| Habib Arkady Limited |
|
|
|
|
|
|
|
|
|
| Annual
Report 1999 |
|
|
|
| BOARD
OF DIRECTORS |
|
|
| Gaffar A. Habib |
|
| John R. Mahlich |
|
| Haider Anvarali |
|
| Habibullah
A. Habib |
|
| Mohsin
A. Habib |
|
| Bashir A. Habib |
|
| Tufail Y. Habib |
|
|
| Registered
& Head Office |
|
| 3rd
Floor, AI-Rehman Bldg. |
|
| I.I.
Chundrigar Road, |
|
| Karachi - 74200 |
|
|
|
| DIRECTORS
REPORT TO THE SHAREHOLDERS |
|
|
| Dear
Shareholders, |
|
|
| The
year under review was one full of challenges; as numerated: |
|
|
| 1.
World prices of our raw material - Rice - remained very high due to drought
in the Rice growing |
|
| /consuming
areas brought about by the E1 Nino; while favourable growing conditions for
corn |
|
| (raw
material for competing producers) and its resulting lower prices took a
severe toll on our sales. |
|
|
| 2.
As a result of a continuing drought in the Hub River catchment area - the Hub
Dam reservoir was |
|
| totally
depleted. Our factory draws water from the Hub Dam lake and hence the water
supply was |
|
| curtailed
till it was totally stopped in April. |
|
|
| The
intermittent plant operations meant higher costs of operation. |
|
|
| 3.
Attempts to pass on these higher costs were successful with only a small
portion of our market |
|
| and
hence a big drop was registered in our sales figures. |
|
|
|
|
| Habib Sorbitol: |
|
|
|
|
| 4.
Low priced Imported Sorbitol (subsidized by E.U.) continued to be dumped into
our markets - sales |
|
| tax
free - while sales tax incurred on our raw material and inputs had to be
absorbed by us forcing |
|
| us
to merge the Sorbitol unit into the main operations as on 31st July, 1999. |
|
|
| Notwithstanding
these adverse conditions, we bow our heads in gratitude to Allah the Provider
for having |
|
| Blessed
us with His Bounties which have enabled us to close the year in a profit,
which the Board of |
|
| Directors
propose to appropriate as follows: |
|
|
| Profit
Before Taxation |
|
Rs. |
24,846,190 |
|
| Provision
for Taxation |
|
Rs. |
2,445,560 |
|
|
|
|
------------------ |
|
| Profit
After Taxation |
|
Rs. |
22,400,630 |
|
| Unappropriated
Profit brought forward |
|
Rs. |
40,352,866 |
|
|
|
|
------------------ |
|
| Profit
available for appropriation |
|
Rs. |
62,753,496 |
|
|
|
|
========== |
|
| Appropriations: |
|
|
|
|
| Cash
Dividend @ 15% on Paid-up-Capital |
|
Rs. |
22,500,000 |
|
| i.e.
Rs.0.75 per share on 30,000,000 shares |
|
|
|
| Unappropriated
Profit carried forward |
|
Rs. |
40,253,496 |
|
|
|
|
------------------ |
|
|
|
Rs. |
62,753,496 |
|
|
|
========== |
|
|
| Earning
per share (of Rs.5/-) for current year is Rs.0.75 verses Rs.1.43 for
preceding year. |
|
|
| Present
Situation: |
|
| The
monsoons of 99 have come and gone - with little rain in the catchment area
(of the 60 foot drop |
|
| in
the level - the water has risen 4 feet) allowing one day a week supply of
water to the plant. We continue |
|
| to
purchase water by tankers to enable partial operation of the plant. |
|
|
| Future: |
|
|
|
| --
Habib Agglomeration: |
|
| We
intend to shift the plant to Quetta to take advantage of the favourable
weather conditions |
|
| conducive
to production. This shift will mean a temporary dislocation of production
during the winter |
|
| off
season and we hope to restart in time for the high summer season. |
|
|
|
|
| -- Habib Microfine: |
|
| With
the expiry of the tax holiday period, we have made suitable amendments in our
articles to |
|
| permit
exports through this company of our other products as well. |
|
|
|
|
| --
We have taken on lease from our Associated Sister Companies, an Oil
Extraction Plant which we |
|
| hope
to operate on Canola Oil Seed. |
|
|
| --
We are diversifying into other higher value added products. |
|
|
|
|
AND |
|
|
|
|
|
| Most
importantly - please join me in our Prayers to Allah the Beneficent the
Provider to Bless us with |
|
| Beneficial
rains and Bless our efforts with Bounties as Befits His Glory. Aameen. |
|
|
|
|
|
GAFFAR A. HABIB |
|
| KARACHI
DATED: 30th September, 1999 |
|
Chairman |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed Balance Sheet of M/S. HABIB ARKADY
LIMITED. As at June 30, |
|
| 1999
and the related Profit and Loss Account and Statement of changes in financial
position (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 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 |
|
| Companies
Ordinance, 1984; |
|
|
|
| (b)
in our opinion: |
|
|
|
|
| i)
The Balance Sheet and the 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 to the best of our information and according to the
explanations given to |
|
| us,
the Balance Sheet, Profit and Loss Account and Statement of changes in
financial position- |
|
| Cash
flow 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 June 30, 1999 and of the Profit
for the year |
|
| then ended; and |
|
|
| (d)
in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance,
1980 has |
|
| been
deducted and deposited under section 7 of that Ordinance. |
|
|
|
|
|
|
HYDER BHIMJI & CO. |
|
| KARACHI
DATED: 30th September, 1999 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1999 |
|
|
|
|
1999 |
1998 |
|
|
NOTE |
RUPEES |
RUPEES |
|
|
|
|
| AUTHORISED
CAPITAL |
|
|
|
| 40,000,000
Ordinary Shares of Rs. 5/= each |
|
|
200,000,000 |
200,000,000 |
|
|
|
|
========== |
========== |
|
| ISSUED
SUBSCRIBED AND PAID UP CAPITAL |
|
3 |
150,000,000 |
150,000,000 |
|
|
|
|
|
|
| RESERVE
AND SURPLUS: |
|
|
|
|
|
|
|
|
|
| CAPITAL
RESERVE |
|
4 |
10,000,000 |
10,000,000 |
|
|
|
|
|
| REVENUE
RESERVE |
|
5 |
37,500,000 |
37,500,000 |
|
|
|
|
|
| UNAPPROPRIATED
PROFIT |
|
|
40,253,496 |
40,352,866 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
87,753,496 |
87,852,866 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
237,753,496 |
237,852,866 |
|
|
|
|
| LONG
TERM LOANS (Secured) |
|
6 |
5,412,000 |
14,046,000 |
|
|
|
|
|
|
| CURRENT
LIABILITIES: |
|
|
|
|
| Current
Maturity of Long Term Loans |
|
|
8,634,000 |
11,126,000 |
|
| Short
Term Running Financing (Secured) |
|
7 |
44,400,000 |
78,512,017 |
|
| Creditors
and Accrued Liabilities |
|
8 |
5,727,041 |
12,004,910 |
|
| Advances
and Deposits |
|
9 |
1,892,609 |
4,228,880 |
|
| Proposed
Dividend |
|
|
22,500,000 |
45,000,000 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
83,153,650 |
150,871,807 |
|
| CONTINGENCIES
& COMMITMENTS |
|
10 |
|
|
|
|
------------------ |
------------------ |
|
|
|
326,319,146 |
402,770,673 |
|
|
|
|
|
|
========== |
========== |
|
|
|
|
|
| TANGIBLE
FIXED ASSETS |
|
11 |
162,763,968 |
176,839,166 |
|
|
|
|
|
|
| LONG TERM: |
|
|
|
|
| Deposits |
|
12 |
1,079,835 |
1,079,835 |
|
| Investment
in Share Capital of |
|
|
|
|
| Subsidiary
Companies |
|
13 |
3,000,000 |
3,000,000 |
|
|
|
|
|
|
| Loan
to wholly owned Subsidiary Companies |
|
14 |
31,333,575 |
34,072,822 |
|
| Investment
in Securities |
|
15 |
10,000,000 |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
45,413,410 |
38,152,657 |
|
|
|
|
|
| CURRENT
ASSETS: |
|
|
|
|
| Stores,
Spares and Loose Tools |
|
16 |
22,394,505 |
23,848,473 |
|
| Stock in Trade |
|
17 |
30,099,388 |
90,307,184 |
|
| Trade Debts |
|
18 |
25,977,169 |
50,219,603 |
|
| Advances,
Deposits, Pre-Payments and |
|
|
|
| Other
Receivables |
|
19 |
19,331,059 |
17,440,493 |
|
| Cash
and Bank Balances |
|
20 |
20,339,647 |
5,963,097 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
118,141,768 |
187,778,850 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
326,319,146 |
402,770,673 |
|
|
|
|
========== |
========== |
|
| Note:
The annexed notes form an integral part of these accounts. |
|
|
| KARACHI
DATED: 30th September, 1999 |
|
|
|
HAlDER ANVARALI |
|
|
GAFFAR A. HABIB |
|
|
Chief Executive |
|
|
Chairman |
|
|
|
| PROFIT
& LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
|
|
|
1999 |
1998 |
|
|
|
|
NOTE |
RUPEES |
RUPEES |
|
| SALES (Net) |
|
|
|
| Local |
|
158,968,997 |
272,791,845 |
|
| Export |
|
108,057,711 |
155,637,072 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
267,026,708 |
428,428,917 |
|
| Cost
Of Goods Sold |
|
21 |
227,267,454 |
376,210,609 |
|
|
|
|
------------------ |
------------------ |
|
| Gross Profit |
|
|
|
39,759,254 |
52,218,308 |
|
|
|
|
|
| Less: |
|
|
|
|
| Administrative
Expenses |
|
22 |
24,717,293 |
19,400,973 |
|
| Selling Expenses |
|
23 |
13,423,028 |
11,868,280 |
|
| Financial
Expenses |
|
24 |
5,712,780 |
10,896,707 |
|
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
43,853,101 |
42,165,960 |
|
|
|
|
------------------ |
------------------ |
|
| Operating
(Loss) / Profit |
|
|
(4,093,847) |
10,052,348 |
|
|
|
|
|
|
|
|
|
| Add:
Net Income from Subsidiary Cos. |
|
25 |
28,007,169 |
39,500,038 |
|
| Other Income |
|
26 |
1,363,836 |
375,267 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
29,371,005 |
39,875,305 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
25,277,158 |
49,927,653 |
|
| Less:
Other Charges |
|
27 |
1,307,694 |
2,621,785 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
23,969,464 |
47,305,868 |
|
| Prior
Year's Adjustments |
|
28 |
876,726 |
216,147 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
Before Taxation |
|
|
24,846,190 |
47,522,015 |
|
| Provision
For Taxation |
|
29 |
2,445,560 |
4,704,220 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
After Taxation |
|
|
22,400,630 |
42,817,795 |
|
| Unappropriated
Profit Brought Forward |
|
|
40,352,866 |
42,535,071 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
62,753,496 |
85,352,866 |
|
|
|
|
|
| Proposed
Final Dividend @ 15% i.e. Rs. 0.75 per |
|
|
|
| share
on 30,000,000 shares (1998: @ 30%) |
|
|
22,500,000 |
45,000,000 |
|
|
|
|
------------------ |
------------------ |
|
| Unappropriated
Profit Carried Forward |
|
|
40,253,496 |
40,352,866 |
|
|
|
|
========== |
========== |
|
|
| Note:
The annexed notes form an integral part of these accounts. |
|
|
|
HAlDER ANVARALI |
|
GAFFAR A. HABIB |
|
|
Chief Executive |
|
|
|
Chairman |
|
|
| KARACHI
DATED: 30th September, 1999 |
|
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION (CASH FLOW STATEMENT) |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
|
1999 |
1998 |
|
|
|
|
|
RUPEES |
RUPEES |
|
|
|
|
| NET
CASH (OUTFLOW)/INFLOW FROM |
|
|
|
| OPERATING
ACTIVITIES |
|
|
|
| Cash
Generated From Operations |
|
|
|
| Profit Before Tax |
|
|
|
24,846,190 |
47,522,015 |
|
| Adjustment
for non cash charges and other items |
|
|
|
|
| Depreciation |
|
|
|
16,868,531 |
18,532 710 |
|
| (Gain)
/ Loss on Disposal of Fixed Assets |
|
|
(1,315,836) |
(339;267) |
|
| Financial
Charges |
|
|
|
5,712,780 |
10,896,707 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
21,265,475 |
29,090,150 |
|
| Cash
Flow from operating activities before working |
|
|
------------------ |
------------------ |
|
| capital changes |
|
|
|
46,111,665 |
76,612,165 |
|
|
|
|
| (Increase)
/ Decrease in Current Assets |
|
|
|
| Stores,
Spares & Loose Tools |
|
|
|
1,453,968 |
(2,667,603) |
|
| Stock in Trade |
|
|
|
60,207,796 |
(40,480,450) |
|
| Trade Debts |
|
|
|
24,242,434 |
10,454,498 |
|
| Advances,
Deposits, Prepayments & Other Receivables |
|
(4,336,126) |
(6,844,287) |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
81,568,072 |
(39,537,84-2) |
|
| Increase
/ (Decrease) in Current Liabilities |
|
|
|
|
| Short
Term Running Financing (Secured) paid |
|
|
(34,112,017) |
324,605,331 |
|
| Trade
Creditors & Accrued Expenses |
|
|
(6,277,869) |
(29,796,811) |
|
| Advances
& Deposits |
|
|
|
(2,336,271) |
1,788,913 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
(42,726,157) |
4,452,635 |
|
|
|
|
| Effects
of Cash Flow due to Working Capital |
|
|
|
| changes |
|
|
|
38,841,915 |
(35,085,207) |
|
|
|
------------------ |
------------------ |
|
| Cash
Flow from operating activities |
|
84,953,580 |
41,526,958 |
|
| Financial
Charges paid |
|
(5,712,780) |
(10,308,983) |
|
|
|
------------------ |
------------------ |
|
|
|
79,240,800 |
31,217,975 |
|
|
|
|
| Net
Cash (Outflow) / Inflow from Investing Activities |
|
|
| Capital
Expenditure |
|
|
|
(3,172,357 |
(15,035,297) |
|
| Sale
Proceeds from disposal of fixed assets |
|
1,694,860 |
568,500 |
|
| Loan
to Subsidiary Companies |
|
2,739,247 |
2,183,293 |
|
| Investment
in Securities |
|
|
|
(10,000,000) |
-- |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
(8,738,250) |
(12,283,504) |
|
|
|
------------------ |
------------------ |
|
|
|
70,502,550 |
18,934,471 |
|
| Net
Cash (Outflow) / Inflow from Financing Activities |
|
|
|
|
| Repayment
of Long Term Loans |
|
|
(11,126,000) |
(17,214,000) |
|
| Dividend Paid |
|
|
|
(45,000,000) |
-- |
|
|
|
------------------ |
------------------ |
|
| Net
Increase / (Decrease) in Cash and Cash equivalent |
|
(56,126,000) |
(17,214,000) |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
14,376,550 |
1,720,471 |
|
| Cash
and Cash equivalent at beginning of the year |
|
|
5,963,097 |
4,242,626 |
|
|
|
|
|
------------------ |
------------------ |
|
| Cash
and Cash equivalent at the end of the year |
|
|
20,339,647 |
5,963,097 |
|
|
|
|
|
========== |
========== |
|
|
|
HAIDER ANVARALI |
|
|
|
GAFFAR A. HABIB |
|
|
Chief Executive |
|
|
Chairman |
|
|
| KARACHI
DATED: 30th September, 1999 |
|
|
|
| NOTES
TO THE ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
| 1.00
HISTORY OF THE COMPANY |
|
|
|
|
| The
Company was incorporated in Pakistan on 10th July, 1980 as a public limited
company |
|
| and
is quoted on Stock Exchanges in Karachi and Lahore. The principal activity of
the |
|
| Company
is the manufacture of Starch Based Sugar and Rice Gluten. The company has |
|
| also
acquired the entire fixed assets of its wholly owned subsidiary namely Habib
Sorbitol |
|
| (Pvt)
Ltd. in view of adverse effect of sales tax and also of prevailing business
condition |
|
| to
its subsidiary with effect from 31st July 1999. Accordingly the company has
started to |
|
| manufacture,
sale & export of hydrogenated sugar and related by products in the
following |
|
| year,
immediately after purchase of fixed assets. |
|
|
| 2.00
SIGNIFICANT ACCOUNTING POLICIES |
|
|
|
|
| 2.01
Accounting Convention |
|
| Accounts
of the Company have been prepared on historical cost convention. |
|
|
|
|
| 2.02
Foreign Currency Translation |
|
| Foreign
Currency Transactions and receivables are recorded at the rate prevailing on
the |
|
| date
of transactions and Foreign Currency deposits are translated into Pak Rupees
at the |
|
| rate
of Exchange ruling at the Balance Sheet date. |
|
|
| 2.03
Staff Retirement Benefits |
|
| The
Company operates Provident Fund Scheme for all its employees eligible for the
benefits. |
|
|
| 2.04 Taxation |
|
|
| Provision
for Current Taxation is computed in accordance with the provision of income
tax |
|
| ordinance 1979. |
|
|
|
| The
Company accounts for deferred taxation on all material timing differences by
using liability |
|
| method. |
|
|
|
| 2.05
Fixed Assets |
|
| These
are stated at cost less accumulated depreciation except free-hold land and
capital |
|
| work-in-progress,
if any, which are stated at cost. |
|
|
|
|
| Depreciation
is charged to income applying reducing balance method. |
|
|
|
|
| A
full year's depreciation is charged on additions irrespective of the date of
purchase whereas |
|
| no
depreciation is charged on the assets disposed off during the year. |
|
|
|
|
| Maintenance
and normal repairs are charged to income as and when incurred. |
|
|
|
|
| 2.06
Stores Spares and Loose Tools. |
|
| Stores
and Spares |
|
Valued at average cost |
|
| Loose Tools |
|
Stated at actuals |
|
|
|
| 2.07
Stock in Trade |
|
| Raw
& Packing Material |
|
Valued at average cost |
|
| Work-in-Process |
|
Valued at average cost of
raw material plus |
|
|
|
a portion of the
manufacturing expenses |
|
| Finished Goods |
|
Valued at lower of
average cost and net |
|
|
|
realisable value. |
|
| Raw
Material in Transit |
|
Stated at actuals |
|
|
| 2.08
Trade Debts |
|
| Debts
considered irrecoverable are written off and provision is made for debts
considered |
|
| doubtful. |
|
|
|
| 2.09
Revenue Recognition |
|
| Sales
are recorded on despatch of goods to customers. Income on Investment is
recorded |
|
| when received. |
|
|
|
| 2.10
Accounting For Lease. |
|
| Lease
expenses represent lease rental for assets being used under operating lease
agreements |
|
| with
various leasing companies. |
|
|
|
|
1999 |
1998 |
|
|
|
RUPEES |
RUPEES |
|
| 3.00
ISSUED SUBSCRIBED AND PAID UP CAPITAL |
|
|
| 15,000,000
Ordinary Shares of Rs.5/- each |
|
75,000,000 |
75,000,000 |
|
| fully
paid issued for Cash. |
|
|
| 15,000,000
Ordinary Shares of Rs.5/- each |
|
75,000,000 |
75,000,000 |
|
| issued
as Fully Paid Bonus Shares. |
|
------------------ |
------------------ |
|
|
|
150,000,000 |
150,000,000 |
|
|
|
========== |
========== |
|
| 4.00
CAPITAL RESERVE |
|
|
| Premium
on 5,000,000 Right Shares |
|
|
| @
Rs.2/- per share |
|
10,000,000 |
10,000,000 |
|
|
|
========== |
========== |
|
|
|
|
| 5.00
REVENUE RESERVE |
|
|
|
|
|
|
| General Reserve |
|
37,500,000 |
87,500,000 |
|
|
|
|
|
| Less:
Transfer to Paid up Capital by issue |
|
|
|
| of Bonus Shares |
|
-- |
50,000,000 |
|
|
|
------------------ |
------------------ |
|
|
|
|
37,500,000 |
37,500,000 |
|
|
|
========== |
========== |
|
|
