores and Spares |
|
| These
are valued at lower of cost and net realisable value. |
|
|
| 2.8
Stock-in-Trade |
|
| Basis
of valuation are as follows: |
|
|
| Particulars |
|
Mode of valuation |
|
| Raw
Materials |
|
At lower of average cost
and market value |
|
| Work
in process |
|
At lower of average cost
and market value |
|
| Finished
Goods |
|
Selling price less
estimated profit margin |
|
|
| 2.9
Revenue Recognition |
|
| Sales
are recorded on dispatch of goods to the customers. |
|
| Income
on investment is accounted for on receipt basis. |
|
|
| 2.10
Allocation of Expenses |
|
| The
Company has maintained the policy of allocation of certain expenses to |
|
| manufacturing,
administrative and selling expenses at the end of the year using |
|
| calculated
percentages. |
|
|
|
2000 |
1999 |
|
|
Rupees |
Rupees |
|
| 3.
ISSUED, SUBSCRIBED & PAID-UP CAPITAL |
|
| 578,000 |
Ordinary Shares of Rs.
10/- each |
|
|
issued for cash |
|
5,7 80,000 |
5,780,000 |
|
| 172,000 |
Ordinary Shares of Rs.
10/- each |
|
|
|
|
issued for consideration
other |
|
|
|
|
than cash |
|
1,720,000 |
1,720,000 |
|
| 750,000 |
