| Hilal Tanneries Limited |
|
|
|
|
|
|
|
|
|
|
|
|
| Annual Report 1999 |
|
|
| CONTENTS |
|
|
| Company
Information |
|
|
|
| Notice
of Annual General Meeting |
|
|
| Directors'
Report |
|
|
|
| Auditors' Report |
|
|
|
| Balance
Sheet |
|
| Profit and Loss Account |
|
|
| Statement
of Changes in Financial Position |
|
|
| Notes to the Accounts |
|
| Pattern of holding of the
Shares |
|
|
| Pattern of holding of the
Shares (CDC) |
|
|
|
|
|
|
| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
| Ch. Shahid Hussain |
Chief Executive |
|
| Ch. Ahmad Javed |
|
| Ch. Ahmad Mukhtar |
|
| Ch. Zahid Hussain |
|
| Mr. Arif Saeed |
|
| Mr. Shahid H. Kardar |
|
| Mr.
Babar Farooq Khan |
|
|
|
| SECRETARY |
|
| Mr. Yaqoob Masih |
|
|
|
| BANKERS |
|
| Muslim
Commercial Bank Ltd. |
|
| The Bank of Khyber |
|
|
| AUDITORS |
|
| S. M. Masood & Co. |
|
| Chartered
Accountants |
|
|
| REGISTERED OFFICE |
|
| Servis House, |
|
| 2-Main
Gulberg, Lahore - 54662 |
|
|
| FACTORY |
|
| G. T. Road, Gujrat. |
|
|
|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
|
|
| Notice
is hereby given that the Annual General Meeting of Shareholders of THE HILAL
TANNERIES |
|
| LIMITED,
will be held on Wednesday the 22rid December, 1999 at 11.00 a.m. at the
registered office |
|
| of
the Company, Servis House, 2-Main Gulberg, Lahore to transact the following
business:- |
|
|
| 1.
To confirm the minutes of the last General Meeting. |
|
|
| 2.
To receive, consider and adopt the Profit and Loss Account and Balance Sheet
for the year |
|
| ended
30-06-1999 and the Directors' Report and Auditors' Report thereon. |
|
|
| 3.
To appoint Auditors and to fix their remuneration. |
|
|
| 4.
To transact any other business with the permission of the Chair. |
|
|
| By Order of the Board |
|
|
|
|
YAQOOB MASIH |
|
| Lahore- 24-11-1999. |
|
Secretary |
|
|
| NOTES : |
|
|
| 1.
The Share Transfer Books of the Company will remain closed from 15-12-99 to
21-12-99 (both |
|
| days inclusive). |
|
|
|
| 2.
A member entitled to vote at the meeting may appoint another member as
his/her proxy. |
|
| Proxies
in order to be effective, must be received at the registered office of the
Company duly |
|
| stamped,
signed and witnessed not later than 48 hours before the meeting. |
|
|
| 3.
Shareholders are requested to notify the Company of any change in their
address. |
|
|
|
| DIRECTORS'
REPORT TO THE SHAREHOLDERS |
|
|
| The
Directors are pleased to present Annual Report of the Company and the Audited
Accounts for |
|
| the
year ended 30th June, 1999. |
|
|
| We
are pleased to report that the strategies adopted in the last couple of years
have started giving |
|
| positive
results and the Company has made a pre-tax profit of Rs. 1.16 million (loss
of Rs. 4.85 |
|
| million
for 30th June, 1998). The sales have increased by about 6% to Rs. 156.96
million as |
|
| compared
to Rs. 148.15 million for the previous year. |
|
|
| The
entire leather sector in the country is going through a hard time due to
collapse of economies in |
|
| the
Far East and lowering of demand from the European market. The export of
leather products and |
|
| shoes
has dropped by approximately 20%. |
|
|
| We
have been able to reduce the financial expenses considerably. The expense has
come down to |
|
| Rs.
7.23 million from Rs. 9.52 million in the previous year. We will continue to
pursue the policy of a |
|
| well
defined product range and improvement in quality. We are confident that this
strategy will give |
|
| results
in the future as well. |
|
|
| YEAR 2000 BUG |
|
| Company
has updated all its hardware and software. It is fully compliant to the
requirements of year |
|
| 2000. |
|
|
| APPROPRIATION: |
|
| Financial
results for 30-06-1999 are summarized below: |
|
|
|
|
|
|
Rupees |
|
| Profit before tax |
|
1,164,473 |
|
| Provision for taxation |
|
(784,807) |
|
| Prior year adjustment |
|
(298,855) |
|
|
|
------------------- |
|
| Profit after tax |
|
80,811 |
|
| Add
deficit brought forward |
(15,340,809) |
|
|
|
------------------- |
|
| Net
deficit C/o to Balance Sheet |
(15,259,998) |
|
|
|
=========== |
|
|
|
| APPOINTMENT
OF AUDITORS: |
|
| Messrs
S. M. Masood & Company, Chartered Accountants have retired as Auditors
and being |
|
| eligible
have offered themselves for re-appointment. |
|
|
| MANAGEMENT
AND WORKERS RELATIONSHIP: |
|
| The
relationship between the Management and Staff and Workers remained extremely
cordial |
|
| throughout
the year. The Management would like to put on record their appreciation for
the |
|
| continued
hard work put in by the staff and workers. |
|
|
| The
pattern of share holding of the Company as on 30-06-1999 is enclosed with the
Balance Sheet. |
|
|
|
|
For and on behalf of the Board |
|
|
| Date: 24-11-1999. |
|
SHAHID HUSSAIN |
|
| Place: Lahore. |
|
Chief Executive |
|
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed Balance Sheet of THE HILAL TANNERIES 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 period 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 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 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 period was for the purpose of the
Company's |
|
| business; and |
|
|
| iii)
the business conducted, investments made and the expenditure incurred during
the |
|
| period
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 & Loss
Account and the Statement of Changes in |
|
| Financial Position (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 June 30, 1999 and of the PROFIT and the
Changes in Financial Position (Cash Flow |
|
| Statement), for the year then ended; and |
|
|
| d)
in our opinion, no Zakat was deductible at source under the Zakat and Ushr
Ordinance, |
|
| 1980. |
|
|
|
| Date: 24-11-1999 |
|
S. M. MASOOD & CO. |
|
| Place: Lahore. |
|
Chartered Accountants |
|
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1999 |
|
|
|
|
|
|
|
|
|
1999 |
1998 |
|
|
|
NOTE |
Rupees |
Rupees |
|
|
| SHARE
CAPITAL & RESERVES |
|
| Share Capital |
|
3 |
15,397,090 |
15,397,090 |
|
| Share
Premium Account |
|
|
139,219 |
139,219 |
|
| General Reserve |
|
|
10,800,000 |
10,800,000 |
|
| Accumulated Loss |
|
|
(15,259,998) |
(15,340,809) |
|
|
|
|
----------------------- |
----------------------- |
|
|
|
|
11,076,311 |
10,995,500 |
|
| Long Term Liabilities |
|
|
|
| Bank Loan |
|
|
4 |
292,500 |
487,500 |
|
| Liabilities
against Assets Subject to |
|
|
|
| Finance Lease |
|
|
5 |
218,165 |
691,947 |
|
| Sponsors Loan |
|
|
6 |
16,000,000 |
16,000,000 |
|
|
|
----------------------- |
----------------------- |
|
|
16,510,665 |
17,179,447 |
|
|
| Deferred Liabilities |
|
| Staff Gratuity |
|
|
7 |
471,168 |
498,743 |
|
|
| Current Liabilities |
|
| Short
Term Running Finance from Banks |
|
8 |
29,930,307 |
41,120,321 |
|
| Current
Portion of Long Term Loans |
|
4 |
195,000 |
195,000 |
|
| Current
Portion of Liabilities against |
|
|
|
| Assets
Subject to Finance Lease |
|
5 |
293,782 |
764,031 |
|
| Creditors,
Accrued Expenses & |
|
|
|
| Other Liabilities |
|
|
9 |
88,792,465 |
53,166,280 |
|
| Tax Payable |
|
|
10 |
2,164,692 |
1,377,965 |
|
|
----------------------- |
----------------------- |
|
|
|
|
121,376,246 |
96,623,597 |
|
| Contingencies
and Commitments |
|
11 |
0 |
0 |
|
|
|
|
----------------------- |
----------------------- |
|
|
|
|
149,434,390 |
125,297,287 |
|
|
|
|
============= |
============= |
|
|
| Tangible Fixed Assets |
|
|
| Operating
Fixed Assets |
|
12 |
14,842,594 |
13,301,175 |
|
| Fixed
Assets Subject to Finance Lease |
|
13 |
437,804 |
1,003,174 |
|
|
|
|
----------------------- |
----------------------- |
|
|
|
|
15,280,398 |
14,304,349 |
|
| Security Deposits |
|
14 |
661,645 |
268,645 |
|
|
| CURRENT ASSETS |
|
| Stores,
Spares & Loose Tools |
|
15 |
7,681,336 |
7,456,831 |
|
| Stock in Trade |
|
|
16 |
102,854,755 |
89,275,757 |
|
|
|
|
| Trade Debts |
|
|
10,181,422 |
5,162,336 |
|
| Advances,
Deposits, Pre-payments & |
|
|
|
| Other Receivables |
|
17 |
10,730,771 |
8,018,911 |
|
| Cash & Bank Balances |
|
|
18 |
2,044,063 |
810,458 |
|
|
----------------------- |
----------------------- |
|
|
|
133,492,347 |
110,724,293 |
|
|
|
----------------------- |
----------------------- |
|
|
|
149,434,390 |
125,297,287 |
|
|
|
============= |
============= |
|
| Annexed
notes from 1 to 30 form an integral part of these accounts. |
|
|
|
|
|
| Mir Sultan Anwar |
Ch. Shahid Hussain |
Ch. Ahmad Javed |
|
|
|
| Chief Accountant |
Chief Executive |
Director |
|
|
|
|
|
|
|
Date: 24-11-1999 |
|
AUDITORS' REPORT |
|
|
Place: LAHORE. |
|
(As per annexed) |
|
|
|
|
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
NOTE |
1999 |
1998 |
|
|
|
Rupees |
Rupees |
|
|
|
|
| Sales |
|
|
19 |
156,964,977 |
148,154,794 |
|
| Cost of Goods Sold |
|
20 |
141,660,406 |
137,616,528 |
|
|
|
----------------------- |
----------------------- |
|
| Gross Profit |
|
|
|
15,304,571 |
10,538,266 |
|
|
|
|
|
|
| Operating expenses |
|
|
|
|
| Distribution Expenses |
|
|
21 |
734,126 |
655,641 |
|
| Administrative
Expenses |
|
22 |
6,106,870 |
5,416,835 |
|
|
|
----------------------- |
----------------------- |
|
|
6,840,996 |
6,072,476 |
|
|
----------------------- |
----------------------- |
|
| Operating Profit |
|
|
|
8,463,575 |
4,465,790 |
|
| Financial Expenses |
|
23 |
7,239,298 |
9,525,802 |
|
|
|
----------------------- |
----------------------- |
|
| Profit/(Loss)
after Operating & Financial Expenses |
|
1,224,277 |
(5,060,012) |
|
| Other Income |
|
|
24 |
26,500 |
214,183 |
|
| Other Expenses |
|
|
|
0 |
(10,000) |
|
|
----------------------- |
----------------------- |
|
|
26,500 |
204,183 |
|
|
----------------------- |
----------------------- |
|
|
1,250,777 |
(4,855,829) |
|
| Workers'
Profit Participation Fund |
|
62,539 |
0 |
|
| Workers' Welfare Fund |
|
23,765 |
0 |
|
|
----------------------- |
----------------------- |
|
|
86,304 |
0 |
|
| Profit/(Loss)
Before Taxation |
|
1,164,473 |
(4,855,829) |
|
| Provision
for Taxation - Turnover Tax |
|
784,807 |
740,774 |
|
|
----------------------- |
----------------------- |
|
| Profit/(Loss)
After Taxation |
|
379,666 |
(5,596,603) |
|
| Prior Year Adjustments |
|
25 |
(298,855) |
(606,937) |
|
|
----------------------- |
----------------------- |
|
|
80,811 |
(6,203,540) |
|
|
| Unappropriated
Profit/(Loss) Brought Forward |
|
(15,340,809) |
(9,137,269)' |
|
|
|
----------------------- |
----------------------- |
|
|
| Accumulated
Loss Transferred to Balance Sheet |
|
(15,259,998) |
(15,340,809) |
|
|
============= |
============= |
|
| Basic
Earning per Share |
|
26 |
0.05 |
0 |
|
|
|
|
|
|
============= |
============= |
|
|
|
|
| Annexed
notes from 1 to 30 form an integral part of these accounts. |
|
|
| Mir Sultan Anwar |
Ch. Shahid Hussain |
Ch. Ahmad Javed |
|
| Chief Accountant |
Chief Executive |
Director |
|
|
| Date: 24-11-1999 |
AUDITORS' REPORT |
|
| Place: LAHORE. |
(As per annexed) |
|
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
1999 |
1998 |
|
|
|
Rupees |
Rupees |
|
| Cash
Flow from Operating Activities |
|
| Profit/(Loss)
before taxation and extra ordinary items |
|
1,164,473 |
(4,855,829) |
|
| Adjustments for: |
|
|
| Depreciation |
|
|
1,724,094 |
1,514,770 |
|
| Profit
on Sale of Fixed Assets |
|
(26,500) |
(202,183) |
|
| Interest Expenses |
|
|
7,025,855 |
9,200,056 |
|
| Amortization |
|
|
565,370 |
713,086 |
|
| Gratuity provision |
|
|
237,371 |
130,350 |
|
| Prior Year Adjustment |
|
|
(298,855) |
(606,937) |
|
|
|
------------------- |
------------------- |
|
| Operating
profit before working capital changes |
|
10,391,808 |
5,893,313 |
|
|
| (Increase)/Decrease
in stores, spares and loose tools |
|
(224,505) |
771,775 |
|
| (Increase)/Decrease
in stock- in trade |
|
|
(13,578,998) |
19,092,478 |
|
| (Increase)
/Decrease in trade debts |
|
|
(5,019,086) |
17,558,562 |
|
| (Increase)/Decrease
in advances, deposits, |
|
|
|
|
| prepayments
and other receivables |
|
(2,711,860) |
(1,002,880) |
|
| Increase/(Decrease)
in creditors, accrued expenses |
|
|
|
| and other liabilities |
|
|
36,232,520 |
(22,608,326) |
|
| Gratuity Paid |
|
|
(264,946) |
(316,434) |
|
|
|
------------------- |
------------------- |
|
| Cash
Generated from operations |
|
|
24,824,933 |
19,388,488 |
|
| Interest Paid |
|
|
(7,630,270) |
(9,724,464) |
|
|
|
------------------- |
------------------- |
|
| Net
Cash (used in)/from operating activities |
|
|
17,194,663 |
9,664,024 |
|
|
------------------- |
------------------- |
|
| Cash
flow from investing activities |
|
| Additions
to fixed assets |
|
|
(3,270,850) |
(375,296) |
|
| Assets
acquired against finance lease |
|
|
0 |
(886,450) |
|
| Security deposits |
|
|
|
(573,000) |
(49,145) |
|
| Sale
proceeds on disposal of fixed assets |
|
|
31,837 |
820,000 |
|
| Proceeds
from insurance on loss of leased assets |
|
0 |
375,000 |
|
|
|
|
|
------------------- |
------------------- |
|
| Net
cash used in investing activities |
|
|
(3,812,013) |
(115,891 ) |
|
|
------------------- |
------------------- |
|
| Cash
flow from financing activities |
|
| Payment
of long term loans |
|
|
(195,000) |
(97,500) |
|
| Increase
in Finance Lease Liabilities |
|
|
0 |
886,450 |
|
| Payments
of Finance Lease Liabilities |
|
|
(764,031) |
(968,128) |
|
| Increase/(Decrease)
in running finances |
|
|
(11,190,014) |
(9,064,644) |
|
|
|
|
|
------------------- |
------------------- |
|
| Net
Cash (used in)/from financing activities |
|
|
(12,149,045) |
(9,243,822) |
|
|
|
|
|
------------------- |
------------------- |
|
| Net
(decrease)/increase in cash & cash equivalents |
|
1,233,605 |
304,311 |
|
| Cash
& cash equivalents at beginning of the period |
|
810,458 |
506,147 |
|
|
|
|
------------------- |
------------------- |
|
| Cash
& cash equivalents at the close of the period |
|
2,044,063 |
810,458 |
|
|
|
|
=========== |
=========== |
|
|
|
|
|
|
|
|
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
| 1.
THE COMPANY AND ITS OPERATIONS |
|
|
| The
Hilal Tanneries Limited is a public limited company incorporated in Pakistan.
Its shares are |
|
| quoted
on Lahore and Karachi stock exchanges in Pakistan. The principal activity of
the |
|
| Company
is processing of hides and skins and selling of finished leather. |
|
|
| 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
|
| The
Policies adopted by the Company, which are consistent with those of the
previous year |
|
| are as follows :- |
|
|
|
| a)
Accounting Convention: |
|
|
| These
accounts have been prepared under the historical cost convention and comply |
|
| with
International Accounting Standards, where applicable and mandatory in all
material |
|
| aspects. |
|
|
|
|
| b)
Retirement Benefits: |
|
|
| The
Company maintains a recognized Provident Fund for its employees.
Contributions |
|
| based
upon salaries and wages are made monthly to the Provident Fund Trust to cover |
|
| the obligation. |
|
|
|
|
| There
is an unfunded gratuity scheme for those who are not members of the Provident |
|
| Fund.
Liability for gratuity is based on graduated scale and is calculated with
reference to |
|
| the
length of service and last drawn salary and average wages of the employees. |
|
|
| Managerial
employees are entitled to participate in both the schemes. |
|
|
| The
Company also operates a contributory pension scheme for employees who were
not |
|
| members
of the Employees' Old-age benefit Scheme under the rules applicable before |
|
| July 01, 1986. |
|
|
|
| c) Taxation: |
|
|
| The
charge for current taxation is based on taxable income at the current rates
of |
|
| taxation
after taking into account tax credits, tax rebates and other allowances
available |
|
| for
set off, if any or minimum tax liability, whichever is less. |
|
|
| The
Company accounts for deferred taxation, using the liability method, on all
major |
|
| timing
differences if they are expected to reverse in the foreseeable future, but
does not |
|
| recognise
deferred tax debits. |
|
|
| d)
Contingencies & Commitments: |
|
| These
are recognized only when they become due. |
|
|
| e)
Foreign Currencies: |
|
| Export
sales are translated into Rupees at estimated rates, differences arising on |
|
| subsequent
realization are adjusted against sales. |
|
|
| f)
Tangible Fixed Assets: |
|
| These
are stated at cost less accumulated depreciation where applicable. |
|
| Cost
includes purchase cost together with any incidental expenses of acquisition
and |
|
| adjustments
for exchange differences on loans financing these assets. |
|
| Depreciation
on fixed assets is calculated to depreciate their cost over their useful
lives at |
|
| the
rates specified in Note 12 to the accounts using the reducing balance method.
No |
|
| depreciation
is provided on freehold land and capital work in progress. |
|
| Full
year's depreciation is provided in the year of acquisition and none in the
year of |
|
| disposal. |
|
|
| Maintenance
and normal repairs are charged to income as and when incurred, while |
|
| major
repairs and improvements are capitalized. |
|
| Gains
and losses on disposal of fixed assets are included in income in the year the
assets |
|
| are disposed off. |
|
|
|
| g)
Assets Subject to Finance Lease: |
|
| Assets
under finance lease are accounted for at the fair value of assets. The
aggregate |
|
| amounts
of obligations relating to assets subject to finance lease are stated at net |
|
| present
value of the commitments. The assets so acquired are amortized over the
shorter |
|
| of
the lease term or their useful lives. Finance charge is allocated to periods
during the |
|
| lease
term so as to produce a constant periodic rate of interest on the remaining
balance |
|
| of
the liability for each period. The amortization and financial charges on
leased assets |
|
| are
charged to current year's income. |
|
|
| h) Stocks & Stores: |
|
|
| These
are stated at lower of cost and net realizable value. The cost is determined
as |
|
| follows: |
|
|
|
| Stores,
spare parts, loose |
|
| tools
and packing material |
: |
On first in first out
basis. |
|
| Goods in transit |
|
: |
At purchase cost. |
|
| Raw materials |
|
: |
On first in first out
basis. |
|
| Work in process |
|
: |
At estimated raw material
cost. |
|
| Finished goods |
|
: |
By deducting estimated
profit margin from the selling |
|
|
price. |
|
|
| Net
realizable value signifies the estimated selling price in the ordinary course
of the |
|
| business
less costs necessary to be incurred in order to make the sale. |
|
|
| i) Revenue: |
|
| Sales
are recognized on despatch of goods to the customers. |
|
|
| j) Borrowing Cost: |
|
|
| Borrowing
costs are charged to the income in the year in which they are incurred. |
|
|
| 3. SHARE CAPITAL |
|
|
1999 |
1998 |
|
|
|
Rupees |
Rupees |
|
|
|
|
| Authorised: |
|
|
|
|
| 2,000,000
ordinary shares of Rs. 10 each |
|
20,000,000 |
20,000,000 |
|
|
|
============ |
============ |
|
| Issued,
Subscribed & Paid-up |
|
|
|
| 500,000 |
ordinary shares of |
|
|
|
|
Rs. 10 each issued for
cash |
|
5,000,000 |
5,000,000 |
|
| 1,007,631 |
ordinary shares of |
|
|
|
|
Rs. 10 each issued as
bonus |
|
10,076,310 |
10,076,310 |
|
| 32,078 |
ordinary shares of Rs. 10
each |
|
|
|
as fully paid to PICIC
against loan |
|
320,780 |
