| Frontier Ceramics Limited |
|
|
|
|
|
|
|
| Annual
Report 1999 |
|
|
|
| Contents |
|
|
| COMPANY INFORMATION |
|
| NOTICE OF MEETING |
|
| DIRECTORS'
REPORT |
|
| AUDITORS' REPORT |
|
| PROFIT & LOSS ACCOUNT |
|
| CASH
FLOW STATEMENT |
|
| NOTES
TO THE ACCOUNTS |
|
| PATTERN
OF SHAREHOLDING |
|
|
|
| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
|
| Mr.
S.U. Durrani |
|
Chairman |
|
| Mr.
Iqbal Hussain Khattak |
|
| Mrs.
A. Matloob |
|
| Mr.
M. Akram Khan (N.B.P) |
|
| Mr.
Z.I. Saifi (B.E.L) |
|
| Mr.
M. Sharif Shafique (N.D.F.C) |
|
| Mr.
Asadullah Khawaja (I.C.P) |
|
| Mr.
Ansarullah Khan |
|
Managing Director &
Chief Executive |
|
| Mr.
Shamsul Hassan |
|
| Ms.
Zainab Ibrahim |
|
| Lt.
Col. (R) Saadat Hussain |
|
Company Secretary |
|
|
| BANKERS |
|
|
| National
Bank of Pakistan |
|
| United
Bank Limited |
|
| The
Bank of Khyber |
|
| Banker's
Equity Limited |
|
| Pakistan
Industrial Credit & Investment Corporation Limited |
|
| National
Development Finance Corporation |
|
|
| AUDITORS |
|
|
| Messrs.
Rahim Jan & Co. Chartered Accountants. |
|
|
| LEGAL
ADVISOR |
|
|
| Mian
Noor ul Ghani Advocate |
|
|
| REGISTRAR
AND SHARE TRANSFER OFFICE |
|
|
| Ghafoor
& Co., Chartered Accountants, Rehmat Lane, Saddar Road, Peshawar. |
|
|
| HEAD
OFFICE/REGISTERED OFFICE |
|
|
|
| Jamrud
Industrial Estate, Jamrud Road, Peshawar, N.W. EP. |
|
| Tel:
92-91-812360, 812747 Fax: 92-91-812757 |
|
|
| ZONAL
OFFICES |
|
|
| PESHAWAR |
|
Industrial Estate, Jamrud
Road, Peshawar |
|
|
Tel: 92-91-812360, 812746 |
|
|
| RAWALPINDI |
|
82-A, Satellite Town,
Rawalpindi |
|
|
Tel: 92-51-410998 Fax:
92-51-425523 |
|
|
| LAHORE |
|
61, Shah Jamal, Ferozepur
Road, Lahore |
|
|
Tel: 92-42-7574179 Fax:
92-42-7573090 |
|
|
|
| NOTICE
OF THE MEETING |
|
|
| Notice
is hereby given that the Seventeenth Annual General Meeting of FRONTIER
CERAMICS LIMITED |
|
| will
be held at Industrial Estate, Jamrud Road, Peshawar on Monday, December 27,
1999 at 9:00 a.m. to |
|
| transact
the following business: |
|
|
| 1.
To confirm the minutes of the Sixteenth Annual General Fleeting of the
Company held on December |
|
| 26, 1998. |
|
|
| 2.
To receive, consider and adopt the Audited Accounts together with the
Directors and Auditors |
|
| Reports
for the year ended June 30, 1999. |
|
|
| 3.
To appoint Auditors for the year ending June 30, 2000 and fix their
remuneration. The present Audi- |
|
| tors,
M/s Rahim Jan & Co. Chartered Accountants, being eligible have offered
themselves for reap- |
|
| pointment. |
|
|
| To
transact any other business with the permission of the Chair. |
|
|
|
BY ORDER OF THE BOARD |
|
|
| December 5, 1999 |
|
Lt. Col. (R) Saadat
Hussain |
|
|
Company Secretary |
|
|
| NOTES: |
|
|
| 1.
The Register of Members of the Company will be closed from December 15, 1999
to December 24, |
|
| 1999
(both days inclusive). |
|
|
| 2.
A member entitled to attend and vote at the General Meeting is entitled to
appoint another member |
|
| as
his/her proxy to attend and vote on his/her behalf. Proxy form must be
deposited at the Company's |
|
| Registered
Office at least 48 hours before the meeting. |
|
|
| 3.
Members are requested to notify the company or the Registrar of the Company
any change in their |
|
| address. |
|
|
|
| DIRECTORS'
REPORT |
|
|
| Your
Directors present hereunder the Seventeenth Annual Report together with
audited accounts for |
|
| year
ending June 30, 1999. |
|
|
| FINANCIAL
SUMMARY |
|
|
(Rs. in
million) |
|
|
1999 |
1998 |
|
|
|
| Sales |
|
157.243 |
151.350 |
|
|
---------- |
---------- |
|
| Gross Profit |
|
33.347 |
23.464 |
|
|
---------- |
---------- |
|
| Less:
Admin, Selling & Distribution Expenses |
|
31.528 |
26.385 |
|
|
---------- |
---------- |
|
| Operating
Profit/(Loss) |
|
1.819 |
(2.921) |
|
| Add:
Other Income |
|
0.970 |
1.061 |
|
|
---------- |
---------- |
|
|
2.789 |
(1.860) |
|
| Financial
Expenses |
|
18.607 |
15.913 |
|
| Provision
for Taxation |
|
0.786 |
1.147 |
|
|
---------- |
---------- |
|
| Profit/(Loss)
for the year |
|
(16.604) |
(18.920) |
|
| Prior
Year Adjustment |
|
25.042 |
0.000 |
|
| Accumulated
Loss brought forward |
|
(52.297) |
(33.377) |
|
|
---------- |
---------- |
|
| Profit/(Loss)
carried to Balance Sheet |
|
(43.859) |
(52.297) |
|
|
========== |
========== |
|
| REVIEW
OF OPERATIONS |
|
|
| During
the year under review, ceramics tiles production increased by 12.8°/o i.e.
512,652 Sqm. as com- |
|
| pared
to 454,642 Sqm. in the previous year. The production of Sanitaryware also
increased by 3.2% i.e |
|
| 1,209
tons against I, 171 tons in the previous year. Although the production of
both items showed an |
|
| increase
over the previous year, our capacity utilisation still cannot be optimised
due to the long-standing |
|
| problem
of discontinuation of gas supplies for three months during the winter. |
|
|
| The
recessionery conditions prevailing in the market and free availability of
smuggled tiles and sanitaryware |
|
| particularly
in Peshawar and Quetta, resulted in severe competition. The revenue targets
could not be met |
|
| due
to heavy discounting of sale prices, which became necessary. Cash flow was
affected by the build up in |
|
| inventory
levels, which could not be reduced despite marketing efforts and the
discounting policy. One |
|
| positive
development was the improvement in gross profit percentage achieved through
production effi- |
|
| ciencies
and removal of excise duty. |
|
|
| I
am pleased to report that the Company has concluded satisfactory agreements
with Bankers Equity Lim- |
|
| ited
and PICIC regarding restructuring of financial liabilities. The amount of
remission in loan liability is |
|
| shown
in the financial statements. It is our endeavour to reach out of court
settlements with other Banks |
|
| and DFIs. |
|
|
| FUTURE
OUTLOOK |
|
|
| In
view of the prevailing economic conditions we foresee pressure continuing on
the profitability level. |
|
| However,
the Government policy to introduce low cost housing is a welcome development,
which should |
|
| give
boost to the construction industry thus creating demand for the Company's
products. |
|
|
| It
is also encouraging to note that gas transmission pipes are currently being
laid in the Jamrud Industrial |
|
| Estate
and the work is expected to be completed in the near future. On provision of
regular gas supply the |
|
| Company
will be able to operate to its full capacity which should have a positive
impact on profitability |
|
| through
better use of our resources. |
|
|
| The
issue of Sales Tax refund is now before the Supreme Court. We are hopeful of
a favourable outcome |
|
| which
will enable modernisation and balancing of plant and machinery. |
|
|
| DIVIDEND |
|
|
| In
view of the current financial condition of your company, the Directors are
not recommending a dividend |
|
| for
the year 1998-99. |
|
|
| ACKNOWLEDGMENT |
|
|
| The
Board acknowledges the devotion and hard work of the staff and employees of
the company during the |
|
| year |
|
|
| PATTERN
OF SHAREHOLDING |
|
|
| The
pattern of shareholding is given on page No. 23. |
|
|
| AUDITORS |
|
|
| The
present Auditors, M/s Rahim Jan & Co. Chartered Accountants, retire and
being eligible, offer them- |
|
| selves
for re-appointment |
|
|
|
On behalf of the Board of
Directors |
|
|
|
S.U. DURRANI |
|
|
Chairman |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed Balance Sheet of FRONTIER CERAMICS LIMITED as at
June 30, 1999 and |
|
| the
related Profit and Loss Account and the Cash Flow Statement, together with
the notes forming part |
|
| thereof
for the year then ended and we state that we have obtained all the
informations and explanation, |
|
| which
to the best of our knowledge and belief were necessary for the purpose of our
audit and, after due |
|
| verification
thereof, we report that: |
|
|
| (a)
In our opinion, proper books of account have been kept by the Company as
required by the Compa- |
|
| nies
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 expenditure incurred during the
year were in |
|
| accordance
with the objects of the Company. |
|
|
| (c)
In our opinion and the best of our information and according to the
explanations given to us, the |
|
| Balance
Sheet, Profit and Loss Account and the Cash Flow Statement, together with the
notes form- |
|
| ing
part thereof, give the information required by the Companies Ordinance, 1984
in the manner so |
|
| required,
respectively give a true and fair view of the Company's affairs as at June
30, 1999 and the |
|
| Profit
& Loss and Cash Flow for the year then ended, and |
|
|
| (d)
No Zakat was deductible at source under Zakat and Ushr Ordinance, 1980. |
|
|
|
RAHIM JAN & COMPANY |
|
|
Chartered Accountants |
|
| Karachi:
06 October 1999 |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1999 |
|
|
|
|
1999 |
1998 |
|
|
NOTES |
(Rs.) |
(Rs.) |
|
|
| PROPERTY
AND ASSETS |
|
|
| Fixed
Assets - at cost less depreciation |
|
12 |
366,899,704 |
397,231,145 |
|
| Long
Term Deposits |
|
13 |
752,700 |
742,700 |
|
|
| CURRENT
ASSETS |
|
|
| Stores,
spares and loose tools - at cost |
|
14 |
28,480,339 |
29,677,339 |
|
| Stock
in Trade - at cost |
|
15 |
159,089,354 |
146,842,040 |
|
| Trade Debtors |
|
16 |
72,774,831 |
70,241,570 |
|
| Advances,
Deposits, Pre-payments & |
|
|
|
| other
receivables |
|
17 |
28,619,178 |
36,373,319 |
|
| Cash
and Bank Balances |
|
18 |
14,363,342 |
12,672,493 |
|
|
---------- |
---------- |
|
|
303,327,044 |
295,806,761 |
|
| CURRENT
LIABILITIES |
|
| Finance
under Markup arrangements |
|
8 |
90,187,167 |
86,322, 156 |
|
| Current
portion of long term Loan Liabilities |
|
9 |
50,895,854 |
73,307,208 |
|
| Creditors,
Accrual and other Liabilities |
|
10 |
47,488,604 |
46,788,130 |
|
|
|
---------- |
---------- |
|
|
|
188,571,625 |
206,417,494 |
|
|
|
---------- |
---------- |
|
| Working
Capital |
|
|
114,755,419 |
89,389,267 |
|
|
|
---------- |
---------- |
|
| Total Assets |
|
|
482,407,823 |
487,363, 112 |
|
| Less:
Long Term Loans |
|
7 |
66,330,350 |
107,095,109 |
|
| Deferred
Liabilities |
|
5 |
47,598,997 |
-- |
|
|
---------- |
---------- |
|
| Net Assets |
|
368,478,476 |
380,268,003 |
|
|
========== |
========== |
|
| REPRESENTED
BY |
|
|
|
| Issued,
subscribed and paid up Capital |
|
3 |
77,412,000 |
77,412,000 |
|
| Surplus
on revaluation of Fixed Assets |
|
4 |
283,925,776 |
283,925,776 |
|
| Profit
& Loss - Debit Balance |
|
|
(43,859,300) |
(52,296,595) |
|
| Redeemable
Capital |
|
6 |
51,000,000 |
71,226,822 |
|
|
|
---------- |
---------- |
|
|
|
3 68,478,476 |
380,268,003 |
|
|
========== |
========== |
|
| Contingencies
and Commitments |
|
11 |
|
|
|
|
| The
Annexed Notes form an integral part of these accounts. |
|
|
| ANSARULLAH
KHAN |
|
ZAINAB IBRAHIM |
|
| Chief
Executive |
|
Director |
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
1999 |
1998 |
|
|
NOTES |
(Rs.) |
(Rs.) |
|
|
| Sales - Net |
|
19 |
157,242,701 |
151,349,789 |
|
| Cost of Sales |
|
20 |
123,895,586 |
127,885,687 |
|
|
--------- |
--------- |
|
| Gross Profit |
|
33,347,115 |
23,464,102 |
|
|
| OPERATING
EXPENSES |
|
|
| Administrative
Expenses |
|
21 |
17,316,456 |
14,756,979 |
|
| Selling
and Distribution Expenses |
|
22 |
14,211,663 |
11,628,548 |
|
|
|
|
--------- |
--------- |
|
|
31,528, 119 |
26,385,527 |
|
|
--------- |
--------- |
|
| Operating
Profit/(Loss) |
|
1,818,996 |
(2,921,425) |
|
|
| Profit/(Loss)
on Sale of Fixed Assets |
|
23 |
(40,859) |
475,612 |
|
| Profit
on PLS Saving Account |
|
1,007,859 |
550,300 |
|
| Other Income |
|
3,098 |
35,453 |
|
|
--------- |
--------- |
|
|
970,098 |
1,061,365 |
|
|
2,789,094 |
(1,860,060) |
|
| Financial
Expenses |
|
24 |
18,607,285 |
15,913,355 |
|
| Taxation:
Current - Turnover Tax |
|
25 |
786,214 |
1,146,557 |
|
|
--------- |
--------- |
|
| Profit
(Loss) for the year |
|
(16,604,405) |
(18.919,972) |
|
| Prior
year adjustment |
|
26 |
25,041,700 |
-- |
|
| Accumulated
Loss brought forward |
|
(52,296,595) |
(33,376,623) |
|
|
--------- |
--------- |
|
| Accumulated
Loss Carried to Balance Sheet |
|
(43,859,300) |
(52,296,595) |
|
|
========== |
========== |
|
| The
.Annexed Notes form an integral part of these accounts. |
|
|
| ANSARULLAH
KHAN |
|
ZAINAB IBRAHIM |
|
| Chief
Executive |
|
Director |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) FOR THE YEAR ENDED JUNE 30, 1999 |
|
|
|
1999 |
1998 |
|
|
(Rs.) |
(Rs.) |
|
|
| Cash
collected from customers |
|
154,709,440 |
145,464,826 |
|
| Cash
paid to suppliers |
|
(94, 120,082) |
(98,410,825) |
|
| Administrative
Expenses paid |
|
(16,516,314) |
(13,880,193) |
|
| Selling
& Distribution expenses paid |
|
(14,211,663) |
(11,628,548) |
|
| Bank
charges paid |
|
(346,206) |
(323,111) |
|
| Other
Income received |
|
970,098 |
1,061,365 |
|
| Decrease/(Increase)
in prepayments |
|
|
|
| and
other receivables (net) |
|
(23,981) |
(484,607) |
|
| Increase/(Decrease)
in accruals |
|
|
|
| and
other liabilities |
|
(85,740) |
(4,550,545) |
|
| (Decrease)/Increase
in finance under |
|
|
|
| mark-up
management |
|
3,865,011 |
6,501,761 |
|
| Increase
in inventory |
|
(11,050,314) |
(8,082,554) |
|
|
---------- |
---------- |
|
| Cash
generated from operation |
|
23,190,249 |
15,667,569 |
|
|
| CASH
(OUTFLOWS) INFLOWS FROM |
|
| INVESTING
ACTIVITIES |
|
|
| Addition
in fixed assets |
|
(315,064) |
(463,836) |
|
| Change
due to sale of fixed assets |
|
70,859 |
252,188 |
|
| Long
term deposits |
|
(10,000) |
-- |
|
|
---------- |
---------- |
|
|
(254,205) |
(211,648) |
|
|
| CASH
(OUTFLOWS) INFLOWS FROM |
|
| FINANCE
ACTIVITIES |
|
|
| Long
Term Loans - Net |
|
(2,984,116) |
-- |
|
| Redeemable Capital- Net |
|
-- |
-- |
|
| Interest
Expenses |
|
(18,261,079) |
(15,590,244) |
|
|
---------- |
---------- |
|
|
(21,245,195) |
(15,590,244) |
|
|
| Net
- Increase/(Decrease) in cash & cash equivalent |
|
1,690,849 |
(134,323) |
|
| Cash
and Cash equivalent as at July I st |
|
12,672,493 |
12,806.82 |
|
|
---------- |
---------- |
|
| Cash
and Cash equivalent as at June 30th |
|
14,363,342 |
12,672,493 |
|
|
========== |
========== |
|
|
|
|
| ANSARULLAH
KHAN |
|
ZAINAB IBRAHIM |
|
| Chief
Executive |
|
Di rector |
|
|
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
| 1.
THE COMPANY AND ITS OPERATIONS |
|
|
| Frontier
Ceramics Limited was incorporated in Pakistan in July 1982 as a Public
Limited Company, and |
|
| was
listed on the Karachi and Lahore Stock Exchanges in March 1992. |
|
|
| 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.01
Accounting Convention |
|
| The
accounts of the Company have been prepared under the historical cost
convention, as modi- |
|
| fied
by capitalisation of certain exchange difference in the cost of relevant
assets without any |
|
| adjustments
for the effects of inflation, except plant and machinery which has been
re-valued |
|
| (Note. No. 4). |
|
|
| 2.02
Staff Retirement Benefits |
|
| The
Company operates a provident fund scheme for all its employees, contributions
in respect |
|
| thereof
are made in accordance with the terms of the scheme. |
|
|
| 2.03 Taxation |
|
|
| Charge
for current taxation in the accounts is based on taxable income of the
Company after |
|
| taking
into account rebate, if any allowable to the company. The company accounts
for de- |
|
| ferred
taxation using liability method arising on all major timing differences. |
|
|
| 2.04
Fixed Assets |
|
| Fixed
assets are stated at cost less accumulated depreciation, except leasehold
land and capital |
|
| work
in progress, which are stated at cost. Depreciation is charged on reducing
balance method |
|
| at
the rates specified in Note No. 12. Full year depreciation is charged on
fixed assets, pur- |
|
| chased
during the first half of the accounting year, but no depreciation is charged
on fixed assets |
|
| acquired
during the second half of the accounting year. No depreciation is charged if
the assets |
|
| are
disposed off/deleted in the first half of the accounting year but charged if
disposal/deletion |
|
| is
made in the second half of the accounting year. |
|
|
| Normal
repairs and maintenance are charged to expenses, as and when incurred, while
major |
|
| renewals
and replacements are capitalised. Gains and losses on disposal of fixed
assets are |
|
| taken
to Profit and Loss Account currently. |
|
|
| 2.05
Stock in Trade, Stores, Spares and Loose Tools |
|
| These
are stated as follows: |
|
|
| Stores,
Spares and Loose Tools |
|
At average cost |
|
| Raw
& Packing Material |
|
At average cost, except
in transit, |
|
|
which are stated at
actual cost. |
|
|
| Work
in process |
|
At Cost |
|
| Finished
Goods |
|
At lower of cost or
market value |
|
|
|
|
| 2.06
Rate of Exchange |
|
| Foreign
currency loans and other foreign currency transactions are recorded at the
rate pre- |
|
| vailing
on the date of transaction. Repayment of foreign currency loans are made at
the rate at |
|
| which
the same were disbursed because of exchange risk having been covered. |
|
|
| 2.07
Revenue Recognition |
|
| Sales
are recorded on dispatch of goods to customers. |
|
|
|
1999 |
1998 |
|
|
NOTES |
(Rs.) |
(Rs.) |
|
| 3.
SHARE CAPITAL |
|
|
| AUTHORISED |
|
| 8,000,000
Ordinary Shares of Rs. 10/- each |
|
3 |
80,000,000 |
80,000,000 |
|
|
========== |
========== |
|
| Issued,
Subscribed and Paid.-up Capital 7,741,200 |
|
| ordinary
shares of Rs. I 0/- each issued for cash |
|
77,412,000 |
77,412,000 |
|
|
========== |
========== |
|
| 4.
SURPLUS ON REVALUATION OF FIXED ASSETS |
4 |
283,925,776 |
283,925,776 |
|
|
========== |
========== |
|
| Revaluation
of plant & machinery has been carried out as on June 30, 1996 by an
independent valuer M/s Global |
|
| Engineers
(Pvt) Ltd. Faisalabad, and duly certified by R.H. & Co. Chartered
Accountants, a firm approved |
|
| by
the State Bank of Pakistan for the purpose of revaluation of fixed assets.
Revaluation has been carried out |
|
| on
the basis of depreciated replacement value. (Refer to note no. 12) |
|
|
| 5.
DEFERRED LIABILITIES |
|
5 |
|
|
| Remission/Waiver
of PICIC markup on markup |
|
| loan
restructured |
|
45,995,640 |
-- |
|
| Add:
Mark-up deferred |
|
1,603,357 |
-- |
|
|
---------- |
---------- |
|
|
47,598,997 |
-- |
|
|
========== |
========== |
|
| The
restructured loan liabilities entails remission/waiver which would be allowed
and in proportion to the |
|
| actual
payment made by the company over the period. |
|
|
| Markup
of restructured loan shall be repaid through a monthly instalment from the
month following imme- |
|
| diately
after repayment of restructured loan in seven years period. |
|
|
| 6.
REDEEMABLE CAPITAL (SECURED) |
|
6 |
|
| Term
Finance Certificate Restructured |
|
3,174,781 |
3,174,781 |
|
| Accrued
Markup and overdues converted |
|
| into
Term Finance Certificate Capitalised dues |
|
90,145,041 |
90,145,041 |
