| Yousaf Weaving Mills Ltd - 2004 |
============================================================================================== BALANCE SHEET AS AT SEPTEMBER 30, 2004 ============================================================================================== 2004 2003 Notes (Rupees) (Rupees) ============================================================================================== CAPITAL AND LIABILITIES Share Capital and Reserves Authorised capital 40,000,000 (2003: 40,000,000) ordinary shares of Rs 10 each 400,000,000 400,000,000 Issued, subscribed and paid up capital 3 181,680,000 181,680,000 Investment revaluation reserve - 7,594,840 Accumulated loss (151,144,315) (115,678,146) 30,535,685 73,596,694 NON CURRENT LIABILITIES Long term loans 4 206,650,000 212,625,000 Long term loan from directors 5 120,000,000 120,000,000 Liabilities against assets subject to finance lease 6 5,797,152 20,599,574 Deferred liabilities 7 11,605,963 28,439,876 344,053,115 381,664,450 CURRENT LIABILITIES Current maturity of long term loans and finance lease 8 97,077,010 78,926,295 Short term borrowings 9 158,960,288 132,437,568 Due to directors - unsecured 422,084 16,600,408 Creditors, accrued and other liabilities 10 349,024,229 215,568,440 Provision for taxation 11 8,947,539 32,236,810 614,431,150 475,769,521 Contingencies and Commitments 12 - - 989,019,950 931,030,665 PROPERTY AND ASSETS TANGIBLE FIXED ASSETS Operating fixed assets 13 522,791,024 537,889,695 Deferred Tax Asset 14 14,189,295 Long Term Loans and Security Deposits 15 9,302,435 8,651,193 CURRENT ASSETS Stores and spares 16 15,808,973 16,278,439 Stock in trade 17 115,682,457 60,117,982 Short term investments 18 - 8,032,750 Trade debts 19 71,152,192 45,991,482 Advances, deposits, prepayments and others receivables 20 124,291,825 101,678,607 Cash and bank balances 21 115,801,749 152,390,517 442,737,196 384,489,777 989,019,950 931,030,665 ============================================================================================== ============================================================================================== PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED SEPTEMBER 30, 2004 ============================================================================================== 2004 2003 Notes (Rupees) (Rupees) ============================================================================================== SALES - Net 22 1,571,790,529 1,248,573,342 Cost of sales 23 (1,489,711,969) (1,186,961,320) Gross profit 82,078,560 61,612,022 OPERATING EXPENSES - Administrative 24 (40,475,937) (35,264,193) - Selling and distribution 25 (84,679,557) (26,855,710) (125,155,494) (62,119,903) OPERATING LOSS (43,076,934) (507,881) Financial and other charges 26 (41,233,165) (56,855,884) Other income 27 13,796,023 14,902,813 LOSS BEFORE TAXATION (70,514,076) (42,460,952) Taxation 28 35,047,907 (26,172,867) Net Loss for the year (35,466,169) (68,633,819) Accumulated loss brought forward (115,678,146) (47,044,327) Accumulated loss transferred to balance sheet (151,144,315) (115,678,146) EARNING PER SHARE - Basic 29 (1.95) (3.78) ==============================================================================================CASH FLOW STATEMENT FOR THE YEAR ENDED SEPTEMBER 30, 2004 ==============================================================================================
2004 2003
(Rupees) (Rupees)
==============================================================================================
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before taxation (70,514,076) (42,460,952)
ADJUSTMENTS FOR:
- Depreciation 58,207,117 55,483,478
- Gratuity 5,075,694 3,285,903
- Gain on sale of fixed assets (547,276) (3,095,640)
- Profit on bank accounts (2,796,525) (7,061,485)
- Dividend income (18,000) (505,000)
- Financial and other charges 41,233,165 56,855,884
- Gain on sale of investments
available for sale (7,140,071) (4,209,575)
- Creditor balances reinstated - 58,703
94,014,104 100,812,268
Operating Profit before
Working Capital Changes 23,500,027 58,351,316
DECREASE / (INCREASE) IN CURRENT ASSETS
- Stores and spares 469,466 (374,184)
- Stock in trade (55,564,475) 8,752,875
- Trade debts (25,160,710) (25,037,987)
- Advances, deposits, prepayments and
other receivables (30,700,405) (8,849,675)
(DECREASE) / INCREASE IN CURRENT LIABILITIES
- Creditors, accrued and other liabilities 131,358,174 63,347,431
20,402,050 37,838,460
Cash Generated from Operations 43,902,077 96,189,776
Gratuity paid (3,104,655) (1,847,230)
Financial and other charges paid (39,134,700) (58,888,263)
Income tax paid (9,524,886) (11,412,977)
Net Cash (used in) / from Operating Activities (7,862,164) 24,041,306
CASH FLOWS FROM INVESTING ACTIVITIES
Fixed capital expenditure (46,985,069) (94,880,737)
Sale proceeds of fixed assets 11,422,900 5,162,500
Proceeds from disposal of investments available for sale 7,577,981 4,495,165
Interest received 2,469,817 7,061,485
Dividend received 18,000 505,000
Long term loans and security deposits (3,948,073) (1,574,430)
Net Cash used in Investing Activities (29,444,444) (79,231,017)
CASH FLOWS FROM FINANCING ACTIVITIES
Long term loans 9,411,225 110,151,725
Long term loan from directors - 120,000,000
Liabilities against assets subject to finance leas (19,036,931) (13,307,973)
Short term borrowings 26,522,720 (124,582,971)
Dividend paid (850) (1,062)
Due to directors (16,178,324) (38,334,624)
Net Cash from Financing Activities 717,840 53,925,095
Net Decrease in Cash and Cash Equivalents (36,588,768) (1,264,616)
Cash and cash equivalents at the beginning of the year 152,390,517 153,655,133
Cash and Cash Equivalents at the End of the Year 115,801,749 152,390,517
==============================================================================================
==============================================================================================
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED SEPTEMBER 30, 2004
==============================================================================================
Investment
Share revaluation Accumulated Total
Capital reserve loss
(Rupees) (Rupees) (Rupees) (Rupees)
==============================================================================================
Balance as at October 1, 2002 181,680,000 2,931,500 (47,044,327) 137,567,173
Net loss for the year - - (68,633,819) (68,633,819)
Surplus on revaluation of investments - 7,833,000 - 7,833,000
Realised gain on disposal of
investment transferred to
profit and loss account (other income) - (3,169,660) - (3,169,660)
Balance as at September 30, 2003 181,680,000 7,594,840 (115,678,146) 73,596,694
Net loss for the year - - (35,466,169) (35,466,169)
Realised gain on disposal of
investment transferred to
profit and loss account (other income) - (7,594,840) - (7,594,840)
Balance as at September 30, 2004 181,680,000 - (151,144,315) 30,535,685
==============================================================================================NOTES TO THE ACCOUNTS FOR THE YEAR ENDED SEPTEMBER 30, 20041. THE COMPANY AND ITS OPERATIONS 1.1. The Company was incorporated on January 17, 1988 as a Public Limited Company in Pakistan under the Companies Ordinance, 1984 and is quoted on Karachi and Lahore Stock Exchanges. The Company is engaged in the business of textile weaving, spinning and sale of processed fabric and home textile. The registered office of the Company is situated at Kashana-e-Yousaf, Khawaja Street, Chakwal. 1.2. GOING CONCERN ASSUMPTION The Company has accumulated losses of Rs 151.144 million up to September 30, 2004 and net loss for the year of Rs 35.466 million. The current liabilities of the Company exceed its current assets by Rs 171.694 million as at balance sheet date. These factors raise doubts about the Company being a going concern and therefore, it may be unable to realize its assets and discharge its liabilities in the normal course of business. However, any adjustments relating to the recoverability of recorded assets and settlement of liabilities have not been incorporated in these accounts as the management is making continuous efforts to improve the quality of its products and reduction in the production overheads through improvement in the existing plant and machinery. Furthermore, the Company has concentrated on value addition and diversification of its products and have secured new customers, the benefit of which is expected in the forth coming years. The Company has also successfully negotiated its debt servicing plans during the year. The management believes that the going concern assumption is still valid and, therefore, these accounts have been prepared on going concern basis without considering any adjustment relating to the recoverability of recorded assets and settlement of liabilities. 2. SIGNIFICANT ACCOUNTING POLICIES 2.1. BASIS OF PREPARATION These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan and the requirements of the Companies Ordinance, 1984. Approved accounting standards comprise of such International Accounting Standards as notified under the provisions of the Companies Ordinance, 1984. Wherever the requirement of Companies Ordinance, 1984 or directives issued by the Securities and Exchange Commission of Pakistan differ with the requirements of these standards, the requirements of the Companies Ordinance 1984. 2.2. ACCOUNTING CONVENTION These accounts have been prepared under the historical cost convention without any adjustment for the effect of inflation or current values, except investments that have been stated at fair values. 2.3. STAFF RETIREMENT BENEFITS Defined benefit plan The Company operates unfunded and unapproved gratuity scheme for all its permanent employees. Provisions are made to cover the obligations under the scheme on the basis of actuarial valuation and are charged to income. The recent actuarial valuation was carried out as of September 30, 2003 using the Project Unit Credit Cost method. Actuarial gains / (losses) in excess of 10% of the present value of defined benefit obligation are recognized over the expected average future working lives of the employees participating in the scheme. Past service cost is recognized immediately to the extent the benefits already vested. The amount recognized in the balance sheet represents the present value of the defined benefit obligation adjusted for unrecognized actuarial gains and losses and unrecognized past service cost. The principal assumptions used are as follows: Discount rate: 8% Expected rate of salary increase in future years: 7% Average expected remaining working life time of employees: 4 years Actuarial valuation method: Projected unit credit method 2.4. PROVISIONS A provision is recognized in the balance sheet when the Company has a legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation of which a reliable estimate can be made. 2.5. TRADE AND OTHER PAYABLES Liabilities for trade and other amounts payable are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the Company. 2.6. TAXATION Current Charge for current taxation is based on taxable income at current tax rates after taking into account all tax credits and rebates available, if any. In vase of loss minimum tax liability is provided in these accounts based on liability worked out under Section 113 or under Sections 154 and 153 of the Income Tax Ordinance, 2001, whichever of these liability is higher. Deferred Deferred tax is provided in full using the balance sheet liability method on all temporary differences arising at the balance sheet date, between the tax bases of the assets and liabilities and their carrying amounts. Deferred tax assets are recognized for all deductible temporary differences, unused tax losses and unused tax credits, if any to the extent that it is probable that future taxable profit will be available against which the temporary differences, tax losses and unused tax credits can be utilized. The carrying amount of all deferred tax assets is reviewed at each balance sheet date and adjusted to the appropriate extent, if it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax assets to be utilized. The tax rates enacted at the balance sheet date are used to determine deferred income tax. 2.7. FOREIGN CURRENCY TRANSLATIONS Assets and liabilities in foreign currencies are translated into Pak Rupees at the rate of exchange approximating to those ruling on the balance sheet date or rates fixed under forward exchange rate booking. Exchange gain or loss on translation of foreign bills under collection at the year end is charged to income in the year of realization. 2.8. FIXED CAPITAL EXPENDITURE AND DEPRECIATION Operating fixed assets Operating assets are stated at cost less accumulated deprecation expect freehold land and capital work-in-progress which are stated at cost. Cost of tangible operating assets consists of historical cost, borrowing cost pertaining to the construction and erection period and directly attributable cost of bringing the assets to working condition. Depreciation is charged to income applying the reducing balance method to write off the cost of operating assets over their expected useful life. Full year's depreciation is charged on additions except major additions or extensions to production facilities, which are depreciated on pro-rata basis for the period of commercial during the year. No depreciation is charged on assets deleted during the year. Maintenance and normal repairs are charged to income as and when incurred. Major renewals and improvement are capitalized. Gain or loss, if any, on disposal of operating assets is included in current year's income. Leased assets Assets subject to finance lease are stated at the lower of present value of minimum lease payments under the lease agreements and the fair value of such assets. The related obligations under the lease are accounted for at net present value of liabilities. The assets so acquired are depreciated over their expected useful life at the same rates as of owned assets. The depreciation is charged to current year's income. 2.9. IMPAIRMENT In accordance with IAS 36 assets are reviewed for impairment whenever events or changes in circumstances indicated that the carrying amount of these assets may not be recoverable. Whenever the carrying amount of these assets exceeds their recoverable amount, an impairment loss is recognized in the profit and loss account. 2.10. INVESTMENTS Investments are initially recognised on trade date at cost, comprising of consideration paid and cost of transaction. For listed securities, closing quotations of stock exchanges on last working day of the accounting year are considered for determining fair value, while for un-quoted securities, fair value is determined considering breakup value of the securities. Its classification is made on the basis of intended purpose of holding such investments. Management determines the appropriate classification of its investments at the time of purchase and re-evaluates such classification on regular basis and presents in the balance sheet on the following basis. Held-to-maturity These are stated amortized cost less impairment loss, if any, recognized to reflect irrecoverable amounts. Impairment are charged to profit and loss account. Held for trading These are recognized at fair value and changes in the carrying values are included in profit and loss account. Available for sale These are stated at fair value and changes in carrying values are recognized through Equity Statement until investment is sold or determined to be impaired at which time the accumulated gain or loss previously recognized in equity is included in profit and loss account for the year. 2.11. STORES AND SPARES There are valued at cost, applying moving average method except for stock-in-trade which is valued at cost. 2.12. STOCK-IN-TRADE These are valued at lower of cost and net realisable value applying the following basis: Raw material - At average cost Work in process - At estimated average manufacturing cost Finished goods - At average manufacturing cost Manufacturing cost comprises of cost of material, labour and appropriate manufacturing overheads. Wastes - At net realizable value. Net realizable value signifies the estimated selling price at which goods in stock could be currently sold less any further costs that would be incurred to of complete the sale. Raw material in transit are valued at cost comprising invoice value plus incidental charges paid thereon. 2.13. TRADE DEBTS Trade debts are carried at original invoice less an estimate made for doubtful debts based on a review of all outstanding amounts at the year end. Bad debts are written off when identified. 2.14. CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise of cash and bank balances. 2.15. FINANCIAL INSTRUMENTS Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument and de-recognized when the Company, in case of financial assets loses control of the contractual rights through either realization, surrender or expiration and in case of financial liability on extinguishment, discharge, cancellation or expiration of obligation specified in the contract. A financial asset and financial liability is offset and the amount is reported in the balance sheet if the Company has a legally enforceable right to set-off the recognized amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. 2.16. RELATED PARTY TRANSACTIONS Transactions with related parties are made at arm's length prices except in circumstances where it is in the interest of the Company not to do so. 2.17. BORROWING COSTS Borrowing costs are charged to income as and when incurred except to the extent costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of asset. 2.18. REVENUE RECOGNITION Revenue from local and export sales is recognized on dispatch of goods to customers. Processing income is recognised on the basis of service provided to the customers. Dividend income on equity investments is recognized as income when the right of receipt is established. Profit on short-term deposits is accounted for on time-apportioned basis on the principal outstanding by using the rate applicable. Rebates on exports, if any, are accounted for on accrual basis. 3. ISSUED, SUBSCRIBED AND PAID UP CAPITAL ==================================================================================
2004 2003 2004 2003
No of shares (Rupees) (Rupees)
==================================================================================
18,168,000 18,168,000 Ordinary shares
of Rs 10/- each
fully paid in cash 181,680,000 181,680,000
==================================================================================4. LONG-TERM LOANS==============================================================================================
2004 2003
Notes (Rupees) (Rupees)
==============================================================================================
BANKING COMPANIES - SECURED
Term Finance 4.1 3,530,175 5,528,950
Demand Finance I 4.2 112,500,000 150,000,000
Demand Finance II 4.3 37,150,000 58,390,000
Demand Finance III 4.4 60,000,000 59,850,000
Demand Finance IV 4.5 15,000,000 -
Demand Finance 4.6 55,000,000 -
283,180,175 273,768,950
Less current portion (76,530,175) (61,143,950)
206,650,000 212,625,000
==============================================================================================This term finance facility is repayable is equal monthly installments of Rs 0.50 million latest by June 2004 and carries markup at the rate of 10% per annum. This is secured hypothecation of book debts and stock in trade and second charge over fixed assets of the Company.This facility is repayable in 48 equal monthly installments of Rs 3.125 million from October, 2003 and carries markup at a rate of 1% above the FDR held by the bank. This is secured against first pari passu charge over fixed assets of the Company, personal guarantees of directors and deposit account grouped in cash and bank balances (note 21). During the year, the repayment of remaining installments has been deferred till April 2006 by the bank. This facility is repayable in 36 equal monthly installments of Rs 1.770 million each along with markup from July, 2003 carries markup at the rate of 9%. This is secured against first pari passu charge over the fixed assets of the Company. During the year, the repayment of remaining installments has been deferred till April 2006 by the bank. This represent re-scheduling of short term loan, repayable by December 2004. The rate of markup during the year varied from 8% to 5%. This is secured against hypothecation of stocks of the weaving unit of the Company, export letters of credit and personal guarantees of the directors. This facility is repayable in 36 equal monthly installment of Rupees 0.5 million each along with markup from April, 2004 can carries markup at the rate of 8%. This is secured against first charge over fixed assets of the Company and personal guarantees of all the director of the Company. During the year, the repayment of remaining installments has been deferred till April 2006 by the bank. This facility is repayable in 60 equal monthly installments of Rs 1.00 million each along with markup, from April, 2004 and carries markup at the rate of six months KIBOR plus 7% with a floor of 8% to be reset at the end of each half year. Markup shall be charged at the rate of 14% in case of delayed payments. This is secured against first charge over the fixed assets of the Company ranking pari passu with other creditors and personal guarantees of all the director of the company. 5. LONG TERM LOANS FROM DIRECTORS These loans shall be repaid after the repayment of loans referred to in Note 4 or improvement in the financial position of the Company whichever is earlier. These loan are unsecured and free of interest. 6. LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE ==============================================================================================
2004 2003
(Rupees) (Rupees)
==============================================================================================
- 03-2004 - 23,354,885
- 04-2005 2,310,253 22,746,627
- 05-2006 1,497,024 -
- 06-2007 1,705,922 -
- 07-2008 1,126,200 -
- 08-2009 2,294,650 -
28,934,049 46,101,512
Financial charges not currently due (2,590,062) (7,719,593)
Present value of minimum lease payments 26,343,049 38,381,919
Current and overdue portion (20,546,835) (17,782,345)
5,797,152 20,599,574
============================================================================================== Reconciliation between total of minimum lease payments and their present value is as under==============================================================================================
2004 2003
(Rupees) (Rupees)
==============================================================================================
GROSS MINIMUM LEASE PAYMENTS:
- Due not later than one year 22,310,253 23,354,885
- Due later than one year but not later than five years 6,623,796 22,746,627
28,934,049 46,101,512
PRESENT VALUE OF MINIMUM LEASE PAYMENTS:
- Due not later than one year 20,546,835 17,782,346
- Due later than one year but not later
than five years 5,797,152 20,599,573
26,343,987 38,381,919
==============================================================================================6.1. This represents lease arrangements entered into with banks / leasing companies to acquire plant and machinery and vehicles. Financing rates approximately of 7.17 to 12% per annum have been used as discounting factor.Overdue rental payments are subject to additional charge of 5% over State Bank of Pakistan rate for providing short term accommodation to commercial banks for the entire period of default. Taxes, repairs, replacement and insurance costs are to be borne by the lessee. In case of termination of agreement the lessee has to pay the entire rent for the unexpired period. 6.2. The lease liabilities are secured against charge on leased assets, personal guarantee of the directors and security deposits amounting to Rs 4,589,000 (2003: Rs 2,900,000) grouped under long term deposits (Note 15). 7. DEFERRED LIABILITIES ==============================================================================================
2004 2003
Notes (Rupees) (Rupees)
==============================================================================================
Deferred tax - net 7.1 - 18,804,952
Gratuity payable 7.2 11,605,963 9,634,924
11,605,963 28,439,876
==============================================================================================7.1. DEFERRED TAX - NET==============================================================================================
2004 2003
(Rupees) (Rupees)
==============================================================================================
CREDIT / (DEBIT) BALANCE ARISING IN RESPECT OF LOCAL SALES:
- Accelerated tax depreciation - 47,799,330
- Liabilities against assets subject
to finance lease - (432,688)
- Staff retirement benefits - (1,854,723)
- Available tax losses - (26,706,967)
- 18,804,952
==============================================================================================7.1.1. During the year, net deferred tax asset has arisen and therefore has been disclosed in note 14.7.2. GRATUITY PAYABLE ==============================================================================================
2004 2003
(Rupees) (Rupees)
==============================================================================================
MOVEMENT IN LIABILITY RECOGNISED IN THE BALANCE SHEET:
Opening balance 9,634,924 8,196,251
Amount recognised during the year 5,075,694 3,285,903
14,710,618 11,482,154
Benefit paid during the year (3,104,655) (1,847,230)
11,605,963 9,634,924
============================================================================================== The amounts recognised in the profit and loss account are as follows==============================================================================================
2004 2003
(Rupees) (Rupees)
==============================================================================================
Current service cost / provision for the year 4,239,799 2,416,984
Interest cost 835,895 868,919
5,075,694 3,285,903
==============================================================================================7.2.1. The amount recognised during the year is based on estimate of actuarial valuation carried out as on September 30, 2003.8. CURRENT AND OVERDUE PORTION OF NON CURRENT LIABILITIES ==============================================================================================
2004 2003
(Rupees) (Rupees)
==============================================================================================
Long term loans 76,530,175 61,143,950
Liabilities against assets
subject to finance lease 20,546,835 17,782,345
97,007,010 78,926,295
==============================================================================================9. SHORT TERM BORROWINGS==============================================================================================
2004 2003
Notes (Rupees) (Rupees)
==============================================================================================
SHORT TERM FINANCES
Secured
Running / export re-finance 9.1 148,962,771 122,859,300
Unsecured 9.2 9,997,517 9,578,268
158,960,288 132,437,568
==============================================================================================Short-term finances from banks, other than post-shipment finance, against aggregate facilities of Rs 232 million (2003. Rs 135 million) are secured against first pari passu and second charge by way of equitable mortgage of all present and future fixed assets of the Company, first floating charge on all assets, hypothecation of stocks, pledge of raw materials stock of Rs 30 million. Post-shipment finance is secured against lien on export bills drawn under letters of credit.Mark-up on the above facilities ranges from 5% to 10% per annum. This includes Rs 9.998 million (2003: Rs 0.104 million) due to cheques issued but not presented on the balance sheet date. 10. CREDITORS, ACCRUED AND OTHER LIABILITIES ==============================================================================================
2004 2003
Notes (Rupees) (Rupees)
==============================================================================================
SECURED
Creditors 10.1 139,119,531 106,581,999
Financial charges accrued on:
Long-term loans - 4,202,141 3,551,500
Lease liabilities on assets under finance lease - 195,712 204,069
Short-term finances - 2,062,293 2,547,296
UNSECURED
Creditors 10.2 134,825,083 50,529,279
Accrued expenses 29,405,634 15,226,676
Unclaimed dividend 2,472,649 2,473,499
Workers' (profit) participation fund 10.3 22,374,707 20,433,523
Income tax payable of suppliers,
contractors & employees 6,418,657 5,966,220
Other liabilities 7,947,821 8,054,379
349,024,229 215,568,440
==============================================================================================10.1. These are secured against letters of credit issued by the bankers of the Company.10.2. Creditors include an amount of Rs 0.277 million (2003: Rs 2.101 million) due to related parties on account of raw materials purchased. 10.3. WORKERS' (PROFIT) PARTICIPATION FUND ==============================================================================================
2004 2003
(Rupees) (Rupees)
==============================================================================================
Opening balance 20,433,523 19,627,237
Interest recognised during the year 1,941,184 1,806,286
22,374,707 21,433,523
Benefit paid during the year - (1,000,000)
Closing balance 22,374,707 20,433,523
==============================================================================================11. PROVISION FOR TAXATION -NET==============================================================================================
2004 2003
(Rupees) (Rupees)
==============================================================================================
Opening balance 32,236,810 34,850,000
Provision for current year 8,947,539 6,242,867
Provision for prior years (11,001,199) 1,125,048
(2,053,660) 7,367,915
30,183,150 42,217,915
Payments / adjustments against advance tax (21,235,611) (9,981,105)
8,947,539 32,236,810
==============================================================================================12. CONTINGENCIES AND COMMITMENTSContingencies 12.1. The Company is contingently liable for indemnity bonds / bank guarantee issued, amount in to Rs 26.458 million (2003: Rs 17.482 million), in the favour of Collector of Customs to avail exemptions under SRO 439(I)/2001 dated 18-06-2001 and SRO 987(I)/99 dated 30-8-1999 in respect of customs duty and sales tax on imported plant and machinery. 12.2. Income tax liability amounting to Rs 85.40 million upto the assessment year 2001-2002 under Section 62 of the Repealed Income Tax Ordinance, 1979 was determined by the Income Tax Department. Pending the outcome of appeals filed by the Company, no provision has been made in these accounts since in the management's view the outcome of the appeals will be in favour of the Company. Commitments 12.3. COMMITMENTS FOR IMPORT OF PLANT AND MACHINERY ==============================================================================================
2004 2003
(Rupees) (Rupees)
==============================================================================================
22.029 33.74
==============================================================================================12.4. COMMITMENTS OTHER THAN PLANT AND MACHINERY==============================================================================================
2004 2003
(Rupees) (Rupees)
==============================================================================================
27.795 15.05
==============================================================================================13. OPERATING ASSETS=======================================================================================================================================================
COST DEPRECIATION Book
Particulars As at Additions Disposals Total as at Rate As at Disposals For the Total as at Value
01-10-2003 30-09-2004 01-10-2003 year 30-09-2004 as at
30-09-2004
Rupees Rupees Rupees Rupees % Rupees Rupees Rupees Rupees Rupees
=======================================================================================================================================================
FIXED ASSETS - OWNED
Land - freehold 7,536,673 - - 7,536,673 - - - - 7,536,673
Factory building on freehold land 125,413,727 - - 125,413,727 10 68,005,679 - 5,740,805 73,746,484 51,667,243
Colony building on freehold land 29,818,530 - - 29,818,530 10 17,151,353 - 1,266,718 18,418,071 11,400,459
Plant and machinery 832,689,149 34,815,649 (630,000) 866,874,798 10 436,605,299 (86,625) 42,290,71 478,809,389 388,065,409
Tools and equipments 9,080,764 276,800 - 9,357,564 10 4,871,415 - 448,615 5,320,030 4,037,534
Office equipments 6,353,934 474,340 - 6,828,274 10 2,829,545 - 399,873 3,229,418 3,598,856
Furniture and fixtures 3,378,198 86,900 - 3,465,098 10 1,958,526 - 150,657 2,109,183 1,355,915
Vehicles 12,936,470 11,331,380 (12,553,141) 11,714,709 20 4,875,933 (2,220,892) 1,811,934 4,466,975 7,247,734
Sub total 1,027,207,445 46,985,069 (13,183,141) 1,061,009,373 536,297,750 (2,307,517) 52,109,31 586,099,550 474,909,824
FIXED ASSETS-LEASED
Plant and machinery 58,000,000 - - 58,000,000 10 11,020,000 - 4,698,000 15,718,000 42,282,000
Vehicles - 6,999,000 - 6,999,000 20 - - 1,399,800 1,399,800 5,599,200
Sub total 58,000,000 6,999,000 - 64,999,000 11,020,000 - 6,097,800 17,117,800 47,881,200
Total Rupees 2004 1,085,207,445 53,984,069 (13,183,141) 1,126,008,373 547,317,750 (2,307,517) 58,207,11 603,217,350 522,791,024
Total Rupees 2003 997,425,440 94,880,737 (7,098,732) 1,085,207,445 496,866,144 (5,031,872) 55,483,47 547,317,750 537,889,695
=======================================================================================================================================================13.1. THE DEPRECIATION CHARGE FOR THE YEAR HAS BEEN ALLOCATED AS UNDER==============================================================================================
2004 2003
Notes (Rupees) (Rupees)
==============================================================================================
Cost of sales 23 54,444,853 53,128,001
Administrative 24 3,762,264 2,355,477
58,207,117 55,483,478
==============================================================================================13.2. DISPOSALS OF OPERATING FIXED ASSETS========================================================================================================================
PARTICULARS Cost Accumulated Book Sale Gain/ Mode of Particulars of
Depreciation Value Proceeds (Loss) Disposal Purchasers
Rupees Rupees Rupees Rupees Rupees
========================================================================================================================
Plant and machinery 630,000 86,625 543,375 250,000 (293,375) Negotiation Mr. Qamar
2nd floor Ijaz Cenre, Lahore
VEHICLES:
- Mazda Van 582,000 532,007 49,993 200,000 150,007 Negotiation Haji Saeed Ahmad
Bunga Hayat, Pakpatan
- Mercedez Benz 3,323,062 1,196,302 2,126,760 2,900,000 773,240 Negotiation Mr. Ahtasham-ul-Haq
18/E III, Model Town
Lahore
- Toyota Corolla 1,238,269 178,861 1,059,408 1,025,000 (34,408) Insurance claim Premier Insurance Co.
23 Sharah-e-Quaid-e-Azam
Lahore
- Honda Civic 1,265,310 253,062 1,012,248 1,125,000 112,752 Insurance claim Adamjee Insurance Co.
- Toyota Land Cruise 6,000,000 - 6,000,000 5,800,000 (200,000) Sales & Askari Leasing Ltd.
lease back 5th floor AWT Plaza,
The Mall Rawalpindi
- Honda CG-125 77,000 27,720 49,280 66,200 16,920 Company Policy Mr. Abbas Ali
Company employee
- Honda CG-70 67,500 32,940 34,560 56,700 22,140 Negotiation Mr. Umar Habib
419/1 AA DHA-Lahore
Total Rupees 13,183,141 2,307,517 10,875,624 11,422,900 547,276
========================================================================================================================14. DEFERRED TAX ASSET==============================================================================================
2004 2003
(Rupees) (Rupees)
==============================================================================================
DEBIT / (CREDIT) BALANCE ARISING IN RESPECT OF LOCAL SALES:
- Accelerated tax depreciation (35,730,545) -
- Liabilities against assets
subject to finance lease (3,241,351) -
- Staff retirement benefits 2,145,943 -
- Available tax losses 51,015,248 -
14,189,295 -
==============================================================================================14.1. The management is confident that future taxable profits shall be available to set off taxable losses incorporated in deferred tax asset.15. LONG TERM LOANS AND DEPOSITS ==============================================================================================
2004 2003
(Rupees) (Rupees)
==============================================================================================
Loan to employees 5,594,423 3,217,590
Current portion (735,791) (295,400)
4,858,632 2,922,190
SECURITY DEPOISTS AGAINST:
- Utilities 2,754,003 2,829,003
- Finance lease 1,689,800 2,900,000
9,302,435 8,651,193
==============================================================================================15.1. These represent long term loans given to employees (other than chief executive, directors and executives) as per policy of the Company, as house building finance. These loans are secured against the employees gratuity balances and are free of interest. These are recoverable by way of equal monthly installments.16. STORES AND SPARES ==============================================================================================
2004 2003
(Rupees) (Rupees)
==============================================================================================
Stores 6,436,080 6,715,338
Spares 9,372,893 9,563,101
15,808,973 16,278,439
==============================================================================================17. STOCK-IN-TRADE==============================================================================================
2004 2003
(Rupees) (Rupees)
==============================================================================================
Raw material 28,721,032 22,888,914
Work-in-process 43,181,091 14,784,611
Finished goods 43,780,334 22,444,457
115,682,457 60,117,982
==============================================================================================18. SHORT TERM INVESTMENTS==============================================================================================
2004 2003
(Rupees) (Rupees)
==============================================================================================
QUOTED
E.F.U. General Insurance Limited
Nil (2003: 115,000) fully paid ordinary shares of Rs 10/- each
Cost Rs Nil (2003: 437,910) - 8,032,750
==============================================================================================18.1. THE INVESTMENT HAS BEEN SOLD DURING THE YEAR19. TRADE DEBTS ==============================================================================================
2004 2003
Note (Rupees) (Rupees)
==============================================================================================
Local debts 19.1 16,391,986 44,333,200
(Unsecured - considered good)
Foreign debts 54,760,206 1,658,282
(Secured - considered good)
71,152,192 45,991,482
==============================================================================================19.1. This includes Rs 1.077 million (2003: Rs Nil) due from associated undertaking, Chakwal Spinning Mills Limited.20. ADVANCES, DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES ==============================================================================================
2004 2003
Note (Rupees) (Rupees)
==============================================================================================
ADVANCES - CONSIDERED GOOD
Suppliers and contractors 3,529,955 1,748,930
- Staff 20.1 1,112,015 2,078,907
- Letters of credit 1,076,662 3,221,438
DEPOSITS
- Letter of credit/guarantee margin 25,154,300 19,357,455
- Others 100,000 100,000
- Finance lease 2,900,000 -
Prepayments 445,958 248,658
OTHER RECEIVABLES-CONSIDERED GOOD
- Income tax 39,431,854 51,142,579
- Sales tax 42,837,602 19,696,383
- Export rebate 6,357,851 2,127,463
- Interest receivable 804,443 477,735
- Others 541,185 1,479,059
124,291,825 101,678,607
==============================================================================================20.1. Included in advances, amount due from chief executive, directors and executives was Rs Nil (2003: Nil).21. CASH AND BANK BALANCES ==============================================================================================
2004 2003
Note (Rupees) (Rupees)
==============================================================================================
Cash in hand 398,407 188,336
Imprest with staff 233,239 144,081
With banks in:
- Current accounts 2,298,016 1,775,968
- Deposit account 21.1 112,872,087 150,282,132
115,170,103 152,058,100
115,801,749 152,390,517
==============================================================================================21.1. This includes deposit amounting to Rs 112.5 million (2003: Rs 150 million) under lien against liabilities mentioned in note 4.2. The deposit yields 2% to 3% (2003: 3% to 4%) per annum.==============================================================================================
2004 2003
(Rupees) (Rupees)
==============================================================================================
EXPORTS
- Grey cloth 571,614,217 553,660,540
- Processed cloth / made up 334,227,881 -
Export rebate 7,291,688 2,638,959
913,133,786 556,299,499
LOCAL
- Cloth 353,184,161 387,871,019
- Yarn 403,548,356 402,889,572
756,732,517 790,760,591
Waste sales 3,465,719 2,160,143
Processing charges 9,996,838 11,963,961
1,683,328,860 1,361,184,194
Sales tax (99,418,793) (105,516,246)
Commission (12,119,538) (7,094,606)
(111,538,331) (112,610,852)
1,571,790,529 1,248,573,342
==============================================================================================23. COST OF SALES==============================================================================================
2004 2003
Notes (Rupees) (Rupees)
==============================================================================================
Raw materials consumed 23.1 1,158,033,830 888,589,116
Chemicals consumed 33,765,466 34,840,029
Salaries, wages and benefits 72,647,901 65,716,759
Dying and processing charges 35,697,868 -
Fuel and power 103,470,992 101,032,227
Insurance 2,052,613 1,967,881
Packing material 14,787,648 6,711,214
Repairs and maintenance 5,008,002 4,235,954
Stores and spares consumed 28,985,662 24,179,543
Miscellaneous 595,276 1,221,361
Depreciation 13.1 4,444,851 53,128,001
1,509,490,109 1,181,622,085
Opening work-in-process 14,784,611 14,565,295
Closing work-in-process (43,181,091) (14,784,611)
1,481,093,629 1,181,402,769
Opening stock of finished goods 22,444,457 27,225,456
Cloth purchased 29,954,217 777,552
1,533,492,303 1,209,405,777
Closing stock of finished goods (43,780,334) (22,444,457)
1,489,711,969 1,186,961,320
==============================================================================================23.1. RAW MATERIALS CONSUMED==============================================================================================
2004 2003
(Rupees) (Rupees)
==============================================================================================
Opening stock 22,888,914 27,080,106
Purchases made during the year 1,169,867,668 876,537,878
Purchase expenses 9,829,409 11,154,502
Processing charges 184,300 -
1,202,770,291 914,772,486
Cost of raw materials sold (16,015,429) (3,294,456)
1,186,754,862 911,478,030
Less: Closing stock (28,721,032) (22,888,914)
1,158,033,830 888,589,116
==============================================================================================24. ADMINISTRATIVE==============================================================================================
2004 2003
Notes (Rupees) (Rupees)
==============================================================================================
Salaries, wages and benefits 14,098,174 13,572,766
Traveling and conveyance 3,299,548 2,087,477
Rent, rates and taxes 1,496,151 1,501,083
Printing and stationery 694,488 664,102
Communications 3,897,588 3,491,201
Entertainment 851,972 702,395
Electricity and gas 2,791,444 2,788,652
Vehicles running 3,476,262 2,773,363
Auditors' remuneration 24.1 230,000 205,000
Legal and professional charges 2,155,061 521,100
Fees and subscriptions 444,778 619,583
Repairs and maintenance 1,139,367 1,022,288
Insurance 1,052,878 900,271
Guest house expenses 74,279 99,583
Donations 24.2 124,502 619,355
Advertisement 46,000 73,730
Miscellaneous 462,566 679,595
Doubtful receivables written off 38,616 587,172
Depreciation 13.1 3,762,264 2,355,477
40,475,937 35,264,193
==============================================================================================24.1. AUDITORS' REMUNERATION==============================================================================================
2004 2003
(Rupees) (Rupees)
==============================================================================================
Statutory audit 180,000 150,000
Half yearly review and review of
code of corporate governance 50,000 -
Tax services - 55,000
230,000 205,000
==============================================================================================24.2.None of the directors or their spouses had any interest in any of the donees. 25. SELLING AND DISTRIBUTION ==============================================================================================
2004 2003
(Rupees) (Rupees)
==============================================================================================
Local expenses including freight and octroi 1,813,851 2,779,419
Export quota purchased 31,798,997 3,592,872
Export expenses including freight 51,066,709 20,483,419
84,679,557 26,855,710
==============================================================================================26. FINANCIAL AND OTHER CHARGES==============================================================================================
2004 2003
(Rupees) (Rupees)
==============================================================================================
FINANCIAL CHARGES
Interest / mark-up on:
- Long term loans 17,986,936 19,950,041
- Finance lease 2,842,126 8,483,790
- Short-term borrowings 13,726,462 23,635,712
- Workers' (profit) participation fund 1,941,184 1,806,286
Bank charges and commissions 3,809,582 2,934,397
OTHER CHARGES
Sales tax penalties / arrears 926,875 7,500
Exchange loss - 38,158
41,233,165 56,855,884
==============================================================================================27. OTHER INCOME==============================================================================================
2004 2003
Note (Rupees) (Rupees)
==============================================================================================
Gain on sale of raw material 27.1 2,461,832 89,816
Gain on sale of fixed assets 547,276 3,095,640
Dividend income 18,000 505,000
Gain on sale of long term
investments available for sale 7,140,071 4,209,575
Profit on bank deposit accounts 2,796,525 7,061,485
Creditor balances (reinstated)dded back - (58,703)
Exchange gain 734,398 -
Miscellaneous 97,921 -
13,796,023 14,902,813
==============================================================================================27.1. GAIN ON SALE OF RAW MATERIALS==============================================================================================
2004 2003
(Rupees) (Rupees)
==============================================================================================
Sales 21,968,386 4,055,226
Less: Sales tax (3,491,125) (670,954)
18,477,261 3,384,272
Less: Cost of sales (16,015,429) (3,294,456)
2,461,832 89,816
==============================================================================================28. TAXATION==============================================================================================
2004 2003
Note (Rupees) (Rupees)
==============================================================================================
CURRENT
- Current 28.1 8,947,539 6,242,867
- Prior periods (11,001,199) 1,125,048
(2,053,660) 7,367,915
DEFERRED (32,994,247) 18,804,952
(35,047,907) 26,172,867
==============================================================================================28.1. In view of available tax losses, the provision for current taxation has been made under Section 154 of the Income Tax Ordinance 2001. No numerical tax reconciliation has been made due to both accounting and tax losses during the year.29. EARNINGS PER SHARE - BASIC ==============================================================================================
2004 2003
(Rupees) (Rupees)
==============================================================================================
Net Loss for the year (35,466,169) (68,633,819)
Number of shares
Weighted average number of ordinary shares
outstanding during the year 18,168,000 (18,168,000)
Earnings per share - Basic (Rupees per share) (1.95) (3.78)
==============================================================================================29.1. DILUTED EARNINGS PER SHAREThere is no dilution effect on the basic earnings per share as the company has no commitments resulting in dilution of earnings of the Company. 30. CHIEF EXECUTIVES', DIRECTORS' AND EXECUTIVES' REMUNERATION The aggregate amounts charged in the accounts for the year as remuneration and benefits to the chief executive of the Company is as follows: ==========================================================================
PARTICULARS CHIEF EXECUTIVE DIRECTOR
2004 2003 2004 2003
Rupees Rupees Rupees Rupees
==========================================================================
Managerial remuneration 2,400,000 - - 3,600,000
House rent allowance 960,000 - - 960,000
Medical 801,779 - - 889,795
Utilities 240,000 - - 240,000
Total 4,401,779 - - 5,689,795
Number of persons 1 - - 1
==========================================================================30.1.No remuneration has been paid to any Director of the Company during the year. 30.2. No meeting fee has been paid to any Director of the Company. 30.3. Chief executive and one director are provided with company maintained vehicles. 30.4. Executives are defined as employees with basic salary exceeding Rs 500,000. No employee of the Company qualifies as an Executive. 31. TRANSACTIONS WITH RELATED PARTIES The related parties comprise associated undertakings and other related parties through directorship of close family members of the directors of the Company. Transactions with related parties undertaken during the year were as follows: ==============================================================================================
2004 2003
Rs in Million Rs in Million
==============================================================================================
Purchase of materials, goods and services 76.403 65.468
Sale of materials, goods and services 16.205 3.601
Long term loan from directors - 120.000
Funds (repaid to) / from related parties - net (16.178) -
==============================================================================================There were no transactions with key management personnel other than undertaken as per terms of their employment. Sale and purchase transactions have been carried out at arms length price under comparable uncontrolled price method.32. PLANT CAPACITY AND PRODUCTION ==============================================================================================
2004 2003
==============================================================================================
Number of looms installed 150 140
Installed capacity converted into 50 picks
Based on 1095 shifts - (Sq Meters approximately) 44,888,470 38,031,272
Actual production converted
into 50 picks in 1092 - (Sq. Meters) 41,153,264 37,430,178
Number of spindles installed 20,520 20,520
Installed capacity in 20's count
Based on triple shift for
365 days (Kgs) - approximately 8,183,700 8,183,700
Actual production after
conversion into 20's count (Kgs) 8,152,776 7,863,527
==============================================================================================Under utilisation of plant capacity is mainly due to normal repair and maintenance and changes on account of production mix and width loss due to the specification of the cloth.33. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES 33.1. FINANCIAL ASSETS AND LIABILITIES Financial assets and liabilities of the Company are as follows: ===============================================================================================================================================
2004
Interest/mark-up bearing Non-interest/mark-up bearing
Maturity upto Maturity after Sub Maturity upto Maturity after Sub
one year one year Total one year one year Total Total
Rupees Rupees Rupees Rupees Rupees Rupees Rupees
===============================================================================================================================================
FINANCIAL ASSETS
Long term loans and
security deposit - - - 735,791 7,612,635 8,348,426 8,348,426
Trade debts - - - 71,152,192 - 71,152,192 71,152,192
Advances, deposits
and other receivables - - - 1,280,667 - 1,280,668 1,280,668
Cash and bank balances 112,872,087 - 112,872,087 2,929,662 - 2,929,662 115,801,749
112,872,087 - 112,872,087 75,362,521 7,612,635 83,710,948 196,583,035
FINANCIAL LIABILITIES
Long-term loans 76,530,175 206,650,000 283,180,175 - - - 283,180,175
Long-term loans from directors - - - - 120,000,000 120,000,000 120,000,000
Liabilities against assets
under finance lease 17,646,835 4,107,352 21,754,187 - - - 21,754,187
Short term borrowings 148,962,771 - 148,962,771 9,997,517 - 9,997,517 158,960,288
Due to directors - - - 422,084 - 422,084 422,084
Creditors, accrued and other liabilities - - - 312,451,568 - 312,451,568 312,451,568
243,139,781 210,757,352 453,897,133 322,871,169 120,000,000 442,871,169 896,768,302
===============================================================================================================================================
===============================================================================================================================================
2003
Interest/mark-up bearing Non-interest/mark-up bearing
Maturity upto Maturity after Sub Maturity upto Maturity after Sub
one year one year Total one year one year Total Total
Rupees Rupees Rupees Rupees Rupees Rupees Rupees
Rupees
===============================================================================================================================================
FINANCIAL ASSETS
Long term loans and
security deposit - - - 19,72,855 8,651,193 28,404,048 28,404,048
Trade debts - - - 45,991,482 - 45,991,482 45,991,482
Advances, deposits
and other receivables - - - 30,335,343 1,889,829 32,225,172 32,225,172
Short term investments - - - 8,032,750 - 8,032,750 8,032,750
Cash and bank balances 150,282,132 - 150,282,132 1,964,304 - 1,964,304 152,246,436
150,282,132 - 150,282,132 106,076,734 10,541,022 116,617,756 266,899,888
FINANCIAL LIABILITIES
Long-term loans 61,143,950 212,775,000 273,918,950 - - - 273,918,950
Long-term loans from directors - - - 120,000,000 - 120,000,000 120,000,000
Liabilities against assets
under finance lease 17,782,345 20,599,574 38,381,919 - - - 38,381,919
Short term borrowings 132,437,568 - 132,437,568 - - - 132,437,568
Due to directors - - - 16,600,408 - 16,600,408 16,600,408
Creditors, accrued and other liabilities 26,736,388 - 26,736,388 188,832,052 - 188,832,052 215,568,440
238,100,251 233,374,574 471,474,825 325,432,460 - 325,432,460 796,907,285
===============================================================================================================================================33.2. RISK MANAGEMENT POLICIES33.2.1. INTEREST / MARK UP RATE RISK Interest rate risk arises from the possibility that changes in interest rates will affect the value of financial instruments. The Company is exposed to interest rate risk in respect of long term loan, liabilities against assets subject to finance lease, short-term running finances and cash in deposit account. Effective interest rates for the monetary financial assets and financial liabilities are mentioned in the respective notes to the accounts. 33.2.2. CONCENTRATION OF CREDIT RISK AND CREDIT EXPOSURES OF THE FINANCIAL STATEMENTS Credit risk represents the accounting loss that would be recognized at the reporting date if counter parties failed completely to perform as contracted. Out of the total financial assets of s. 196,583,035 (2003: Rs 266,899,888) the financial assets which are subject to credit risk amount to Rs 195,951,389 (2003: Rs 266,567,471). The Company believes that it is not exposed to major concentration of credit risk. To manage exposure to credit risk, the Company applies credit limits to its customers. 33.2.3. FOREIGN EXCHANGE RISK MANAGEMENT Foreign currency risk arises mainly where receivables and payables exist due to sale and purchase transaction with foreign undertakings. The Company is exposed to foreign currency risk in respect of receivables and payables in foreign currency and it does not view hedging as being financially feasible owing to the excessive costs involved in relation to the deposit at risk. 33.2.4. FAIR VALUE OF THE FINANCIAL INSTRUMENTS The carrying value of all the financial instruments reflected in the financial statements approximates to their fair values. 34. NUMBER OF EMPLOYEES ==============================================================================================
2004 2003
==============================================================================================
Number of employees as at the year end 1,309 1,031
==============================================================================================35. AUTHORIZATION OF FINANCIAL STATEMENTSThese financial statements were authorised for issue on January 08, 2005 by the Board of Directors of the Company. 36. GENERAL Figures have been rounded off to the nearest rupee; and Figures of corresponding year have been re-arranged, wherever necessary, to facilitate comparison. No material rearrangements / reclassifications have been made. |