| Cherat Papersack Limited |
|
|
|
|
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| Annual
Report 1999 |
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| CONTENTS |
|
|
| Company
Information |
|
| Notice
of Meeting |
|
| Directors'
Report to the Members |
|
| Auditors'
report to the Members |
|
| Balance Sheet |
|
|
| Profit
and Loss Account |
|
| Cash
Flow Statement |
|
| Notes
to the Accounts |
|
| Pattern
of Shareholding |
|
|
|
| COMPANY
INFORMATION |
|
|
| CHAIRMAN |
|
MR. MOHAMMED FARUQUE |
|
| CHIEF
EXECUTIVE |
MR. ZAHID FARUQUE |
|
| DIRECTORS |
|
MR. IQBAL FARUQUE |
|
|
|
MR. AHMAD FARUQUE |
|
|
|
MR. MAHMOOD FARUQUE |
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|
|
MR. AKBARALI PESNANI |
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|
|
MR. KELLY PATEL |
|
|
|
MR. SHEHRYAR FARUQUE |
|
|
|
| Company
Secretary |
MR. R. JAFRANI |
|
| Auditors |
|
SIDAT HYDER QAMAR &
CO. |
|
| Bankers |
|
ABN AMRO BANK. |
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ALLIED BANK LTD. |
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ANZ GRINDLAYS BANK LTD. |
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CREDIT AGRICOLE INDOSUEZ. |
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HABIB BANK LTD. |
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MUSLIM COMMERCIAL BANK
LTD. |
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NATIONAL BANK OF PAKISTAN |
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UNITED BANK LTD. |
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| Registered
Office |
MODERN MOTORS HOUSE, |
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|
BEAUMONT ROAD, |
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|
KARACHI-75530 |
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| Factory |
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PLOT NO. 26, |
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GADOON AMAZAI INDUSTRIAL
ESTATE, |
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DISTT. SWABI, |
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N.W.F.P. |
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| Sales Office |
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1ST FLOOR, BETANI ARCADE, |
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JAMRUD ROAD, PESHAWAR. |
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| Regional Office |
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3, SUNDERDAS ROAD, |
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LAHORE. |
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| Islamabad
Office |
NO. 7, MEZZANINE LEVEL, |
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RAZIA SHARIF PLAZA, 92,
BLUE AREA, |
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ISLAMABAD. |
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| NOTICE
OF MEETING |
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| NOTICE
IS HEREBY GIVEN that Tenth Annual General Meeting of this Company will be
held on |
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| Thursday,
16th December, 1999 at 02:00 p.m. at the Registered Office of the Company at
Modern |
|
| Motors
House, Beaumont Road, Karachi, to transact the following business: |
|
|
| 1.
To receive and consider the audited Accounts for the year ended June 30,
1999, with the |
|
| Directors'
and Auditors' Reports thereon. |
|
|
| 2.
To approve final dividend of Rs. 10.00 per share (100%) for the financial
year ended on |
|
| June
30, 1999 as recommended by Directors in addition to the interim dividend of
Rs. 3.50 |
|
| (35%)
already paid. |
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|
|
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|
|
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| To
elect eight Directors of the Company as fixed by the Board u/s 178(1) of the
Companies |
|
| Ordinance,
1984· The retiring Directors namely (1) Mr. Mohammed Faruque (2) Mr. Zahid |
|
| Faruque
(3) Mr. Iqbal Faruque (4) Mr. Ahmad Faruque (5) Mr. Mahmood Faruque (6) Mr. |
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| Akbarali
Pesnani (7) Mr. Kelly Patel and (8) Mr. Shehryar Faruque all being eligible
have |
|
| notified
their intention to offer themselves to be re-elected. |
|
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| 4.
To appoint auditors for the ensuing year and to fix their remuneration. |
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|
By Order of the Board |
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|
R. JAFRANI |
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| Karachi:
18th November, 1999. |
|
Company Secretary |
|
|
| Notes: |
|
|
| 1.
The register of members of the Company will be closed from Friday, December
10 to |
|
| Thursday,
December 16, 1999 inclusive, and no transfers will be registered during that
time. |
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| Shares
received in order at the registered office of the Company at the close of
business on |
|
| Thursday,
December 09, 1999 will be treated in time for entitlement of the above
dividend. |
|
|
|
|
| 2.
A member eligible to attend and vote at the Annual General Meeting is
entitled to appoint |
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| another
member as his proxy to attend and vote in his stead. Proxies to be effective
must be |
|
| in
writing and received by the Company 48 hours before the Meeting. |
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|
|
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| 3.
Shareholders whose shares are deposited with Central Depository System (CDS)
are |
|
| requested
to bring National Identity Card (NIC) along with their Account number in
Central |
|
| Depository
System for verification. |
|
|
|
|
| 4.
The shareholders are requested to notify the Company if there is any change
in their address. |
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|
|
| DIRECTORS'
REPORT TO THE MEMBERS |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
| Dear
Shareholders, |
|
|
| The
Directors are pleased to place before you the Company's Annual Report
together with |
|
| the
Audited Accounts and Auditors' Report for the year ended June 30, 1999. |
|
|
| PRODUCTION
AND DESPATCHES |
|
| The
Comparative figures for production and despatch of bags are as under: |
|
|
|
1998-99 |
1997-98 |
% Change |
|
|
(Units in Mil.) |
(Units in Mil.) |
|
|
|
| Production |
|
54.42 |
50.84 |
7.04 |
|
| Despatched |
|
54.28 |
51.25 |
5.91 |
|
|
| Out
of the 54.28 million bags despatched, Cherat Cement Co. Ltd. accounted for
only 11.31 |
|
| million
bags (i.e. 20.84%) and the rest were sold to other plants, both in North and
South of the country. |
|
|
| MARKETING |
|
| With
better quality control, constant follow up with our customers and a focussed
marketing |
|
| strategy,
we have been able to keep our share of market. Infact in terms of quantity
the despatches |
|
| this
year were higher than last year by 3.03 million bags. |
|
|
| However,
to maintain our share of market and realizing the cash flow position of
cement plants |
|
| we
had to extend substantial credit to our customers. Our receivables as of June
30, 1999 stood at |
|
| Rs.
102.1 million, which is equivalent to approximately 63 days of sales. |
|
|
| OPERATIONAL
RESULTS |
|
| The
summarized operating results are as follows: |
|
|
|
|
1998-99 |
1997-98 |
Change |
|
|
|
(Rs. in Mil.) |
(Rs. in Mil.) |
(%) |
|
|
|
|
|
| Net Sales |
|
590.2 |
535.5 |
10.2 |
|
| Cost of Sales |
|
478.4 |
400.9 |
19.3 |
|
|
|
------------------ |
------------------ |
------------------ |
|
| Gross Profit |
|
111.8 |
134.6 |
(16.9) |
|
| Expenses
& Taxes |
|
29.3 |
45.8 |
(36.0) |
|
|
|
------------------ |
------------------ |
------------------ |
|
| Net Profit |
|
82.5 |
88.8 |
(7.1) |
|
|
|
========== |
========== |
========== |
|
|
| Other
comparative figures are reflected in the Financial Statements. |
|
|
| APPROPRIATION
OF PROFIT |
|
| The
profit after tax for current year amounts to Rs. 82.51 million which together
with unappropriated |
|
| profit
of Rs. 40.98 million from last year gives us Rs. 123.49 million to be
appropriated. |
|
|
|
| Your
Directors propose following appropriation of profit: |
|
|
|
|
|
Rupees in Million |
|
|
| Net
Profit for the year |
|
82.51 |
|
| Add:
Unappropriated profit brought forward |
|
40.98 |
|
|
|
|
------------------ |
|
| Total
available for appropriation |
|
123.49 |
|
|
|
|
========== |
|
|
|
|
|
|
| Appropriations: |
|
|
| Interim
dividend @ 35% |
|
14.28 |
|
| Proposed
final dividend @ 100% |
|
40.80 |
|
| Transfer
to General Reserve |
|
25.00 |
|
| Balance
to be carried forward |
|
43.41 |
|
|
|
|
------------------ |
|
|
|
|
123.49 |
|
|
|
|
========== |
|
|
|
|
| Y2K
COMPLIANCE |
|
| The
Company has identified the effects of the Y2K issue on the Company's computer
system |
|
| as
well as other computerized / electronic equipment, whether involved in
information processing or |
|
| production
or any other purpose, in connection with the operations and the preparation
of the financial |
|
| statements.
Even though we have taken all the necessary measures, we have also developed
a contingency |
|
| plan
in order to overcome any major problem that might be encountered in the event
of failure, whether |
|
| partial
or complete of our arrangement. |
|
|
| ISO
9002 CERTIFICATION |
|
| We
are happy to report that effective July 1999 we have been certified for ISO
9002 Certification |
|
| and Compliance. |
|
|
| FINANCIAL
COMMITMENTS / DEBT OBLIGATIONS |
|
| There
are no long-term loans against the company and the commitments under the
lease financing |
|
| are
being met as per schedule. |
|
|
| FUTURE
OUTLOOK |
|
| The
success of our Company is dependent on the performance of cement industry,
which of |
|
| late
has shown some sign of improvement. We are hopeful that the overall economic
situation in the |
|
| country
will improve in the months ahead, which in turn should also help us in our
performance. |
|
|
| AUDITORS |
|
| The
present auditors M/s. Sidat Hyder Qamar & Company, Chartered Accountants,
retire and |
|
| being
eligible offer themselves for reappointment. |
|
|
| ACKNOWLEDGMENT |
|
| In
the end we wish to express our thanks to all the financial institutions which
have been associated |
|
| with
us, for their continued support, understanding and cooperation. We would also
like to thank all |
|
| our
customers for their association. Our special thanks are due to our team of
dedicated managers |
|
| and
other executives, supervisors and hard working employees, who continue to put
in their best efforts |
|
| for
achieving optimum results |
|
|
|
|
|
For and on behalf of |
|
|
|
|
CHERAT PAPERSACK LIMITED |
|
|
|
|
|
|
|
|
|
MOHAMMED FARUQUE |
|
| Karachi:
November 18, 1999 |
|
Chairman |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of CHERAT PAPERSACK LIMITED as at 30
June 1999 |
|
| and
the related profit and loss account and cash flow statement, 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 our knowledge and belief were necessary for the purposes of our
audit and, after |
|
| due
verification thereof, 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, the profit and loss account and the cash flow statement,
together with |
|
| the
notes forming part thereof, 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 1999 and of the profit and the cash flows for the year
then |
|
| ended; and |
|
|
|
|
|
| d)
in our opinion, zakat deductible at source under the Zakat and Ushr
Ordinance, 1980 was |
|
| deducted
by the Company and deposited in the Central Zakat Fund established under
Section |
|
| 7
of that Ordinance. |
|
|
|
|
|
SlDAT HYDER QAMAR & CO. |
|
| Karachi:
November 18, 1999 |
|
CHARTERED ACCOUNTANTS |
|
|
|
| BALANCE
SHEET AS AT 30 JUNE 1999 |
|
|
|
Note |
1999 |
1998 |
|
|
|
|
|
(Rupees) |
|
|
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
| Authorised |
|
|
|
|
| 5,000,000
Ordinary |
|
|
| shares
of Rs. 10/- each |
|
|
50,000,000 |
50,000,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up |
|
3 |
40,800,000 |
40,800,000 |
|
| Share
premium reserve |
|
4 |
6,800,000 |
6,800,000 |
|
| General reserve |
|
4 |
125,000,000 |
100,000,000 |
|
| Unappropriated
profit |
|
4 |
43,413,851 |
40,978,630 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
216,013,851 |
188,578,630 |
|
|
|
|
| LIABILITIES
AGAINST ASSETS SUBJECT |
|
|
| TO
FINANCE LEASE |
|
5 |
10,050,449 |
16,781,327 |
|
| Deferred
liability - Gratuity |
|
|
1,482,134 |
1,018,266 |
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Current
maturity of liabilities against assets |
|
|
| subject
to finance lease |
|
5 |
6,730,878 |
5,511,222 |
|
| Creditors,
accrued and other liabilities |
|
6 |
58,397,403 |
95,522,413 |
|
| Proposed
dividend |
|
|
40,800,000 |
28,560,000 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
105,928,281 |
129,593,635 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
8 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
333,474,715 |
335,971,858 |
|
|
|
|
|
========== |
========== |
|
|
|
|
| FIXED
ASSETS - TANGIBLE |
|
|
|
| Operating
assets |
|
9 |
34,797,382 |
36,302,810 |
|
| Assets
subject to finance lease |
|
10 |
20,011,050 |
22,234,500 |
|
| Capital
work-in-progress |
|
|
241,294 |
220,792 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
55,049,726 |
58,758,102 |
|
| INVESTMENTS |
|
|
11 |
6,237,350 |
9,462,350 |
|
| LONG-TERM
ADVANCES, DEPOSITS |
|
|
|
| AND
PREPAYMENTS |
|
12 |
1,386,384 |
1,775,185 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores,
spares and loose tools |
|
|
9,213,329 |
4,533,808 |
|
| Stock-in-trade |
|
13 |
82,220,632 |
101,781,412 |
|
| Trade debts |
|
14 |
102,104,499 |
95,807,754 |
|
| Short-term
investments |
|
|
-- |
10,000,000 |
|
| Advances,
deposits, prepayments and |
|
|
|
| other
receivables |
|
15 |
10,660,362 |
14,530,187 |
|
| Cash
and bank balances |
|
16 |
66,602,433 |
39,323,060 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
270,801,255 |
265,976,221 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
333,474,715 |
335,971,858 |
|
|
|
|
|
========== |
========== |
|
| AUDITORS'
REPORT ANNEXED |
|
| These
accounts should be read with the annexed notes. |
|
|
|
ZAHID FARUQUE |
|
AKBARALI PESNANI |
|
|
Chief Executive |
|
Director |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED 30 JUNE 1999 |
|
|
|
|
Note |
1999 |
1998 |
|
|
|
|
|
(Rupees) |
|
|
|
|
| Sales - net |
|
17 |
590,173,146 |
535,541,873 |
|
| Cost
of goods sold |
|
18 |
478,415,048 |
400,923,454 |
|
|
|
|
------------------ |
------------------ |
|
| Gross profit |
|
|
111,758,098 |
134,618,419 |
|
|
|
|
------------------ |
------------------ |
|
| Administration
expenses |
|
19 |
4,936,445 |
4,915,773 |
|
| Selling expenses |
|
20 |
15,411,320 |
29,346,259 |
|
|
|
|
------------------ |
------------------ |
|
|
|
20,347,765 |
34,262,032 |
|
|
|
------------------ |
------------------ |
|
| Operating profit |
|
91,410,333 |
100,356,387 |
|
|
|
------------------ |
------------------ |
|
| Financial
charges |
|
8,486,072 |
7,303,237 |
|
| Other charges |
|
|
333,900 |
340,000 |
|
| Other income |
|
|
(7,198,867) |
(3,596,792) |
|
| Workers'
profit participation fund |
|
4,489,461 |
4,815,497 |
|
|
|
|
------------------ |
------------------ |
|
|
|
6,110,566 |
8,861,942 |
|
|
|
------------------ |
------------------ |
|
| Net
profit for the year |
|
|
85,299,767 |
91,494,445 |
|
|
|
|
------------------ |
------------------ |
|
| Taxation-
current |
|
24 |
2,950,866 |
2,677,709 |
|
|
- prior |
|
|
|
|
(166,320) |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
2,784,546 |
2,677,709 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
after taxation |
|
|
82,515,221 |
88,816,736 |
|
| Accumulated
profit brought forward |
|
|
40,978,630 |
32,961,894 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
available for appropriation |
|
|
123,493,851 |
121,778,630 |
|
|
|
|
| Appropriations: |
|
|
|
| Proposed
final dividend @ 100% (1998: @ 70%) |
|
40,800,000 |
28,560,000 |
|
| Interim
dividend @ 35% (1998: @ 30%) |
|
14,280,000 |
12,240,000 |
|
| Transfer
to general reserve |
|
25,000,000 |
40,000,000 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
80,080,000 |
80,800,000 |
|
|
|
|
------------------ |
------------------ |
|
| Accumulated
profit carried forward |
|
|
43,413,851 |
40,978,630 |
|
|
|
|
========== |
========== |
|
| Earning
per share - basic and diluted |
|
25 |
20.22 |
21.77 |
|
|
|
|
|
========== |
========== |
|
|
| These
accounts should be read with the annexed notes. |
|
|
|
ZAHID FARUQUE |
|
AKBARALI PESNANI |
|
|
|
Chief Executive |
|
Director |
|
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED 30 JUNE 1999 |
|
|
|
Note |
1999 |
1998 |
|
|
|
|
|
(Rupees) |
|
|
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| Net
profit before taxation |
|
|
85,299,767 |
91,494,445 |
|
| Adjustment for: |
|
|
|
|
| Depreciation |
|
|
6,359,339 |
6,696,097 |
|
| Amortization |
|
|
305,000 |
305,000 |
|
| Provision
for gratuity |
|
|
463,868 |
359,055 |
|
| Provision
for doubtful debts |
|
|
-- |
17,965,874 |
|
| Provision
for diminution in value of investment |
|
|
-- |
1,323,588 |
|
| Gain
on sale of fixed assets |
|
|
|
(17,822) |
-- |
|
| Financial
charges |
|
|
|
8,486,072 |
7,303,237 |
|
| Return
on investment |
|
|
|
(4,457,710) |
(3,132,087) |
|
|
|
|
|
|
------------------ |
------------------ |
|
| Operating
profit before working capital changes |
|
96,438,514 |
122,315,209 |
|
|
|
|
| (Increase)/decrease
in: |
|
|
|
| Stores,
spares and loose tools |
|
(4,679,521) |
(648,439) |
|
| Stock-in-trade |
|
|
19,560,780 |
(55,545,556) |
|
| Trade debts |
|
|
(6,296,745) |
(48,693,288) |
|
| Advances,
deposits, prepayments and |
|
|
|
| other
receivables |
|
2,066,455 |
(2,659,085) |
|
|
|
|
| Increase/(decrease)
in: |
|
|
|
| Creditors,
accrued and other liabilities |
|
(38,112,328) |
37,027,675 |
|
|
|
------------------ |
------------------ |
|
|
|
(27,461,359) |
(70,518,693) |
|
|
|
------------------ |
------------------ |
|
| Cash
generated from operations |
|
68,977,155 |
51,796,516 |
|
|
|
|
|
|
| Income tax paid |
|
|
|
|
(3,621,816) |
(2,829,725) |
|
| Dividend paid |
|
|
|
|
(41,758,410) |
(32,010,985) |
|
| Interest paid |
|
|
|
|
(4,791,574) |
(2,421,148) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(50,171,800) |
(37,261,858) |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash from operating activities |
|
|
18,805,355 |
14,534,658 |
|
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
| Additions
to assets |
|
|
(2,674,789) |
(4,836,994) |
|
| Sale
proceed of fixed assets |
|
|
|
62,150 |
-- |
|
| Capital
work-in-progress |
|
|
(20,502) |
(220,792) |
|
| Long-term
advances, deposits and prepayments |
|
|
83,801 |
(448,740) |
|
| Investments |
|
|
|
3,225,000 |
(5,006,100) |
|
| Short-term
investment |
|
|
10,000,000 |
(10,000,000) |
|
| Interest
received |
|
|
7,098,350 |
2,277,087 |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash from / (used in) investing activities |
|
17,774,010 |
(18,235,539) |
|
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
| Lease
rentals paid against finance lease |
|
(9,299,992) |
(9,300,388) |
|
|
|
|
------------------ |
------------------ |
|
| Net
increase / (decrease) in cash and bank balances |
|
27,279,373 |
(13,001,269) |
|
| Cash
and bank at beginning of the year |
|
