| PEL Appliances Limited |
|
|
|
|
|
|
|
|
| Annual
Report 2001 |
|
|
|
| CONTENTS |
|
|
| Company
Information |
|
| Notice
of Meeting |
|
| Directors'
Report |
|
| Auditors'
Report |
|
| Balance Sheet |
|
|
| Profit
& Loss Account |
|
| Cash
Flow Statement |
|
| Statement
of Changes in Equity |
|
| Notes
to the Accounts |
|
| Pattern
of 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 |
|
| 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 |
|
| 302-Gadoon
Amazai |
|
| 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 20th Annual General Meeting of the Shareholders of
PEL Appliances Limited |
|
| will
be held on Monday, 31 December 2001 at 11:00 A.M. at 06-Egerton Road, Lahore
the Registered Office |
|
| of
the Company to transact the following business:- |
|
|
| 1.
To confirm the minutes of Extraordinary General Meeting held on 03 November
2001. |
|
|
|
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| 2.
To receive and adopt the Annual Audited Accounts for the year ended 30 June,
2001 alongwith Directors' |
|
| and
Auditors' Reports thereon. |
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|
|
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| 3.
To appoint Auditors to hold office till the conclusion of the next Annual
General Meeting and to fix their |
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| remuneration. |
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|
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| 4.
Any other business with the permission of the Chair. |
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|
By order of the Board |
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| Lahore |
|
|
SHEIKH MUHAMMAD SHAKEEL |
|
| December
08, 2001 |
|
Company Secretary |
|
|
| NOTES: |
|
|
| 1.
The Share Transfer Books of the Company will remain closed from 31 December
2001 to 07 January |
|
| 2002
(both days inclusive). |
|
|
|
|
|
|
| 2.
A member entitled to attend and vote at this meeting may appoint another
member as proxy. Proxies in |
|
| order
to be effective, must be received at 06-Egerton Road, Lahore, the Registered
Office of the Company |
|
| not
later than forty-eight hours before the time for holding the meeting and must
be duly stamped, |
|
| signed
and witnessed. |
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|
|
|
|
| 3.
Members whose shares are deposited with Central Depository System (CDS) are
requested to bring |
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| their
original National Identity Cards or original Passports alongwith their
Account Numbers in CDS for |
|
| attending
the meeting. |
|
|
|
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| 4.
Members are requested to notify the Company change in their addresses, if
any. |
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|
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| Directors
Report to the Members |
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|
| GENTLEMEN |
|
| Your
Directors are pleased to submit their Report together with the Audited
Accounts of the Company for the |
|
| year
ended 30 June 2001. |
|
|
| FINANCIAL |
|
|
2001 |
2000 |
|
|
|
(Rupees in
thousands) |
|
|
| Gross sales |
|
|
502,528 |
511,960 |
|
| Gross profit |
|
|
12,162 |
27,413 |
|
| Operating loss |
|
|
(36,817) |
(21,416) |
|
| Net
loss for the year |
|
|
(137,560) |
(137,269) |
|
|
| 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, 2001. 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 formulated 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 investments in view of
their long term nature and |
|
| the
fact that prices quoted on Stock Exchanges are abnormally depressed these
days. |
|
|
| Investment
in shares was made prior to 1995. According to the opinion of legal advisor
relevant provision of |
|
| Companies
Ordinance 1984 will be operative with effect from 2nd day of July 1995 and
will not be applicable |
|
| to
the investment made prior to amendment in statute. |
|
|
| PATTERN
OF SHAREHOLDING |
|
| A
statement showing pattern of holding of the shares held by the shareholders
of PEL APPLIANCES LIMITED |
|
| as
at 30 June, 2001 is attached. |
|
|
|
|
For and on behalf of the Board |
|
|
|
|
|
|
| Lahore |
|
|
M. Naseem Saigol |
|
| December
08, 2001 |
|
Chairman / Chief Executive |
|
|
|
| Auditors'
Report to the Members |
|
|
| We
have audited the annexed balance sheet of PEL APPLIANCES
LIMITED as at 30th June, 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
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, and subject to the observations expressed below
and extent to which the |
|
| notes
referred to may effect, 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 30th June,
2001 and of the loss, its cash |
|
| flows
and changes in equity for the year then ended; and |
|
|
| 1.
It is pointed out that shareholders equity shows an adverse balance of Rs.
313.643 Million as on |
|
| 30th
June, 2001 against Rs. 176.083 Million on the corresponding date in the last
year. As a result |
|
| of
continuous losses the current liabilities have exceeded the current assets
and working capital |
|
| position
is badly effected which has increased from adverse balance of Rs. 196.839
Million to Rs. |
|
| 412.548
Million. A study of Note No. 28 to Annual Accounts reveals that there is no
improvement |
|
| in
the capacity utilization. The production of the Air-conditioners has slightly
increased while there |
|
| is
material shortfall in production of Deep Freezers. Considering the present
level of production it |
|
| may
not be possible for company to recoup even its fixed expenses of constant
nature. It is also |
|
| facing
difficulties in making payments of the over due and current installments of
long term loans |
|
| and
all these factors create a doubt about the company's ability to continue its
operations in the |
|
| foreseeable
future. In our opinion the business of company can be viable only if further
funds are |
|
| introduced
for meeting working capital requirements and 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 value. In our opinion the diminution in the value of the
shares indicated at |
|
| Note
No. 7(i) of Rs. 27.337 Million should have been provided in the accounts. |
|
|
| 3.
Advances to associated Companies amounting to Rs. 36.624 Million indicated at
Note No. 6.2 are |
|
| in
excess of 30% shareholders equity, which shows deficit balance. The 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 08, 2001. |
|
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 2001 |
|
|
|
|
Note |
2001 |
2000 |
|
|
|
(Rupees in
thousand) |
|
|
|
|
| FIXED
CAPITAL EXPENDITURE |
|
|
| Operating
assets |
|
3 |
386,819 |
289,759 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores,
spares and stock in trade |
|
4 |
234,323 |
206,265 |
|
| Trade debts |
|
5 |
99,910 |
118,308 |
|
| Advances,
deposits and prepayments |
6 |
79,696 |
78,463 |
|
| Short
term investment |
|
7 |
37,954 |
37,954 |
|
| Cash
and bank balances |
|
8 |
12,269 |
20,742 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
464,152 |
461,732 |
|
|
| CURRENT
LIABILITIES |
|
| Short
term finances |
|
9 |
251,704 |
225,819 |
|
| Current
portion of long term liabilities |
10 |
146,755 |
87,463 |
|
| Creditors,
provisions and accrued liabilities |
11 |
478,241 |
345,289 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
876,700 |
658,571 |
|
|
|
|
------------------ |
------------------ |
|
| Net
working capital |
|
|
(412,548) |
(196,839) |
|
|
|
|
========== |
========== |
|
| Total net assets |
|
|
(25,729) |
92,920 |
|
|
|
|
|
|
|
| CONTINGENCIES
AND COMMITMENTS |
12 |
|
|
|
|
|
|
|
| LONG
TERM LIABILITIES |
|
|
|
| Long term loans |
|
13 |
24,989 |
123,429 |
|
|
|
|
------------------ |
------------------ |
|
| NET- WORTH |
|
|
(50,718) |
(30,509) |
|
|
|
========== |
========== |
|
| REPRESENTED
BY |
|
|
|
| Share capital |
|
14 |
58,500 |
58,500 |
|
| Reserves |
|
15 |
245,250 |
245,250 |
|
| Unappropriated
loss |
|
|
(617,393) |
(479,833) |
|
|
|
|
------------------ |
------------------ |
|
| SHAREHOLDER'S
EQUITY |
|
|
(313,643) |
(176,083) |
|
| Surplus
on revaluation of fixed assets |
16 |
262,925 |
145,574 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(50,718) |
(30,509) |
|
|
========== |
========== |
|
|
| The
annexed notes (1) 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, 2001 |
|
|
|
Note |
2001 |
2000 |
|
|
|
(Rupees in
thousand) |
|
|
|
| SALES
- GROSS (LOCAL) |
|
|
502,528 |
511,960 |
|
| SALES TAX |
|
|
71,366 |
76,221 |
|
|
|
|
------------------ |
------------------ |
|
| SALES - NET |
|
|
431,162 |
435,739 |
|
| COST
OF SALES |
|
17 |
419,000 |
408,326 |
|
|
|
|
------------------ |
------------------ |
|
| GROSS
PROFIT |
|
|
12,162 |
27,413 |
|
|
|
|
| OPERATING
EXPENSES |
|
| Administrative |
|
18 |
20,281 |
20,165 |
|
| Selling |
|
19 |
28,698 |
28,664 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
48,979 |
48,829 |
|
|
|
|
|
------------------ |
------------------ |
|
| OPERATING
LOSS |
|
|
(36,817) |
(21,416) |
|
| FINANCIAL
EXPENSES |
|
20 |
(104,366) |
(116,350) |
|
| OTHER
INCOMES |
|
21 |
5,461 |
497 |
|
|
|
|
------------------ |
------------------ |
|
| LOSS
BEFORE TAXATION |
|
|
(135,722) |
(137,269) |
|
| Provision
for taxation |
|
22 |
(1,838) |
-- |
|
|
|
|
------------------ |
------------------ |
|
| LOSS
AFTER TAXATION |
|
|
(137,560) |
(137,269) |
|
|
|
| UN-APPROPRIATED
LOSS BROUGHT FORWARD |
(479,833) |
(342,564) |
|
|
|
|
------------------ |
------------------ |
|
| ACCUMULATED
LOSS CARRIED TO BALANCE SHEET |
(617,393) |
(479,833) |
|
|
========== |
========== |
|
| EARNING
PER SHARE (Rs.) |
|
(23.51) |
(23.46) |
|
|
========== |
========== |
|
|
| The
annexed notes (1) 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 |
|
| FORTHEYEAR
ENDED JUNE 30, 2001 |
|
|
|
|
|
2001 |
2000 |
|
|
|
(Rupees in
thousand) |
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Cash
received from customers |
|
|
475,579 |
457,672 |
|
| Cash
paid to suppliers and employees |
|
(375,737) |
(252,885) |
|
|
|
|
------------------ |
------------------ |
|
| Cash
generated from operations |
|
|
99,842 |
204,787 |
|
| Markup paid |
|
|
(99,314) |
(111,699) |
|
| Tax refund |
|
|
1,826 |
4,470 |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash flow from operating activities |
|
2,354 |
97,558 |
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
| Fixed
capital expenditures |
|
|
(3,026) |
(3,365) |
|
| Proceeds
from sale of fixed assets |
|
|
-- |
10 |
|
| Proceeds
from sale of Investments |
|
-- |
30,142 |
|
| Interest
received |
|
5,461 |
4,401 |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash flow from investing activities |
|
2,435 |
31,188 |
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Payment
of Long Term Loans |
|
|
(39,147) |
(18,764) |
|
| Payment
of lease liabilities |
|
|
-- |
(4,710) |
|
| Increase
/ (decrease) in short term finances |
|
25,885 |
(99,394) |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash flow from financing activities |
|
(13,262) |
(122,868) |
|
|
|
|
------------------ |
------------------ |
|
| Net
decrease in cash and cash equivalents |
|
(8,473) |
5,878 |
|
| Cash
and cash equivalents at the beginning of the year |
20,742 |
14,864 |
|
|
|
|
------------------ |
------------------ |
|
| Cash
and cash equivalents at the end of the year |
|
12,269 |
20,742 |
|
|
|
|
========== |
========== |
|
|
|
M. Azam Saigol |
|
M. Naseem Saigol |
|
|
Director |
|
Chairman/Chief Executive |
|
|
|
| STATEMENT
OF CHANGES IN EQUITY |
|
| FOR
THE YEAR ENDED JUNE 30, 2001 |
|
|
|
|
|
(Rupees in thousand) |
|
|
|
|
|
Share Capital |
Un-appropriated |
Reserves |
Total |
|
|
|
Loss |
|
|
|
| Balance
as at 01-07-1999 |
58,500 |
(342,564) |
245,250 |
(38,814) |
|
| Net
loss for the year |
-- |
(137,269) |
-- |
(137,269) |
|
|
|
------------------ |
------------------ |
------------------ |
------------------ |
|
| Balance
as at 30-06-2000 |
58,500 |
(479,833) |
245,250 |
(176,083) |
|
|
|
========== |
========== |
========== |
========== |
|
| Balance
as at 01-07-2000 |
58,500 |
(479,833) |
245,250 |
(176,083) |
|
| Net
loss for the year |
-- |
(137,560) |
-- |
(137,560) |
|
|
|
------------------ |
------------------ |
------------------ |
------------------ |
|
| Balance
as at 30-06-2001 |
58,500 |
(617,393) |
245,250 |
(313,643) |
|
|
========== |
========== |
========== |
========== |
|
|
|
M. Azam Saigol |
|
M. Naseem Saigol |
|
|
Director |
|
Chairman/Chief Executive |
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 2001 |
|
|
| 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 land leasehold, |
|
| building
and plant & machinery which are stated at re-valued amount. |
|
|
|
|
| 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 |
|
|
|
|
|
|
| Current |
|
|
|
| The
tax holiday concession allowed for ten years under clause 122(c) of second
schedule of |
|
| Income
Tax Ordinance, 1979 has expired on 16-11-2000 where-after the tax is payable
as prescribed |
|
| under
the law. In view of losses, the provision of current year is made under
section 80-D on the |
|
| sales
falling in taxable period. |
|
|
| Deferred |
|
|
| No
provision for deferred taxation is made in books of account as the company is
sustaining heavy |
|
| operating
losses. |
|
|
| 2.4
Tangible Fixed Assets and Depreciation |
|
|
| Operating
assets are stated at cost, except land leasehold, 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
1st March 1995. |
|
|
|
|
| 2.6 Investments |
|
| Short
term investments are valued at lower of cost or market value. |
|
|
| 2.7
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. |
|
|
| 2.8
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. |
|
|
| 2.9
Revenue recognition |
|
| The
sale of goods is recognised on delivery of goods to customers. |
|
|
|
|
2001 |
2000 |
|
|
|
|
|
|
(Rupees in
thousand) |
|
|
| 3.
OPERATING ASSETS |
|
| Own (Note 3.1) |
|
|
386,819 |
287,143 |
|
|
|
| Capital
work in progress |
|
|
-- |
2,616 |
|
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
|
386,819 |
289,759 |
|
|
|
|
|
|
========== |
========== |
|
|
| 3.1
Schedule of operating assets-Own |
|
|
|
|
|
|
(Rupees in thousand) |
|
|
|
|
|
|
Cost as at |
Addition/ |
Cost as at |
Depre- |
Accumulated |
Written down |
Revaluation |
Revalued |
|
| Description |
|
01 July 2000 |
(Deletion) |
30 June 01 |
ciation |
depreciation as |
value as at |
Surplus |
amounts as at |
|
|
|
|
rate % |
at 30 June 01 |
30 June 01 |
|
30 June 2001 |
|
|
|
|
| TANGIBLE |
|
|
| Land-Leasehold |
|
4,734 |
-- |
4,734 |
-- |
550 |
