| Merit Packaging Limited |
|
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|
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| Annual
Report 2001 |
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| CONTENTS |
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|
| 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 |
|
| ZULFIQAR
ALI LAKHANI |
|
| AMIN
MOHAMMED LAKHANI |
|
| TASLEEMUDDIN
AHMED BATLAY |
|
| AZIZ
EBRAHIM |
|
| FAROOQ
HASAN |
|
| MUHAMMAD
ASIF |
|
| MOHAMMAD
SHAHID |
|
Chief Executive |
|
|
| ADVISOR |
|
| SULTANALI
LAKHANI |
|
|
| COMPANY
SECRETARY |
|
| M. K. NAWAZ |
|
|
| AUDITORS |
|
| FORD,
RHODES, ROBSON, MORROW |
|
| Chartered
Accountants |
|
|
| BANKERS |
|
| AMERICAN
EXPRESS BANK LTD |
|
| HABIB
BANK LTD |
|
| OMAN
INTERNATIONAL BANK |
|
|
| 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 21st Annual General Meeting of Merit Packaging
Limited will be held |
|
| on
Tuesday November 27, 2001 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, Profit and Loss
account for the year ended |
|
| June
30, 2001 together with the Directors' and Auditors' Reports thereon. |
|
|
| 2.
To declare final dividend @ 20% as recommended by the Board of Directors. |
|
|
| 3.
To consider to appoint auditors and fix their remuneration. |
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|
By Order of the Board |
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|
M. K. NAWAZ |
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| Karachi:
October 15, 2001 |
|
Company Secretary |
|
|
| NOTES: |
|
|
| 1.
The share transfer books of the Company will remain closed from November 16,
2001 to |
|
| November
27, 2001, both days inclusive. Transfers received in order at the company's
registered office |
|
| situated
at Lakson Square, Building No. 2, Sarwar Shaheed Road, Karachi upto November
15, 2001 will |
|
| be
considered in time to be eligible for payment of the final dividend to the
transferees. |
|
|
|
|
| 2.
A member who has deposited his/her shares into Central Depository Company of
Pakistan Limited, must |
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| 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 entitled to attend and vote at the general meeting 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 photocopies 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 to be valid must be received at the Company's Registered
Office not later than 48 hours |
|
| before
the time of the meeting. |
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|
|
|
| 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, 2001. |
|
|
|
|
|
Rupees |
|
|
| Profit
after taxation |
|
10,236,931 |
|
| Unappropriated
profit brought forward |
|
18,917 |
|
|
|
|
------------------ |
|
| Profit
available for appropriation |
|
10,255,848 |
|
|
|
|
|
|
| APPROPRIATIONS: |
|
| Proposed
cash dividend Rs. 2.00 per share (20%) |
|
5,498,954 |
|
| Transfer
to general reserve |
|
4,700,000 |
|
|
|
|
------------------ |
|
|
|
|
10,198,954 |
|
|
|
|
------------------ |
|
| Unappropriated
profit carried forward |
|
56,894 |
|
|
========== |
|
|
|
| OPERATING
RESULTS |
|
| The
year under review saw improved production, sales and profit despite adverse
business environment. The sales turnover |
|
| increased
to Rs. 264.474 million for the year ended June 30, 2001 as compared to Rs.
207.270 million for the year ended |
|
| June
30, 2000. The gross profit for the year was Rs. 36.904 million as compared to
Rs. 22,183 million for the same |
|
| period
last year. Increased profitability was mainly due to improved efficiency,
better product mix and stricter cost control. |
|
| Moreover,
the replacement of some old equipment with advanced version reduced lead and
delivery times and Simultaneously |
|
| increased
our ability to respond quickly to customer needs. This ensured consistent
inflow of orders. |
|
|
| ISO
CERTIFICATION |
|
| The
company obtained ISO-9002 certification in the year 1999. It is now in the
process of obtaining the latest version of |
|
| ISO-9001:2000
certificate. This will help not only in improving the overall performance of
the company but also in |
|
| enhancing
company's image and winning greater confidence of customers, suppliers and
financial institutions alike. |
|
|
| CONTRIBUTION
TO THE NATIONAL ECONOMY |
|
| We
are pleased to state that during the year under review the company
contributed Rs. 29.149 million to the national |
|
| economy
by way of duties and taxes. |
|
|
| FUTURE
OUTLOOK |
|
| The
surplus capacity in the printing industry has led to intense competition,
pressurising selling rates and business share. |
|
| To
combat the situation, we are further streamlining and fine-tuning our
operational processes and cost controls to improve |
|
| the
quality of our products and services. Accordingly, we are confident that the
company's market share will be maintained. |
|
|
| GRATITUDE |
|
| The
directors are grateful to all shareholders, customers, bankers and vendors
for their continued cooperation, understanding |
|
| and support. |
|
|
| The
directors also place on record their appreciation for the sincere and
dedicated services rendered by all employees |
|
| during
the year under review. |
|
|
| AUDITORS |
|
| The
present Auditors Ford, Rhodes, Robson, Morrow retire and being eligible,
offer themselves for re-appointment. |
|
|
| 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 09, 2001 |
|
Chairman |
|
|
|
| Auditors'
Report |
|
|
| We
have audited the annexed balance sheet of MERIT PACKAGING
LIMITED as at June 30, 2001 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
c6nducted 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; |
|
|
|
|
| (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, 2001 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 09, 2001 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 2001 |
|
|
|
|
2001 |
2000 |
|
|
|
|
Note |
Rupees |
Rupees |
|
| ASSETS |
|
| NON-CURRENT
ASSETS |
|
| Tangible
fixed assets |
|
3 |
40,327,511 |
47,040,961 |
|
| Long
term deposits |
|
2,677,324 |
2,701,365 |
|
|
|
------------------ |
------------------ |
|
|
|
43,004,835 |
49,742,326 |
|
| CURRENT
ASSETS |
|
|
|
| Stores
and spares |
|
4 |
14,382,541 |
13,933,284 |
|
| Stock-in-trade |
|
|
5 |
29,773,323 |
36,775,117 |
|
| Trade debts |
|
|
6 |
14,663,192 |
12,788,406 |
|
| Advances,
deposits and other receivables |
7 |
14,425,846 |
11,683,592 |
|
| Prepayments |
|
|
|
453,170 |
588,189 |
|
| Cash
and bank balances |
|
8 |
283,780 |
109,928 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
73,981,852 |
75,878,516 |
|
|
------------------ |
------------------ |
|
| TOTAL
ASSETS |
|
116,986,687 |
125,620,842 |
|
|
|
========== |
========== |
|
| EQUITY
AND LIAB ILITES |
|
| 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 |
|
|
|
20,656,894 |
15,918,917 |
|
|
|
------------------ |
------------------ |
|
|
|
|
48,151,664 |
43,413,687 |
|
|
|
|
|
| NON-CURRENT
LIABILITES |
|
|
|
| Liabilities
against assets subject to finance lease |
10 |
15,518,401 |
11,857,563 |
|
| Deferred
liabilities |
|
11 |
3,998,894 |
3,077,903 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
19,517,295 |
14,935,466 |
|
|
|
| CURRENT
LIABILITIES |
|
| Current
portion of liabilities against assets |
|
| subject
to finance lease |
|
10 |
3,660,838 |
4,049,955 |
|
| Short
term running finances |
|
12 |
28,044,926 |
39,640,309 |
|
| Creditors,
accrued and other liabilities |
13 |
16,694,839 |
16,250,119 |
|
| Proposed
final dividend |
|
|
5,498,954 |
2,749,477 |
|
|
|
------------------ |
------------------ |
|
|
|
53,899,557 |
62,689,860 |
|
| CONTINGENCY
AND COMMITMENTS |
14 |
------------------ |
------------------ |
|
| TOTAL
EQUITY AND LIABLITIES |
|
116,986,687 |
125,620,842 |
|
|
|
|
========== |
========== |
|
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
|
IQBALALI LAKHANI |
|
|
MOHAMMAD SHAHID |
|
|
Chairman |
|
|
Chief Executive |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 2001 |
|
|
|
|
|
2001 |
2000 |
|
|
Note |
Rupees |
Rupees |
|
|
| Net sales |
|
15 |
264,474,068 |
207,270,420 |
|
| Cost
of goods sold |
|
16 |
(227,570,111) |
(185,087,655) |
|
|
|
|
------------------ |
------------------ |
|
| Gross profit |
|
|
36,903,957 |
22,182,765 |
|
| Other income |
|
17 |
528,604 |
1,360,610 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
37,432,561 |
23,543,375 |
|
|
|
|
------------------ |
------------------ |
|
| Administrative
expenses |
|
18 |
(8,406,077) |
(7,581,334) |
|
| Selling
and distribution expenses |
|
19 |
(2,182,529) |
(2,542,164) |
|
| Other charges |
|
20 |
(4,321,102) |
(649,565) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(14,909,708) |
(10,773,063) |
|
|
|
------------------ |
------------------ |
|
| Operating profit |
|
|
22,522,853 |
12,770,312 |
|
| Financial
charges |
|
21 |
(8,088,340) |
(7,960,082) |
|
|
|
|
------------------ |
------------------ |
|
| Profit
before taxation |
|
|
14,434,513 |
4,810,230 |
|
| Taxation |
|
22 |
(4,197,582) |
(2,486,000) |
|
|
|
|
------------------ |
------------------ |
|
| Profit
after taxation |
|
|
10,236,931 |
2,324,230 |
|
| Unappropriated
profit brought forward |
|
18,917 |
44,164 |
|
| Transfer
from general reserve |
|
|
-- |
400,000 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
available for appropriation |
|
|
10,255,848 |
2,768,394 |
|
|
|
|
|
| Appropriations: |
|
|
|
|
| Proposed
final dividend Rs. 2.00 (20%) per share |
|
|
| [2000:
Re. 1.00 (10%) per share] |
|
|
(5,498,954) |
(2,749,477) |
|
| Transfer
to general reserve |
|
|
(4,700,000) |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(10,198,954) |
(2,749,477) |
|
|
|
|
------------------ |
------------------ |
|
| Unappropriated
profit carried forward |
|
56,894 |
18,917 |
|
|
|
|
========== |
========== |
|
| Basic
earnings per share |
|
26 |
3.72 |
0.85 |
|
|
|
|
========== |
========== |
|
|
|
|
|
| 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, 2001 |
|
|
|
|
|
2001 |
2000 |
|
|
|
Note |
Rupees |
Rupees |
|
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Cash
generated from operations |
|
23 |
32,993,794 |
9,058,612 |
|
| Tax paid |
|
|
(6,970,844) |
469,854 |
|
| Financial
charges on short term finances paid |
|
(4,800,176) |
(5,135,957) |
|
| Long
term deposits |
|
24,041 |
(1,945,949) |
|
| Payment
of gratuity |
|
(44,174) |
(45,739) |
|
|
------------------ |
------------------ |
|
| Net
cash inflow from operating activities |
|
21,202,641 |
2,400,821 |
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
| Capital
expenditure |
|
|
(1,023,041) |
(29,327,536) |
|
| Proceeds
from sale of assets |
|
3.3 |
1,367,057 |
1,540,440 |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash inflow/(outflow) from investing activities |
|
344,016 |
(27,787,096) |
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Obligations
under finance lease |
|
|
-- |
21,792,452 |
|
| Repayment
of finance lease |
|
(7,030,967) |
(6,769,155) |
|
| Term finance |
|
-- |
(20,000,000) |
|
| Payment
of dividend |
|
(2,746,455) |
(4,122,073) |
|
|
|
------------------ |
------------------ |
|
| Net
cash (outflow) from financing activities |
|
(9,777,422) |
(9,098,776) |
|
|
|
------------------ |
------------------ |
|
| Net
increase/(decrease) in cash and cash equivalents |
11,769,235 |
(34,485,051) |
|
| Cash
and cash equivalents at the beginning of the year |
(39,530,381) |
(5,045,330) |
|
|
|
------------------ |
------------------ |
|
| Cash
and cash equivalents at the end of the year |
|
(27,761,146) |
(39,530,381) |
|
|
|
========== |
========== |
|
|
|
|
|
| CASH
AND CASH EQUIVALENTS COMPRISE OF: |
|
| Cash
and bank balances |
|
8 |
283,780 |
109,928 |
|
|
| Running
finance utilised under mark-up arrangements |
12 |
(28,044,926) |
(39,640,309) |
|
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
(27,761,146) |
(39,530,381) |
|
|
|
========== |
========== |
|
|
|
|
| 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, 2001 |
|
|
|
Issued, subs- |
Revenue |
Unappro- |
Total |
|
|
cribed and |
reserves |
priated |
|
|
|
paid-up capital |
|
profit |
|
|
|
Rupees |
Rupees |
Rupees |
Rupees |
|
|
| Balance
as at July 1, 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 |
|
| Profit
after taxation |
-- |
-- |
10,236,931 |
10,236,931 |
|
| Transfer
to general reserve during the year |
-- |
4,700,000 |
(4,700,000) |
-- |
|
| Proposed
final dividend |
-- |
-- |
(5,498,954) |
(5,498,954) |
|
|
|
------------------ |
------------------ |
------------------ |
------------------ |
|
| Balance
as at June 30, 2001 |
27,494,770 |
20,600,000 |
56,894 |
48,151,664 |
|
|
|
========== |
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| The
annexed notes form an integral part of these accounts. |
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IQBALALI LAKHANI |
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MOHAMMAD SHAHID |
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Chairman |
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Chief Executive |
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| NOTES
TO THE ACCOUNTS |
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| FOR
THE YEAR ENDED JUNE 30, 2001 |
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| 1.
THE COMPANY AND ITS OPERATIONS |
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| The
company was incorporated on January 28, 1980 in Pakistan as a public limited
company and is listed |
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| on
the Karachi Stock Exchange. The company is mainly engaged in the manufacture
and sale of printing |
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| and
packaging materials. |
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| 2.
SIGNIFICANT ACCOUNTING POLICIES |
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| 2.1
Accounting Convention |
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| These
accounts have been prepared under the historical cost convention. |
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| 2.2
Tangible fixed assets and depreciation |
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| These
are stated at cost less accumulated depreciation except leasehold land and
capital work-in- |
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| progress
which are stated at cost. |
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| Depreciation
charge on operating fixed assets is based on reducing balance method except
for |
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| imported
dies which are depreciated on a straight line basis over its estimated useful
life. A full year's |
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| depreciation
is charged in the year of addition whereas no depreciation is charged in the
year of |
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| disposal. |
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| Rates
of depreciation which are disclosed in note 3.1 are designed to write off the
cost over the |
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| estimated
useful lives of the assets. |
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| Maintenance
costs and normal repairs are charged to profit and loss account as and when
incurred. |
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| Major
renewals and improvements are capitalised. |
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| Gains
and losses on disposal of fixed assets are taken to the profit and loss
account. |
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| 2.3
Leased assets |
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| Assets
held under finance leases are stated at cost less accumulated depreciation. |
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| The
outstanding obligations under the lease less finance charges allocated to
future periods are |
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| shown
as a liability. |
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| The
financial charges are allocated to accounting periods in a manner so as to
provide a constant |
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| periodic
rate of charge on the outstanding liability. |
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| Depreciation
is charged at the same rates as company owned assets. |
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| Lease
rentals payable on assets held under operating leases are charged to the
profit and loss |
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| account. |
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| 2.4
Stores and spares |
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| Stores
and spares are stated at cost which is determined by the moving average
method except |
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| those
in transit and in bond which are valued at actual cost. Provision is made for
slow moving and |
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| obsolete items. |
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| 2.5
Stock-in-trade |
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| Raw
materials, work-in-process and finished goods are stated at the lower of cost
and estimated net |
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| realisable
value. Cost is arrived at by using the moving average basis except for goods
in transit and |
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| in
bond which are valued at actual cost. Cost of work-in-process and finished
goods include an |
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| appropriate
portion of production overheads. |
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