| PEL Appliances Limited |
|
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|
|
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|
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|
| Annual
Report 2000 |
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| Contents |
|
|
| Company
Information |
|
| Notice
of Meeting |
|
| Directors'
Report |
|
| Auditors'
Report |
|
| Balance Sheet |
|
|
| Profit
& Loss Account |
|
| Cash
Flow Statement |
|
| Notes
to the Accounts |
|
| Pattern
of Shareholding |
|
|
|
| Company
Information |
|
|
| BOARD
OF DIRECTORS |
|
| Mr.
M. Naseem Saigol |
(Chairman/Chief
Executive) |
|
| Mr.
M. Azam Saigol |
|
| Mr.
Shahid Sethi |
|
| Mr.
Haroon Ahmad Khan |
|
| Sh.
Mohibullah Usmani |
|
| Mr.
Homaeer Waheed |
|
| Mr.
Maqbool Elahi |
|
|
| COMPANY
SECRETARY |
|
| Sheikh
Muhammad Shakeel, ACA |
|
|
| AUDITORS |
|
| M/s
Manzoor Hussain Mir & Co. |
|
| Chartered
Accountants |
|
|
| BANKERS |
|
| ABN
Amro Bank N.V. |
|
| Deutsche
Bank AG |
|
| Faysal
Bank Limited |
|
| Mashreq
Bank PSC |
|
| National
Bank of Pakistan |
|
|
| REGISTERED
OFFICE |
|
| 06-Egerton
Road, |
|
| Lahore |
|
| Tel:
6306131 (5 Lines) |
|
|
| WORKS |
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| 302-Gadoon
Amazai |
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| Industrial
Estate, |
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| District
Swabi (NWFP) |
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| Notice
of Annual General Meeting |
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| Notice
is hereby given that the Nineteenth Annual General Meeting of Shareholders of
PEL APPLIANCES |
|
| LIMITED
will be held on Saturday 23rd December 2000 at 10:30 A.M. at 06-Egerton Road,
Lahore the |
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| Registered
Office of the Company to transact the following business:- |
|
|
| 1.
To confirm the minutes of Eighteenth Annual General Meeting held on December
31, 1999. |
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|
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| 2.
To receive and adopt the Annual Audited Accounts for the year ended 30 June,
2000 alongwith |
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| Directors'
and Auditors' Reports thereon. |
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|
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| 3.
To approve the appointment of Chief Executive of the Company as recommended
by the Board. |
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|
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| 4.
To appoint Auditors to hold office till the conclusion of the next Annual
General Meeting and to fix |
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| their
remuneration. |
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|
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| 5.
Any other business with the permission of the Chair. |
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|
By order of the Board |
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| Lahore |
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|
SHEIKH MUHAMMAD SHAKEEL |
|
| December 01, 2000 |
|
Company Secretary |
|
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| NOTES: |
|
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| 1.
The Share Transfer Books of the Company will remain closed from 23rd December
2000 to |
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| 29
December 2000 (both days inclusive). |
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|
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| 2.
A member entitled to attend and vote at this meeting may appoint another
member as proxy. |
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| Proxies
in order to be effective, must be received at the Registered Office of the
Company not |
|
| later
than forty-eight hours before the time of the meeting and must be duly
stamped, signed and |
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| witnessed. |
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|
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| 3.
Members whose shares are deposited with Central Depository System are
requested to bring their |
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| original
National Identity Card alongwith their Account Number in Central Depository
System for |
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| attending
the meeting. |
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|
|
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| 4.
Members are requested to notify the Company change in their addresses, if
any. |
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| Directors'
Report to the Members |
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| GENTLEMEN |
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| Your
Directors are pleased to submit their Report together with the Audited
Accounts of the Company |
|
| for
the year ended 30 June 2000. |
|
|
| FINANCIAL |
|
|
2000 |
1999 |
|
|
|
|
(Rupees in
thousands) |
|
|
|
| Gross sales |
|
|
520,683 |
453,371 |
|
| Gross profit |
|
|
36,136 |
47,022 |
|
| Operating loss |
|
|
(21,416) |
(9,568) |
|
| Net
loss for the year |
|
|
(137,269) |
(120,600) |
|
|
| CHAIRMAN'S
REVIEW |
|
| The
Review included in the Annual Report deals inter alia with the performance of
the Company for the |
|
| year
ended June 30, 2000 and future prospects. The directors endorsed the contents
of the review. |
|
|
| AUDITORS
AND THEIR REPORT |
|
| The
present Auditors Messrs Manzoor Hussain Mir & Company, Chartered
Accountants, retires and being |
|
| eligible,
offer themselves for reappointment. |
|
|
| The
company has chalked out a plan to bring its air-conditioner business out of
losses and to expand |
|
| sales
of deep-freezer in a way that it should improve its operating results
substantially in the ensuing |
|
| year.
This plan has been explained in more detail in the Chairman's review and the
management is |
|
| confident
to achieve the targets for the current year. |
|
|
| No
provision has been made for diminution in the value of short term investments
in view of the fact |
|
| that
prices quoted on Stock Exchanges are normally depressed these days. |
|
|
| Investment
in shares was made prior to 1995. According to the opinion of M/S Hassan
& Hassan Advocates |
|
| relevant
provision of Companies Ordinance will be operative with effect from 2nd day
of July 1995 ad |
|
| will
not be applicable to the investment made prior to amendment in statue. |
|
|
| PATTERN
OF SHAREHOLDING |
|
| A
statement showing pattern of holding of the shares held by the shareholders
of PEL APPLIANCES |
|
| LIMITED
as at 30 June, 2000 is attached. |
|
|
|
|
For and on behalf of the Board |
|
|
|
|
|
|
| Lahore |
|
|
M. Naseem Saigol |
|
| December
01,2000 |
|
Chairman / Chief Executive |
|
|
|
| Auditors'
Report to the Members |
|
|
| We
have audited the annexed balance sheet of PEL APPLIANCES LIMITED as at 30
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 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 the 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; |
|
|
| (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 |
|
| 30
June 2000 and of the loss, its cash flow and changes in equity for the year
then ended; and |
|
|
| 1.
The Company is sustaining losses continuously from 1997 to 2000, it has
sustained losses |
|
| aggregating
to Rs. 479.833 Million, as a result of which the share-holders equity has
converted |
|
| into
deficit balance of Rs. 176.083 Million. The current liabilities have exceeded
the current |
|
| assets
by Rs. 196.839 Million. The production capacity is not fully utilized and
unit is working |
|
| much
below the rated capacity. The business of the company in our opinion, can be
viable |
|
| only
if further funds are introduced for meeting working capital requirements anti
management |
|
| is
in a position to improve future profitability by improving production
activities. |
|
|
| 2.
The short term investment is allowed to stand at cost which is contrary to
method of valuation |
|
| of
lower of cost and market. In our opinion the diminution in the value of the
shares indicated |
|
| at
Note No. 7(i) of Rs. 22.935 Million should have been provided in the
accounts. |
|
|
|
|
| 3.
Investment in shares of associated Companies and advances to them aggregating
to |
|
| Rs.
69.512 Million indicated at Note No. 7(ii) are in excess of 30% share holders
equity which |
|
| shows
deficit balance. The investment made and advances given are contrary to the
provisions |
|
| of
Section 208 of the Companies Ordinance, 1984. |
|
|
|
|
|
| (d)
in our opinion no Zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980. |
|
|
|
|
| Lahore, |
|
|
MANZOOR HUSSAIN MIR & CO. |
|
| December
02, 2000. |
|
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 2000 |
|
|
|
Note |
2000 |
1999 |
|
|
|
(Rupees in
thousand) |
|
|
| FIXED
CAPITAL EXPENDITURE |
|
|
| Operating
assets |
|
3 |
289,759 |
307,600 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
289,759 |
307,600 |
|
|
| CURRENT
ASSETS |
|
| Stores,
spares and stock in trade |
|
4 |
2,062,651 |
234,787 |
|
| Trade debts |
|
5 |
118,308 |
148,057 |
|
| Advances,
deposits and prepayments |
6 |
78,463 |
104,219 |
|
| Short
term investment |
|
7 |
37,954 |
72,000 |
|
| Cash
and bank balances |
|
8 |
20,742 |
74,864 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
461,732 |
573,927 |
|
|
| CURRENT
LIABILITIES |
|
| Short
term finances |
|
9 |
225,819 |
325,212 |
|
| Current
portion of long term liabilities |
10 |
87,463 |
51,200 |
|
| Creditors,
provisions and accrued liabilities |
11 |
345,289 |
215,189 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
658,571 |
591,601 |
|
|
|
|
------------------ |
------------------ |
|
| Net
working capital |
|
|
(196,839) |
(17,674) |
|
|
|
|
========== |
========== |
|
| Total net assets |
|
|
92,920 |
289,926 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
-- |
-- |
|
|
|
| LONG
TERM LIABILITIES |
|
| Long term loans |
|
13 |
123,429 |
183,166 |
|
|
|
|
------------------ |
------------------ |
|
| Net - Worth |
|
|
(30,509) |
106,760 |
|
|
|
|
========== |
========== |
|
|
|
|
| REPRESENTED
BY |
|
|
|
| Share capital |
|
14 |
58,500 |
58,500 |
|
| Reserves |
|
15 |
245,250 |
245,250 |
|
| Unappropriated
loss |
|
|
(479,833) |
(342,564) |
|
|
|
|
------------------ |
------------------ |
|
| SHAREHOLDER'S
EQUITY |
|
|
(176,083) |
(38,814) |
|
| Surplus
on revaluation of fixed assets |
16 |
145,574 |
145,574 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(30,509) |
106,760 |
|
|
|
========== |
========== |
|
|
|
|
| The
annexed notes (l) to (29) form an integral part of these financial
statements. |
|
|
|
M. Azam Saigol |
|
M. Naseem Saigol |
|
|
Director |
|
Chairman/Chief Executive |
|
|
|
|
|
Auditors' report annexed |
|
Manzoor Hussain Mir & Co. |
|
|
Lahore |
|
Chartered Accountants |
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2000 |
|
|
|
|
Note |
2000 |
1999 |
|
|
|
|
(Rupees in
thousand) |
|
|
|
| SALES
- GROSS (LOCAL) |
|
|
520,683 |
453,371 |
|
| SALES TAX |
|
|
76,221 |
58,525 |
|
|
|
|
------------------ |
------------------ |
|
| SALES - NET |
|
|
444,462 |
394,846 |
|
| COST
OF SALES |
|
17 |
408,326 |
347,824 |
|
|
|
|
------------------ |
------------------ |
|
| GROSS
PROFIT |
|
|
36,136 |
47,022 |
|
|
|
|
|
| OPERATING
EXPENSES |
|
| Administrative |
|
18 |
20,165 |
15,318 |
|
| Selling |
|
19 |
37,387 |
41,272 |
|
|
------------------ |
------------------ |
|
|
|
57,552 |
56,590 |
|
|
|
------------------ |
------------------ |
|
| OPERATING
LOSS |
|
|
(21,416) |
(9,568) |
|
|
|
|
|
|
| FINANCIAL
EXPENSES |
|
20 |
(116,350) |
(90,128) |
|
| OTHER
INCOMES |
|
21 |
497 |
3,872 |
|
|
|
|
|
|
------------------ |
------------------ |
|
|
| NET
LOSS FOR THE YEAR BEFORE UNUSUAL ITEMS |
(137,269) |
(95,824) |
|
| UNUSUAL
ITEMS |
|
22 |
-- |
(24,776) |
|
|
------------------ |
------------------ |
|
| NET
LOSS FOR THE YEAR |
|
|
(137,269) |
(120,600) |
|
| UNAPPROPRIATED
LOSS BROUGHT FORWARD |
(342,564) |
(221,964) |
|
|
|
|
------------------ |
------------------ |
|
| ACCUMULATED
LOSS CARRIED TO BALANCE SHEET |
(479,833) |
(342,564) |
|
|
|
|
========== |
========== |
|
| EARNING
PER SHARE |
|
-- |
-- |
|
|
|
========== |
========== |
|
|
| The
annexed notes (l) to (29) form an integral part of these financial
statements. |
|
|
|
M. Azam Saigol |
|
M. Naseem Saigol |
|
|
Director |
|
Chairman/Chief Executive |
|
|
|
|
|
Auditors' report annexed |
|
Manzoor Hussain Mir & Co. |
|
|
Lahore |
|
Chartered Accountants |
|
|
|
| CASH
FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 2000 |
|
|
|
|
2000 |
1999 |
|
|
|
|
(Rupees in
thousand) |
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Cash
received from customers |
|
|
457,672 |
337,165 |
|
| Cash
paid to suppliers and employees |
|
(252,885) |
(448,519 |
|
|
------------------ |
------------------ |
|
| Cash
generated from operations |
|
204,787 |
(111,354) |
|
| Markup paid |
|
(111,699) |
(66,589) |
|
| Tax refund |
|
4,470 |
(1,241) |
|
|
|
------------------ |
------------------ |
|
| Net
cash flow from operating activities |
|
97,558 |
(179,184) |
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
| Fixed
capital expenditures |
|
(3,365) |
(1,010) |
|
| Proceeds
from sale of fixed assets |
|
10 |
2,007 |
|
| Proceeds
from sale of investments |
|
30,142 |
-- |
|
| Net
(increase)/decrease in long term deposits |
|
-- |
1,226 |
|
| Interest
received |
|
4,401 |
4,932 |
|
|
|
------------------ |
------------------ |
|
| Net
cash flow from investing activities |
|
31,188 |
7,155 |
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Payment
of Long Term Loan |
|
(18,764) |
-- |
|
| Payment
of lease liabilities |
|
(4,710) |
(2,967) |
|
| Increase/(decrease)
in short term finances |
|
(99,394) |
172,848 |
|
|
|
------------------ |
------------------ |
|
| Net
cash flow from financing activities |
|
(122,868) |
169,881 |
|
|
|
------------------ |
------------------ |
|
| Net
decrease in cash and cash equivalents |
|
5,878 |
(2,148) |
|
| Cash
and cash equivalents at the beginning of the year |
14,864 |
17,012 |
|
|
|
------------------ |
------------------ |
|
| Cash
and cash equivalents at the end of the year |
|
20,742 |
14,864 |
|
|
========== |
========== |
|
|
|
M. Azam Saigol |
|
M. Naseem Saigol |
|
|
Director |
|
Chairman/Chief Executive |
|
|
|
| NOTES
TO THE ACCOUNTS FOR THE YEAR ENDED JUNE 30, 2000 |
|
|
| 1.
THE COMPANY AND ITS OPERATIONS |
|
|
| The
Company as Private Limited Company was incorporated in Pakistan under the
Companies Ordinance, |
|
| 1984
and converted into Public Limited Company on 23 June 1992. Its shares are
quoted on Stock Exchanges |
|
| of
Pakistan. It is a subsidiary of PAK ELEKTRON LIMITED holding 50.17% shares.
The Company is engaged in |
|
| the
manufacture and sale of domestic appliances. |
|
|
|
| 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
|
|
|
|
| 2.1
Accounting Convention |
|
|
|
| These
accounts have been prepared under "historical cost" Convention,
except building and plant & |
|
| machinery
which are stated at re-valued amount. |
|
|
|
| 2.2.
Employees Retirement Benefits |
|
|
| The
Company has maintained a provident fund scheme for all its permanent
employees and contributions, |
|
| based
on salaries and wages, are made monthly to cover the obligations. |
|
|
| 2.3 Taxation |
|
|
|
| No
provision for taxation is made as the project is located in the area exempted
under clause 122 (C) of |
|
| the
and schedule of the Income Tax Ordinance, 1979. The exemptions claimed has
since been accepted |
|
| by
the department. |
|
|
|
|
| 2.4
Tangible Fixed Assets and Depreciation |
|
|
| Operating
assets are stated at cost, except building and plant & machinery which
are stated at re-valued |
|
| amount,
less depreciation. Capital work-in-progress and machinery in transit are
stated at cost. |
|
|
|
|
| Depreciation
is charged to income on reducing balance method using the rates specified in
fixed assets |
|
| schedule
except for leasehold land which is being amortized proportionately over the
period of lease. A |
|
| full
year's depreciation is charged in the year of acquisition. However,
depreciation on additions to plant |
|
| &
machinery is charged only for working period. No depreciation is charged in
the year of disposal. |
|
|
| Normal
repairs and maintenance are charged to income as and when incurred. Major
renewals and |
|
| improvements
are capitalized. Profit or loss on disposal of operating assets is charged to
current income. |
|
|
| 2.5 Trade Mark |
|
|
|
| The
Consideration paid for using trade mark is amortized over a period of ten
years commencing from |
|
| March
01, 1995. However this year production of Airconditioners became un
economical and order for |
|
| supply
of some Airconditioners were placed on Pak Elektron Limited. |
|
|
| 2.6
Assets Subject to Finance lease |
|
| Assets
under finance lease are stated at lower of present value of minimum lease
payments under the |
|
| agreement
or the fair value of assets. The aggregate amount of obligations relating to
these assets are |
|
| accounted
for at net present value of liabilities. Depreciation on these assets is
charged in line with |
|
| normal
depreciation policy adopted for assets owned by the company. |
|
|
| 2.7 Investments |
|
|
|
| Short
term investments are valued at lower of cost or market value. |
|
|
| 2.8
Stores, Spares and Stock-in-Trade |
|
| Stores
and spares are valued at moving average cost. |
|
|
|
|
| Raw
material and components are valued at moving average cost. The cost of
work-in-process comprises |
|
| of
cost of materials, labour at actuals and factory overheads proportionate to
labour. Finished goods are |
|
| valued
at lower of cost or net realisable value. The raw materials and components in
bond and in transit |
|
| are
valued at cost. |
|
|
|
| 2.9
Foreign Currency conversion |
|
|
|
| Foreign
currency liability is converted at exchange rates prevailing at the balance
sheet date. Variance |
|
| relating
to fixed assets are adjusted against the value of respective assets, while
others are charged to |
|
| current
year's income. |
|
|
|
|
|
|
| 2.10
Revenue recognition |
|
|
|
| The
sale of goods is recognised on delivery of goods to customers. |
|
|
|
|
|
2000 |
1999 |
|
|
|
(Rupees in
thousand) |
|
|
| 3.
OPERATING ASSETS |
|
| Own (Note 3.1) |
|
287,143 |
297,819 |
|
| Subject
to finance lease |
|
-- |
9,781 |
|
| Capital
work in progress |
|
2,616 |
-- |
|
|
|
------------------ |
------------------ |
|
|
|
|
289,759 |
307,600 |
|
|
========== |
========== |
|
|
| 3.1
Schedule of operating assets - Own |
|
|
(Rupees in thousand) |
|
|
|
Cost as at |
Addition / |
Cost as at |
Depre- |
Accumulated |
Written down |
|
| Description |
|
July 01, 1999 |
(Deletion) |
June 30, 2000 |
ciation |
depreciation as |
value as at |
|
|
|
rate % |
at June 30, 2000 |
June 30, 2000 |
|
|
| TANGIBLE |
|
|
| Land
- Leasehold |
4,734 |
-- |
4,734 |
-- |
502 |
4,232 |
|
| Building on |
|
|
|
|
|
| leasehold land |
|
128,155 |
-- |
128,155 |
5% |
34,849 |
93,306 |
|
| Plant
and Machinery |
187,125 |
15,245 |
202,370 |
5% |
52,894 |
149,476 |
|
| Office
Equipment. |
|
|
|
|
| furniture
& fixture |
3,960 |
4 |
3,939 |
10% |
1,751 |
2,188 |
|
|
|
|
(25) |
|
|
|
| Vehicles |
|
2,525 |
-- |
2,525 |
20% |
1,917 |
608 |
|
|
|
|
| INTANGIBLE |
|
|
|
|
| Trade mark |
|
80,000 |
-- |
80,000 |
|
42,667 |
37,333 |
|
|
|
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
|
| Total
(Rupees) 2000 |
406,499 |
(15,249 |
421,723 |
|
134,580 |
287,143 |
|
|
|
(25) |
|
|
|
========== |
========== |
========== |
========== |
========== |
========== |
|
| 1999 |
|
259,224 |
148,484 |
406,499 |
|
109,368 |
297,819 |
|
|
|
(1,209) |
|
|
(688) |
|
|
========== |
========== |
========== |
========== |
========== |
========== |
|
|
|
|
2000 |
1999 |
|
