| Kashmir Polytex Limited |
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| Annual
Report 1999 |
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| CONTENTS |
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| Company
Information |
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| Notice
of Meeting |
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| Directors'
Report |
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| Auditors'
Report |
|
| Balance Sheet |
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| Profit
and Loss Account |
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| Cash
Flow Statement |
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| Notes
to the Accounts |
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| Pattern
of Shareholding |
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|
|
| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS: |
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|
|
| Mr.
Mohammad Ashraf Khan |
|
Chief Executive |
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| Mr.
Farooq Khan |
|
| Mr.
Nisar Husain Virani |
|
| Mr.
Mohammed Akram |
|
| Dr.
Mrs. Yasmin Ashraf |
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| Mst. Azra Khan |
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| Mrs.
Hareem Ara Hashmi |
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| SECRETARY: |
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| Mr.
Shoaib Abdullah |
|
|
| BANKERS: |
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| National
Bank of Pakistan |
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| Bank
Al-Habib Limited |
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| industrial
Development Bank of Pakistan |
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|
| AUDITORS: |
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| Kanwer
Furqan Ali & Co. |
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| Chartered
Accountants |
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| REGISTERED
OFFICE: |
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| Plot
Nos. A/8-11 Industrial Estate, Mirpur, A.K. |
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|
| LIAISON
OFFICE: |
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| 501,
Fifth Floor, Business Avenue, Main Shahrah-e-Faisal, Karachi. |
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| MARKETING
OFFICE: |
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| S-2,
2nd Floor, Hafeez Centre, Gulberg-III Lahore. |
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| FACTORIES: |
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| i)
Plot Nos. A/8-11 Industrial estate, Mirpur, A.K. |
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| ii)
Plot No. 190 Phase-Ill, Industrial Estate, |
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| Gadoon
Amazai, N.W. RR |
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|
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| NOTICE
OF MEETING |
|
|
| Notice
is hereby given that the 16th Annual General Meeting of the Shareholders of
the Company will be |
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| held
at plot Nos. A/8-11, Industrial Estate, Mirpur A. K., on Friday 31st
December, 1999 at 11.00 am to |
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| transact
the following business: |
|
|
| 1.
To confirm the Minutes of Annual General Meeting of the Shareholders of the
Company held on 31st |
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| December, 1998. |
|
|
| 2.
To receive and adopt the report of the Directors and Audited Accounts of the
Company for the year |
|
| ended
30th June, 1999. |
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|
| 3.
To appoint Auditors for the year 1999-2000 and fix their remuneration, the
retiring Auditors |
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| M/s.
Kanwer Furqan Ali & Co., Chartered Accountants have offered their
services for the ensuing |
|
| year. |
|
|
| 4.
To transact such other business as may be placed before the meeting with the
permission of the |
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| Chairman. |
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|
By Order of the Board |
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| December 10, 1999 |
|
SHOAIB ABDULLAH |
|
| Mirpur,
Azad Kashmir |
|
Secretary |
|
|
| 1.
The Share Transfer Books of the Company will remain closed from December 22,
1999 to |
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| December
31, 1999 (both days inclusive). |
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| 2.
A member entitled to attend and vote at the meeting may appoint another
member as his/her |
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| proxy
to attend and vote instead of him/her. Proxies, in order be effective, must
be received at |
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| the
Registered office of the Company not less than 48 hours before the meeting. |
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|
| 3.
The shareholders are requested to communicate to the Company any change in
their addresses. |
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| 4.
CDC sharesholders desiring to attend the meeting are requested to bring their
original National |
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| Identity
Card, Account and Participants ID number for identification purpose and in
case of |
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| proxy,
to enclose an attested copy of his / her National Identity Card. |
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|
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| DIRECTORS'
REPORT |
|
|
| Dear
Shareholders, |
|
|
| On
behalf of the Board, I am pleased to submit herewith the Annual Report on the
affairs of the Company, |
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| together
with the Audited Accounts for the year ended June 30, 1999. |
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|
| FINANCIAL
RESULTS |
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|
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|
(Rupees in thousand) |
|
|
MIRPUR |
GADOON |
TOTAL |
|
|
|
|
| Net
Loss for the period |
|
37,971 |
41,563 |
79,354 |
|
| Prior
years adjustments |
|
790 |
-- |
790 |
|
|
|
------------------ |
------------------ |
------------------ |
|
|
|
38,761 |
41,563 |
80,534 |
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| Add:
Accumulated Loss B/F |
|
47,982 |
20,249 |
68,231 |
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|
|
------------------ |
------------------ |
------------------ |
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|
86,743 |
61,812 |
148,555 |
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|
========== |
========== |
========== |
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| The
Company has achieved 79% production capacity as against 93% in correspondent
period. The decline in |
|
| production
was due to closure of Mirpur Plant since May 1999. The heavy losses incurred
due to decline in |
|
| production
.and lowest ever selling prices of Polypropylene Bags and fluctuation in raw
material prices which |
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| ranges
between US$ 400 to US$ 800. Last year's nuclear explosion also squeeze the
working capital as the |
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| L/C's
were open at 30% cash margin and no DA facility has been provided by the
Government till to date beside
'~ |
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| the
heavy financial burden is beyond the control of the Company. The
Polypropylene Industry faces the worst |
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| ever
crises due to mushroom growth of un-organised sector which evades Sales Tax
and Electricity. It is evident |
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| from
the fact that a number of units grow in recent years, while 50% of the
organized sector industries were |
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| completely
shut down and the remaining become sick or near to be closed down completely. |
|
|
| PRODUCTION |
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| Annual
Capacity 2,800 metric tons. |
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|
| Year |
|
|
Capacity Utilized |
Percentage |
|
|
|
|
|
|
| 1997 |
|
|
2,407 |
86 |
|
| 1998 |
|
|
2,602 |
93 |
|
| 1999 |
|
|
2219 |
79 |
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|
|
| FUTURE
PROSPECTS |
|
| In
order to save the company from complete closure the management of your
Company has trying to put our case |
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| to
bankers' committee through PICIC to revive the sick unit by getting a relief
package for the company on the |
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| basis
of sustainable debts. Our diversification of Gadoon project has also not been
implemented as the bankers |
|
| are
generally reluctant to further finance the Company. However, the management
is fully convinced that the |
|
| survival
of the company is lying in diversification therefore, the management is
trying to finance the diversification |
|
| program
through other sources by bringing further equity to partial implementation of
Jumbo Bag project. In this |
|
| regard
necessary equipment has already been imported which is partially provided by
M/s. Storsack UK Limited, |
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| and
they have also send their experts so start the training by the end of January
2000 or in the first week of |
|
| February 2000. |
|
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| The
management is fully aware of the Y2K problem and is taking necessary steps in
this direction. |
|
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| The
Auditors of the Company M/s. F. Ahmad & Company, Chartered Accountants,
has resigned and M/s. Kanwar |
|
| Furqan
Ali & Co. Chartered Accountant fill the casual vacancy for the period
1998-99 are retire and being |
|
| eligible,
offer themselves for reappointment for the year 1999-2000. |
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| We
are thankful to our Bankers, Auditors, Clients and especially devoted
employees for their meritorious services. |
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|
For and on behalf of the Board |
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|
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|
MOHAMMAD ASHRAF KHAN |
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|
Chairman |
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|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
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| We
have audited the annexed Balance Sheet of KASHMIR POLYTEX LIMITED as at June
30, 1999 and |
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| the
related Profit and Loss Account and Cash flow Statement, together with the
notes forming part |
|
| thereof,
the year then ended and we state that; |
|
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| We
have obtained all the informations 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 |
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| Companies
Ordinance, 1984. |
|
|
| (b)
in our opinion; |
|
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| i)
the Balance Sheet and Profit and Loss Account have been drawn up in
conformity with |
|
| the
Companies Ordinance, 1984 and are in agreement with the books of account and
are |
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| further
in accordance with accounting policies consistently applied by the Company; |
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|
|
|
|
| ii)
the expenditure incurred during the year was for the purpose of the Company's
business; and |
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|
|
|
| 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 and Profit and Loss Account 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, 1999 and of the loss for the year
then ended; and |
|
|
| (d)
in our opinion, no Zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980. |
|
|
| Without
qualifying our opinion we draw attention to Note 27 in the financial
statement which due to |
|
| the
events more fully explained in the said note raise doubt that the Company
will be able to continue |
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| as
a going concern. |
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|
(KANWER FURQAN ALl & CO) |
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| Karachi:
December 08, 1999 |
|
Chartered Accountants |
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|
|
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|
| BALANCE
SHEET AS AT JUNE 30, 1999 |
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|
|
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|
(Rupees in
thousands) |
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|
Note |
1999 |
1998 |
|
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|
|
| SHARE
CAPITAL AND RESERVES |
|
|
|
|
|
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| CAPITAL |
|
|
|
| Authorised |
|
|
|
| 7,500,000
Ordinary Shares of Rs. 10/- each |
|
|
75,000 |
75,000 |
|
|
|
|
========== |
========== |
|
| Issued,
Subscribed & Paid up |
|
3 |
71,000 |
71,000 |
|
| GENERAL
RESERVE |
|
|
7,100 |
7,100 |
|
| ACCUMULATED
LOSSES |
|
|
(148,555) |
(68,231) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(70,455) |
9,869 |
|
|
|
|
|
|
| SURPLUS
ON REVALUATION OF FIXED ASSETS |
4 |
96,420 |
22,440 |
|
| LONG-TERM
LOANS |
|
5 |
78,566 |
74,323 |
|
| DEFERRED
LIABILITY |
|
6 |
17,630 |
3,816 |
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Current
Maturity |
|
7 |
3,770 |
1,961 |
|
| Short
Term Loans and Bank Borrowings |
|
8 |
163,387 |
139,869 |
|
| Creditors |
|
|
5,712 |
5,657 |
|
| Accrued
Liabilities |
|
9 |
25,130 |
28,091 |
|
|
|
|
------------------ |
------------------ |
|
|
|
197,999 |
175,578 |
|
|
|
|
|
| CONTINGENCIES
& COMMITMENTS |
|
10 |
-- |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
320,160 |
286,026 |
|
|
|
|
|
========== |
========== |
|
|
| TANGIBLE
FIXED ASSETS |
|
11 |
178,737 |
121,046 |
|
| CAPITAL
-WORK-IN-PROGRESS |
|
|
20,960 |
10,316 |
|
|
|
|
|
| LONG-TERM
DEPOSITS |
|
12 |
740 |
740 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores,
Spares and Loose Tools |
|
13 |
5,276 |
5,430 |
|
| Stock-in-Trade |
|
14 |
36,230 |
54,219 |
|
|
|
|
| Trade
Debtors - Unsecured, |
|
|
|
| Considered
Good |
|
|
13,020 |
31,675 |
|
|
|
|
| Advances,
Deposits, Prepayments |
|
|
| and
Other Receivables |
|
15 |
54,797 |
51,977 |
|
| Cash
and Bank Balances |
|
16 |
10,400 |
10,623 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
119,723 |
153,924 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
320,160 |
286,026 |
|
|
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
MOHAMMAD ASHRAF KHAN |
|
NISAR H. VIRANI |
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
| PROFIT
& LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
|
|
|
|
(Rupees in
thousands) |
|
|
|
Note |
1999 |
1998 |
|
|
|
|
| Sales |
|
17 |
65,660 |
88,530 |
|
| Cost of Sales |
|
18 |
67,894 |
77,656 |
|
|
|
|
------------------ |
------------------ |
|
| Gross
Profit - Mirpur A.K. Project |
|
|
(2,234) |
10,874 |
|
|
|
|
|
|
| Sales |
|
17 |
93,706 |
120,465 |
|
| Cost of Sales |
|
18 |
94,265 |
103,129 |
|
|
|
|
------------------ |
------------------ |
|
| Gross
Profit -Gadoon Amazai Project |
|
(559) |
17,336 |
|
|
|
------------------ |
------------------ |
|
| Consolidated
Gross profit |
|
(2,793) |
28,210 |
|
|
|
|
|
|
| OPERATING
EXPENSES |
|
|
|
| Administrative |
|
19 |
18,451 |
16,718 |
|
| Selling |
|
20 |
20,632 |
6,666 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
39,083 |
23,384 |
|
|
|
|
------------------ |
------------------ |
|
| OPERATING
PROFIT / (LOSS) |
|
|
(41,876) |
4,826 |
|
| Other Income |
|
21 |
255 |
396 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
(41,621) |
5,222 |
|
|
|
|
|
| OTHER
CHARGES |
|
|
|
| Financial
Charges |
|
22 |
37,913 |
30,999 |
|
|
|
|
|
------------------ |
------------------ |
|
| PROFIT
/ (LOSS) FOR THE YEAR |
|
|
(79,534) |
(25,777) |
|
| Prior
year's adjustment |
|
|
(790) |
(4,699) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(80,324) |
(30,476) |
|
| Accumulated
Losses brought forward |
|
|
(68,231) |
(37,755) |
|
|
|
|
------------------ |
------------------ |
|
| ACCUMULATED
LOSSES CARRIED FORWARD |
|
(148,555) |
(68,231) |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
MOHAMMAD ASHRAF KHAN |
|
NISAR H. VIRANI |
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
|
|
|
|
(Rupees in
thousands) |
|
| SOURCES
OF CASH (IN FLOW) OPERATION |
|
1999 |
1998 |
|
| Profit
/ Loss after taxation |
|
(79,534) |
(25,777) |
|
| Items
not involving funds |
|
|
|
| Depreciation |
|
17,024 |
11,142 |
|
| Adjustment
of PICIC Loan |
|
-- |
4,698 |
|
| (Gain)
/ Loss on disposal of fixed assets |
|
(200) |
(9 |
|
| Deferred
Liabilities |
|
13,814 |
504 |
|
| Prior
Year's adjustment |
|
(790) |
(4,699) |
|
|
|
------------------ |
------------------ |
|
|
|
29,848 |
11,636 |
|
|
|
------------------ |
------------------ |
|
| Net
Operational flow |
|
(49,686) |
(14,141) |
|
|
|
|
|
| OTHER
SOURCES |
|
|
|
| Sale
proceed of fixed assets |
|
286 |
27 |
|
| Directors' Loan |
|
|
9,113 |
-- |
|
| Increase
in short-term loans and |
|
|
|
|
| bank
borrowings |
|
|
23,518 |
53,315 |
|
| increase
in creditors |
|
|
55 |
-- |
|
| Increase
in accrued liabilities |
|
|
-- |
9,351 |
|
| Decrease
in store and spares |
|
|
154 |
-- |
|
| Decrease
in stock trade |
|
|
17,989 |
-- |
|
| Decrease
in Trade Debtors |
|
|
18,655 |
8,790 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
69,770 |
71,483 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
20,084 |
57,342 |
|
| CASH
OUT FLOW |
|
|
|
| Capital
expenditure |
|
821 |
5,905 |
|
| Capital
Work-in-Progress |
|
10,644 |
10,316 |
|
| Repayment
of Long-term Loans |
|
3,061 |
2,327 |
|
| Decrease
in Creditors |
|
-- |
1,565 |
|
| Decrease
in accrued liabilities |
|
2,961 |
-- |
|
| Unclaimed
dividend paid |
|
-- |
1 |
|
| Increase
in store & spares |
|
-- |
234 |
|
| Increase
in stock in trade |
|
-- |
10,777 |
|
| Increase
in advances, deposits and |
|
|
|
| other
receivables |
|
2,820 |
23,599 |
|
|
|
------------------ |
------------------ |
|
|
|
20,307 |
54,724 |
|
|
|
|
------------------ |
------------------ |
|
| NET
INCREASE / (DECREASE) IN CASH & BANK BALANCES |
|
(223) |
2,618 |
|
|
|
|
========== |
========== |
|
|
|
|
| CASH
& BANK BALANCE |
|
|
|
| Opening |
|
|
10,623 |
8,005 |
|
| Closing |
|
|
10,400 |
10,623 |
|
|
|
|
------------------ |
------------------ |
|
| NET
INCREASE/(DECREASE) IN CASH & BANK BALANCES |
|
(223) |
2,618 |
|
|
|
|
========== |
========== |
|
|
|
|
| NOTES
TO THE ACCOUNTS FOR THE YEAR |
|
| ENDED
JUNE 30, 1999 |
|
|
| 1.
THE COMPANY AND ITS OPERATION |
|
| The
Company is incorporated in Azad Jammu & Kashmir, under the Companies
Ordinance, 1984, as |
|
| adopted
by Azad Jammu & Kashmir Government, as a Public Limited Company, quoted
on Karachi |
|
| and
Lahore Stock Exchanges in Pakistan. The Company is engaged in the business of
manufacturing |
|
| and
sale of polypropylene woven bags and cloth. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
Accounting Convention. |
|
| These
Accounts have been prepared under the historical cost convention. |
|
|
| 2.2
Retirement Benefits |
|
| The
Company operates an unfunded gratuity scheme and provision is made annually
to cover |
|
| the
obligations under the scheme. |
|
|
| 2.3 Taxation |
|
| Provision
for current taxation is based on taxable income at current rates of taxation
as applicable |
|
| in
Pakistan as adopted in Azad Jammu and Kashmir. |
|
|
| 2.4
Tangible Fixed Assets |
|
| All
fixed capital expenditure are at cost less accumulated depreciation except
Leasehold Land |
|
| which
is stated at cost. Depreciation on assets calculated on reducing balance
method at the |
|
| rates
specified in the fixed assets note. Maintenance and normal repairs are
charged to income |
|
| as
and when incurred, while major replacements and improvements, if any are
capitalised. |
|
| Gain
or Loss on disposal of assets is included in current income. |
|
|
| 2.5
Store, Spares & Loose Tools |
|
| These
are valued at Moving Average cost. |
|
|
| 2.6
Stock in Trade |
|
| Stocks
are valued at lower of cost or net realisable value, determined by First in
First out |
|
| method.
Stock in Transit and at Bond are valued at cost. |
|
|
| 2.7
Revenue Recognition |
|
| Sales
are recorded when goods are dispatched and Invoiced. |
|
|
| 2.8
Mark up/Interest on Working Capital loan has been allocated on the basis of
Sales of Mirpur |
|
| and
Gadoon projects. |
|
|
|
|
|
|
|
|
|
|
(Rupees in
thousands) |
|
|
Note |
1999 |
1998 |
|
|
|
|
| 3.
ISSUED, SUBSCRIBED AND PAID UP CAPITAL |
|
| 7,100,000
Ordinary Shares of Rs. 10/- |
|
|
| each
fully paid in cash |
|
|
71,000 |
71,000 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| 4.
SURPLUS ON REVALUATION OF FIXED ASSETS |
|
96,420 |
22,440 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| Surplus
on Revaluation of Fixed Assets represents excess of the value of fixed assets
has assessed |
|
| by
an independent valuer over Net Book Value as on February 28, 1999. The
surplus is not available |
|
| for
distribution until realized on disposal of assets. |
|
|
|
|
|
| 5.
LONG TERM LOANS |
|
|
|
|
|
|
| Directors'
/ Other Loan |
|
5.1 |
-- |
9,113 |
|
| PICIC
Loan for Mirpur-Secured |
|
5.2.1 |
20,272 |
17,572 |
|
| PICIC
Loan for Gadoon-Secured |
|
5.2.2 |
44,245 |
43,884 |
|
| TFCs
for Gadoon-Secured |
|
5.3 |
9,806 |
7,997 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
78,566 |
74,323 |
|
|
|
|
========== |
========== |
|
|
|
|
| 5.1
DIRECTORS'/OTHER LOAN |
|
|
| Mohammad
Ashraf Khan |
|
|
2,289 |
-- |
|
| Farooq Khan |
|
|
|
1,824 |
-- |
|
| M/s.
Storsack (UK) Limited |
|
|
5,000 |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
9,113 |
-- |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| 5.2
PICIC Loan for machinery |
|
|
|
|
|
|
| 5.2.1 Mirpur |
|
|
|
|
| Principle
Amount |
|
|
26,726 |
26,726 |
|
| Paid
upto June, 1999 |
|
|
24,223 |
21,523 |
