| Indus Motor Co Ltd - 2005 |
======================================================================================== BALANCE SHEET AS AT JUNE 30, 2005 ======================================================================================== 2005 2004 Restated Notes (Rupees '000) ======================================================================================== ASSETS NON-CURRENT ASSETS: Fixed assets 3 998,887 860,501 Long-term loans 4 388 234 Long-term deposits 5 5,149 5,254 Finance under musharika arrangements 6 12,153 7,874 1,016,577 873,863 CURRENT ASSETS: Stores and spares 7 137,028 110,923 Stock-in-trade 8 3,168,855 2,537,213 Trade debts 9 384,511 439,532 Current maturity of finance under musharika arrangements 6 29,259 28,701 Loans and advances 10 302,888 307,509 Short-term prepayments 11 4,371 2,599 Accrued mark-up 46,543 26,052 Other receivables 12 302,171 217,895 Taxation - net 13 82,315 50,176 Cash and bank balances 14 6,719,999 6,962,005 11,177,940 10,682,605 Total assets 12,194,517 11,556,468 EQUITY SHARE CAPITAL AUTHORISED CAPITAL: 100,000,000 (2004:100,000,000) 1,000,000 1,000,000 Ordinary shares of Rs 10 each Issued, subscribed and paid-up capital 15 786,000 786,000 Reserves 16 3,689,805 2,985,595 4,475,805 3,771,595 LIABILITIES NON CURRENT LIABILITIES: Liabilities against assets subject to finance lease 17 11,957 7,633 Deferred taxation 18 42,693 29,789 54,650 37,422 CURRENT LIABILITIES: Trade and other payables 19 2,022,227 1,670,178 Advances from customers and dealers 20 5,603,342 6,041,644 Accrued mark-up 21 10,568 7,813 Short term running finances 22 - - Current portion of liabilities against 17 27,925 27,816 assets subject to finance lease 7,664,062 7,747,451 Contingencies and commitments 23 Total equity and liabilities 12,194,517 11,556,468 ======================================================================================== ======================================================================================== PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2005 ======================================================================================== 2005 2004 Notes (Rupees '000) ======================================================================================== Net sales 24 27,601,034 22,521,337 Cost of sales 24 24,894,856 19,827,620 Gross profit 2,706,178 2,693,717 Distribution costs 25 294,304 182,907 Administrative expenses 26 277,653 232,026 571,957 414,933 2,134,221 2,278,784 Other operating expenses 28 186 614 192,683 1,947,607 2,086,101 Other operating income 29 449 443 239,758 2,397,050 2,325,859 Finance costs 30 94,093 59,568 Profit before taxation 2,302,957 2,266,291 Taxation 31 818,311 793,049 Profit after taxation 1,484,646 1,473,242 Earnings per share 32 18.89 18.74 ======================================================================================== ======================================================================================== CASH FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 2005 ======================================================================================== 2005 2004 Notes (Rupees '000) ======================================================================================== CASH FLOWS FROM OPERATING ACTIVITIES: Cash generated from operations 33 1,598,286 1,597,596 Interest paid (67,662) (43,873) Workers' Profit Participation Fund paid (121,958) (220,326) Workers' Welfare Fund paid (46,137) (39,463) Interest received 360,011 209,212 Income tax paid (837,546) (1,125,723) Long term loans - net (154) (74) Long-term deposits 105 195 Net cash inflow from operating activities 884,945 377,544 CASH FLOWS FROM INVESTING ACTIVITIES: Fixed capital expenditure (406,235) (115,461) Proceeds from sale of fixed assets 31,110 14,788 Finance under musharika arrangements (47,979) (44,845) Receipt of finance under musharika arrangement 43,410 15,661 Net cash used in investing activities (379,694) (129,857) CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of obligation against (43,246) (8,247) assets subject to finance lease Dividend paid (704,011) (702,806) Net cash used in financing activities (747,257) (711,053) (242 006) (463 366) Cash and cash equivalents at the beginning of the year 34 6,962,005 7,425,371 34 6,719,999 6,962,005 ======================================================================================== ================================================================================================================================================= STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED JUNE 30, 2005 ================================================================================================================================================= Share Capital Reserves Capital Revenue Unrealised Issued, Premium on gain / (loss) subscribed issue of General Unappro- on hedging and paid-up ordinary reserve priated instruments Sub-Total Total shares profit Notes (Rupees 000) ================================================================================================================================================= Balance at June 30, 2003 as previously reported 786,000 196,500 1,564,000 61 (1,674) 1,758,887 2,544,887 Effect of change in accounting policy 2.17 Final dividend @ 50% for the year ended June 30, 2003 declared subsequent to the year end - - - 393,000 - 393,000 393,000 Transfer to general reserve for the year ended June 30, 2003 appropriated subsequent to the year end - - (707,500) 707,500 - - - Balance at June 30, 2003 as restated 786,000 196,500 856,500 1,100,561 (1,674) 2,151,887 2,937,887 Effect of change in accounting policy 2.17 Final dividend @ 50% for the year ended June 30, 2003 declared subsequent to the year end - - - (393,000) - (393,000) (393,000) Transfer to general reserve for the year ended June 30, 2003 appropriated subsequent to the year end - - 707,500 (707,500) - - - Net loss on cash flow hedge removed from equity and reported in net profit for the period - - - - 1,674 1,674 1,674 Profit after taxation for the year ended June 30, 2004 - - - 1 473,242 - 1,473,242 1,473,242 Net unrealised gain on revaluation of forward foreign exchange contracts - - - - 66,192 66,192 66,192 Interim dividend @ 40% - - - (314,400) - (314,400) (314,400) Balance at June 30, 2004 as restated 786,000 196,500 1,564,000 1,158,903 66,192 2,985,595 3,771,595 Balance at June 30, 2004 as previously reported 786,000 196,500 2,329,900 3 66,192 2,592,595 3,378,595 Effect of change in accounting policy 2.17 Final dividend @ 50% for the year ended June 30, 2004 declared subsequent to the year end - - - 393,000 - 393,000 393,000 Transfer to general reserve for the year ended June 30, 2004 appropriated subsequent to the year end - - (765,900) 765,900 - - - Balance at June 30, 2004 as restated 786,000 196,500 1,564,000 1,158,903 66,192 2,985,595 3,771,595 Effect of change in accounting policy 2.17 Final dividend @ 50% for the year ended June 30, 2004 declared subsequent to the year end - - - (393,000) - (393,000) (393,000) Transfer to general reserve for the year ended June 30, 2004 appropriated subsequent to the year end - - 765,900 (765,900) - - - Net gain on cash flow hedge removed from equity and reported in net profit for the period - - - - (66,192) (66,192) (66,192) Profit after taxation for the year ended June 30, 2005 - - - 1,484,646 - 1,484,646 1,484,646 Net unrealised loss on revaluation of forward foreign exchange contracts - - - - (6,844) (6,844). (6,844) Interim dividend @ 40% - - - (314,400) - (314,400) (314,400) Balance at June 30, 2005 786,000 196,500 2,329,900 1,170,249 (6,844) 3,689,805 4,475,805 =================================================================================================================================================Appropriations of dividend and transfer between reserves made by Directors subsequent to the year ended June 30, 2005 are disclosed in note 40 of these financial statements. Notes to the Financial Statements For the year ended June 30, 2005 1. THE COMPANY AND ITS OPERATIONS The company was incorporated in Pakistan as a public limited company in December 1989 and started commercial production in May 1993.. The shares of the company are quoted on all the stock exchanges in Pakistan. The company was formed in accordance with the terms of a Joint Venture agreement concluded amongst the House of Habib, Toyota Motor Corporation and Toyota Tsusho Corporation for the purposes of assembling, progressive manufacturing and marketing of Toyota vehicles. The company also acts as the sole distributor of Toyota vehicles in Pakistan. The company is also the sole distributor of Daihatsu vehicles in Pakistan and has a license for assembling, progressive manufacturing and marketing of these vehicles in Pakistan. The registered office and factory of the company is situated at Plot No. NWZ/1/P-1, Port Qasim Industrial Estate, Bin Qasim, Karachi. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1. STATEMENT OF COMPLIANCE These financial statements have been prepared in accordance with the approved accounting standards as applicable in Pakistan and the requirements of the Companies Ordinance, 1984. Approved accounting standards comprise of such International Accounting Standards (IASs) as notified under the provisions of the Companies Ordinance, 1984. Wherever the requirements of the Companies Ordinance, 1984 or directives issued by the Securities and Exchange Commission of Pakistan (SECP) differ with the requirements of these standards, the requirements of the Companies Ordinance, 1984 or the requirements of the said directives take precedence. 2.2. BASIS OF PREPARATION These financial statements have been prepared under the historical cost convention except for the remeasurement at fair value of derivative financial instruments. 2.3. FIXED ASSETS 2.3.1. PROPERTY, PLANT AND EQUIPMENT Owned Property, plant and equipment are stated at cost less accumulated depreciation except capital work-in-progress which is stated at cost. Cost in relation to property, plant and equipment signifies historical cost. All expenditures connected to the specific assets incurred during installation and construction period are carried under capital work-in-progress. These are transferred to specific assets as and when assets are available for use. Depreciation is charged to income applying the straight line method, whereby the cost of an asset is written off over its estimated useful life. The cost of leasehold land is amortised equally over the lease period. Depreciation is charged on additions from the month the asset is put to use and on disposals up to the month preceding the month of disposal. The rates of depreciation are stated in note 3.2 to the financial statements. Maintenance and repairs are charged to income as and when incurred. Major renewals and improvements are capitalised and the assets so replaced, if any, are retired. Gains and losses on sale or retirement of property, plant and equipment are included in income currently. Leased Assets held under finance leases are stated at cost less accumulated depreciation. The outstanding obligations under the lease agreements are shown as a liability net of finance charges allocable to future periods. The finance charges are allocated to accounting periods in a manner so as to provide a constant periodic rate of change on the outstanding liability. Depreciation on assets held under finance lease is charged in a manner consistent with that for depreciable assets which are owned by the company. 2.3.2. INTANGIBLE Owned Software costs are only capitalised when it is probable that future economic benefits attributable to the software will flow to the enterprise and the same is amortised applying the straight line method at the rates stated in note 3.3 to the financial statements. 2.3.3. IMPAIRMENT The carrying values of assets are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount. 2.4. LOANS, ADVANCES AND DEPOSITS These are stated at cost. 2.5. FINANCE UNDER MUSHARIKA ARRANGEMENTS Finance under musharika arrangements are initially recognised at cost, being the fair value of the consideration given. Finances with fixed or determinable payments and fixed maturity, where management has both the intent and the ability to hold to maturity, are classified as held-to-maturity. Subsequent to initial recognition at cost, these musharika arrangements are measured at amortised cost, using the effective interest rate method, less provision for impairment in value, if any. For finances carried at amortised cost, gains and losses are recognised in income when the finances are derecognised or impaired. 2.6. STORES AND SPARES Stores and spares are valued at cost. Cost is determined on a moving average basis. 2.7. STOCK-IN-TRADE Stock-in-trade, except in-transit, are valued at the lower of cost and net realisable value. Stock in transit is stated at invoice price plus other charges paid thereon. Cost of raw materials, own manufactured vehicles and trading stock is determined on a moving average basis. Cost of work-in-process is valued at material cost. Net realisable value signifies the estimated selling price in the ordinary course of business less the estimated costs necessarily to be incurred to make the sale. 2.8. TRADE DEBTS AND OTHER RECEIVABLES Trade debts are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. Other receivables are carried at cost. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off when identified. 2.9. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING Fair value hedge Changes in the fair value of derivatives that are designated and quality as fair value hedges are record in the profit and loss account, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The carrying value of the hedged item is adjusted accordingly. Cash flow hedge The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognised directly in equity through statement of changes in equity. The gain or loss relating to the ineffective portion is recognised immediately in the profit and loss account. Amounts accumulated in equity are transferred to the income statement in the periods in which the hedged item will affect profit or loss. 2.10. TAXATION Current The company falls under the Final Tax Regime under Sections 148 and 169 of the Income Tax Ordinance, 2001 to the extent of commercial imports. Provision for tax on local sales and other income is based on taxable income at the rates applicable for the current tax year, after considering rebates and tax credits available, if any. The tax charge as calculated above is compared with turnover tax under Section 113 of the Income Tax Ordinance, 2001, and the higher of the two amounts is provided in the financial statements. Deferred Deferred tax is recognised, using the balance sheet liability method, on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts appearing in the financial statements. Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for all deductible temporary differences to the extent that it is probable that the temporary differences will reverse in the future and taxable income will be available against which the temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part for the deferred tax asset to be utilised. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date. 2.11. CASH AND CASH EQUIVALENTS For the purpose of the cash flow statement, cash and cash equivalents comprise of cash in hand, bank balances and bank deposits net of running finances. The cash and cash equivalents are readily convertible to known amount of cash and are therefore subject to insignificant risk of changes in value. 2.12. 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, whether or not billed to the company. 2.13. PROVISIONS Provisions are recognised when the company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. 2.14. WARRANTY OBLIGATIONS The company recognises the estimated liability on an accrual basis to repair or replace products under warranty at the balance sheet date. 2.15. STAFF RETIREMENT BENEFITS Defined contribution plan The company operates a recognised provident fund for its permanent employees. Equal monthly contributions are made to the fund by the company and the employees in accordance with the rules of the scheme. Defined benefit plan The company also operates an approved pension fund for its permanent employees. The scheme provides life pension to employees and thereafter to their spouse and dependant children. Contributions are made annually to this fund on the basis of actuarial recommendations. Actuarial valuation of the scheme is carried out annually, using Projected Unit Credit Method and the latest valuation was carried out as at June 30, 2005. Actuarial gains and losses are recognised on the basis of actuarial recommendations. The future contribution rate is 6.32% (2004: 7.53%) of the basic salary including allowances. Projected Unit Credit Method, using the following significant assumptions, is used for valuation of the scheme: -- Expected rate of increase in salaries at 8% (2004: 7%) per annum. -- Expected rate of interest on plan assets at 9% (2004: 8%) per annum. -- Expected discount rate at 9% (2004: 8%) per annum. 2.16. EMPLOYEES' COMPENSATED ABSENCES The company accounts for compensated absences on the basis of unavailed earned leave balance of each employee at the end of the year. 2.17. PROPOSED DIVIDEND AND TRANSFER BETWEEN RESERVES During the current year the company has changed its accounting policy pertaining to recognition of dividends declared and transfer between reserves made subsequent to the year end. The change has been made consequent to the amendment made by the SECP in the Fourth Schedule to the Companies Ordinance, 1984 and the new policy is in accordance with the requirements of IAS 10 (Events after the Balance Sheet Date). As per the new policy dividends declared and transfers between reserves made subsequent to the balance sheet date are considered as non-adjusting events and are not recognised in the financial statements. Previously, such dividend declarations and transfer between reserves were being treated as adjusting events in the financial statements of the company. The change in accounting policy has been applied retrospectively and the comparative information has been restated in accordance with the benchmark treatment specified in IAS 8 (Net profit or loss for the period, fundamental errors and changes in accounting policies). Had there been no change in the accounting policy, the unappropriated profit at June 30, 2003 and June 30, 2004 would have been lower by Rs 1,100.500 million and Rs 1,158.900 million respectively. In addition, general reserves and proposed dividend liability would have been higher by Rs 707.500 million and Rs 393.000 million at June 30, 2003 and higher by Rs 765.900 million and Rs 393.000 million at June 30, 2004. The effect of change in accounting policy has been reflected in the statement of changes in equity. The change in accounting policy has not resulted in any change in the profit for the current year. 2.18. REVENUE RECOGNITION Sales are recognised as revenue when goods are delivered and invoiced. Return on bank deposits and mark-up on advances to suppliers and contractors are accounted for on accrual basis. Return on musharika arrangements are recognised on a time proportion basis using the effective interest rate implicit in the instrument. Agency commission is recognised when shipments are made by the principal. 2.19. FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION Foreign currency transactions are translated into Pak Rupees using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities in foreign currencies are translated into Pak Rupees at the rates of exchange prevailing at the balance sheet date. Exchange gain / loss on foreign currency translations are included in income / equity along with any related hedge effects. 2.20. FINANCIAL INSTRUMENTS All financial assets and financial liabilities are recognised at the time when the company becomes a party to the contractual provisions of the instrument. All the financial assets are derecognised at the time when the company loses control of the contractual rights that comprise the financial assets. All financial liabilities are derecognised at the time when they are extinguished i.e., when the obligation specified in the contract is discharged, cancelled, or expires. Any gain or loss on recognition / derecognition of the financial assets and financial liabilities is taken to profit and loss account currently. 2.21. OFFSETTING OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES Financial assets and liabilities are offset and the net amount is reported in the financial statements only when the company has a legally enforceable right to offset the recognised amounts and the company intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. 3. FIXED ASSETS ========================================================================================
2005 2004
Notes (Rupees '000)
========================================================================================
Property, plant and equipment 3.1 988,342 860,501
Intangible assets 3.3 10,545 -
998,887 860,501
========================================================================================3.1. PROPERTY, PLANT AND EQUIPMENT========================================================================================
2005 2004
Notes (Rupees '000)
========================================================================================
Operating assets 3.2 901,035 784,805
Capital work-in-progress 3.6 87,307 75,696
988,342 860,501
========================================================================================3.2. THE FOLLOWING IS A STATEMENT OF OPERATING ASSETS==========================================================================================================================================================
COST Written
At At At Charge (On At down
July 1, Additions Transfers (Disposals)June 30, Period / July 1, for the Transfers disposals) June 30 value at
2004 2005 Rate 2004 year 2005 June 30,
2005
(Rupees 000) (Rupees 000)
==========================================================================================================================================================
Owned
Leasehold land 38,662 - - - 38,662 42 years 6,446 921 - - 7,367 31,295
Buildings on
leasehold land
- Factory 231,224 86,691 - - 317,915 10% 150,958 16,502 - - 167,460 150,455
- Others 50,289 20,097 - - 70,386 5% 20,394 2,269 - - 22,663 47,723
Plant and machinery 1,318,134 119,347 - (10,252) 1,427,229 10% -20% 943,553 131,438 - (5,439) 1,069,552 357,677
Motor vehicles 86,527 2,328 (1,736) (34,643) 52,476 20% 38,382 11,782 (76) (18,909) 31,179 21,297
Furniture and fixtures 22,176 10,726 - (4,728) 28,174 20% 16,901 4,140 - (4,688) 16,353 11,821
Office equipment 31,168 3,184 - (3,974) 30,378 20% 19,461 4,869 - (3,944) 20,386 9,992
Computer and
related accessories 84,003 60,995 - (2,190) 142,808 33.33% 77,355 8,501 - (2,109) 83,747 59,061
Tools and equipment 322,982 49,174 - (1,715) 370,441 20% 210,261 62,326 - (1,65 2) 270,935 99,506
Jigs and fixtures 258,362 28,730 - (9,448) 277,644 20% - 25% 215,124 35,097 - (9,448) 240,773 36,871
2,443,527 381,272 (1,736) (66,950) 2,756,113 1,698,835 277,845 (76) (46,189) 1,930,415 825,698
LEASED:
Plant and machinery 25,686 13,341 - - 39,027 10% - 20% 1,737 6,570 - - 8,307 30,720
Motor vehicles 14,253 34,070 1,736 (1,267) 48,792 20% 708 4,947 76 (93) 5,638 43,154
Computer and
related accessories 3,062 - - - 3,062 33.33% 1,021 1,021 - - 2,042 1,020
Tools and equipment 157 - - - 157 20% 31 31 - - 62 95
Jigs and fixtures 518 - - - 518 20%-25% 66 104 - - 170 348
43,676 47,411 1,736 (1,267) 91,556 3,563 12,673 76 (93) 16,219 75,337
June 30, 2005 2,487,203 428,683 - (68,217) 2,847,669 1,702,398 290,518 - (46,282) 1,946,634 901,035
June 30, 2004 2,425.983 81,748 - (20,528) 2,487,203 1,441,969 268,661 - (8,232) 1,702,398 784,805
==========================================================================================================================================================3.3. THE FOLLOWING IS A STATEMENT OF INTANGIBLE ASSETS======================================================================================================================================
COST Written
At At At Charge (On At down
July 1,Additions Transfers (Disposals)June 30, July 1,for the Transfersdisposals) June 30, value at
2004 2005 Rate 2004 year 2005 June 30,
2005
(Rupees '000) (Rupees '000)
======================================================================================================================================
Software 5,742 13,352 - - 29,094 33,33% 15,742 2,807 - - 18,549 10,545
June 30, 2004 15,742 - - - 15,742 10,932 4,810 - - 15,742 -
======================================================================================================================================3.4. THE DEPRECIATION CHARGE FOR THE YEAR HAS BEEN ALLOCATED AS FOLLOWS========================================================================================
2005 2004
Notes (Rupees '000)
========================================================================================
Cost of sales 24.2 260,030 236,973
Distribution costs 25 24,143 27,944
Administrative expenses 26 6,345 3,744
290,518 268,661
========================================================================================3.5. Particulars of operating assets having book value exceeding Rs 50,000 disposed of during the year are as follows:==========================================================================================================================================================
Description Cost Accumulated Book Sale Gain/(loss) Mode of Particulars
depreciation value proceeds on sale disposal of buyer
(Rupees 000)
==========================================================================================================================================================
Plant and machinery 1,235 936 299 300 1 Negotiation Pearl Corporation , Karachi
6,405 2,562 3,843 6,415 2,572 Insurance claim Habib Insurance Company, Karachi
Computer and
related accessories 295 214 81 118 37 Insurance claim Habib Insurance Company, Karachi
Motor vehicles 1,750 1,.384 366 465 99 Negotiation Mr. S. Riaz Hussain, Karachi
470 323 147 154 7 Employee scheme Mr. Moinuddin ( Employee), Karachi
399 100 299 399 100 Insurance claim Habib Insurance Company, Karachi
399 133 266 399 133 Insurance claim Habib Insurance Company, Karachi
500 351 149 149 - Employee scheme Mr. Mukhtar A. Baig (Employee), Karachi
405 287 118 243 125 Employee scheme Mr. Amin A Hussain (Employee), Karachi
353 251 102 112 10 Employee scheme Mr. Ahmed Nadeem (Employee), Karachi
439 289 150 155 8.5 Employee scheme Mr. Ali Asghar Jamali (Employee), Karachi
405 292 113 113 - Employee scheme Mr. M.Aslam Khan ( Employee), Karachi
365 264 101 102 1 Employee scheme Mr. Musarrat Laiq (Employee), Karachi
1,109 695 414 414 - Employee scheme Mr. M. Asim Aqil (Ex-Employee), Karachi
399 239 160 159 (1) Employee scheme Mr. Q .Tambawala ( Employee), Karachi
399 186 213 213 - Employee scheme Mr. Amin A. Hussain (Employee), Karachi
419 293 126 126 - Employee scheme Mr. Rayomand Ghadiali (Employee), Karachi
1,069 684 385 385 - Employee scheme Mr. Syed Mehdi Askari (Employee)
Islamabad
399 53 346 346 - Employee scheme Mr. Raja Adeel Khalid ( Employee),
Karachi
434 23 411 434 23 Employee scheme Mr. Shehzad Younus (Ex -Employee), Karachi
455 356 99 215 116 Negotiation Mr. Kashif Khan, Karachi
928 728 200 692 492 Negotiation Mr. Noman Hassan Khan, Karachi
405 304 101 275 174 Negotiation Mr. Allauddin Khan, Karachi
353 264 89 294 205 Negotiation Mr. Abdul Waheed, Karachi
399 246 153 383 230 Negotiation Mr. Fahad Bin Zulfiqar, Karachi
399 213 186 382 196 Negotiation Mr. Ahmed Bhatti, Karachi
849 396 453 840 387 Negotiation Mr. M .Atta Afridi, Karachi
966 765 201 685 484 Negotiation Mr. Muhammad Rafiq, Karachi
699 538 161 640 479 Negotiation Sumaiya Enterprise, Karachi
1,029 704 325 680 355 Negotiation Mr. lqram Mohiyuddin, Karachi
969 633 336 336 - Employee scheme Mr. Tariq A. Khan (Employee), Karachi
399 246 153 361 208 Negotiation Mr. Adnan Ahmed Bhatti, Karachi
434 188 246 443 197 Negotiation Mr. Noman Ahmed Siddiqui, Karachi
459 67 392 445 53 Negotiation Mr. Ghulam Sabir Khan, Karachi
459 67 392 409 17 Negotiation Mr. Muhammad Rafiq, Karachi
459 67 392 445 53 Negotiation Mr. Wasim Mirza, Karachi
459 67 392 445 53 Negotiation Mr. Ghulam Sabir Khan, Karachi
459 67 392 445 53 Negotiation Mr. Ghulam Sabir Khan, Karachi
459 67 392 445 53 Negotiation Mr. Allauddin Khan, Karachi
459 67 392 446 54 Negotiation Mr. Noman Hassan Khan, Karachi
459 67 392 426 34 Negotiation Mr. Rais Ahmed, Karachi
459 68 391 447 56 Negotiation Mr. Shukat Rangwala, Karachi
459 68 391 425 34 Negotiation Mr. Ghulam Sabir Khan, Karachi
459 68 391 451 60 Negotiation Mr. Noman Ahmed Siddiqui, Karachi
459 68 391 405 14 Negotiation Mr. Sajid Wadood, Karachi
459 68 391 405 14 Employee scheme Mr. Musarrat Laiq (Employee), Karachi
459 68 391 454 63 Negotiation Mr. Noman Ahmed Siddiqui, Karachi
1,795 1,430 365 452 87 Negotiation Mr. Khalid Latif, Karachi
419 314 105 310 205 Negotiation Mr. Adnan Ahmed, Karachi
849 410 439 500 61 Negotiation Mr. Khalid Majeed, Karachi
459 73 386 392 6 Negotiation Mr. Asim Aqil ( Ex-Employee), Karachi
459 73 386 399 13 Negotiation Mr. Tariq A. Khan (Employee), Karachi
434 17 417 434 17 Insurance claim Habib Insurance Company, Karachi
1,109 739 370 384 14 Employee scheme Mr. Sartaj A. Khan (Employee), Karachi
399 266 133 325 192 Insurance claim Habib Insurance Company, Karachi
667 532 135 1 50 15 Negotiation Auvitronics, Karachi
939 750 189 800 611 Negotiation Auvitronics, Karachi
838 600 238 555 317 Negotiation Miss Saima , Karachi
434 210 224 444 220 Negotiation Mr. Abdul Aman, Karachi
459 86 373 444 71 Negotiation Mr. Wasim Mirza, Karachi
459 86 373 450 77 Negotiation Mr. Wasim Mirza, Karachi
939 391 548 936 388 Negotiation Mr. Imran Iqbal Killedar Karachi
829 653 176 615 439 Negotiation Mr. ZamaAfridi, Karachi
==========================================================================================================================================================3.6. CAPITAL WORK-IN-PROGRESS========================================================================================
2005 2004
(Rupees '000)
========================================================================================
Civil works 37,677 49,137
Plant and machinery 40,899 9,251
Tools and equipment 6,948 6,810
Jigs and fixtures 1,783 10,498
87,307 75,696
========================================================================================3.7. During the year capital work-in-progress amounting to Rs 278.590 million (2004: Rs 14.271 million) was transferred to owned assets and Rs 7.043 million (2004: Rs 25.223 million) was transferred to leased assets.4. LONG-TERM LOANS ========================================================================================
2005 2004
Notes (Rupees '000)
========================================================================================
CONSIDERED GOOD - SECURED:
Due from
Executives 4.2 1,737 759
Employees 1,091 973
4.1 2,828 1,732
Less: Recoverable within one year
shown under current assets
Executives 1,383 587
Employees 1,057 911
2,440 1,498
388 234
========================================================================================4.1. These represent house building and personal loans granted to executives and employees.These are granted in accordance with the terms of their employment and are secured against their balances with the Employees Provident Fund. The loans are repayable over a period of 12 to 24 months. House building and personal loans to management employees carry interest at the rate of 3.50% to 6% (2004: 3.50% to 6%) per annum. Personal loans to non-management employees carry no interest. 4.2. RECONCILIATION OF CARRYING AMOUNT OF LOANS TO EXECUTIVES IS AS FOLLOWS ========================================================================================
2005 2004
(Rupees '000)
========================================================================================
Opening balance 759 734
Disbursements during the year 2,387 1,757
Repayments during the year (1 409) (1,732)
Closing balance 1,737 759
========================================================================================4.3. The maximum aggregate amount due from the executives at the end of any month during the year was Rs 2.750 million (2004: Rs 1.393 million).5. LONG-TERM DEPOSITS ========================================================================================
2005 2004
(Rupees '000)
========================================================================================
Utilities 4,634 4,634
Others 515 620
5,149 5,254
========================================================================================6. FINANCE UNDER MUSHARIKA ARRANGEMENTS========================================================================================
2005 2004
Note (Rupees '000)
========================================================================================
SECURED:
Financial Institution 41,412 36,575
Less: Current maturity shown under current assets 6.1 (29,259) (28,701)
12,153 7,874
========================================================================================6.1. These represent musharika arrangements with a financial institution carrying an expected rate of 6.00% (2004: 6.00%) per annum receivable in 12 unequal quarterly installments.The musharika arrangement is expected to mature by June 2008. Furthermore, the arrangement is coupled with the respective obligation under finance lease (refer note 17) entered into by the company and in case of termination of any lease contract the musharika finance pertaining to that particular lease agreement shall be returned to the company with immediate effect. The maximum aggregate amount in respect of finance under musharika arrangements outstanding at the end of any month during the year was Rs 50.676 million (2004: Rs 43.402 million). 7. STORES AND SPARES ========================================================================================
2005 2004
(Rupees '000)
========================================================================================
Stores 98,094 78,778
Spares 38,934 32,145
137,028 110,923
========================================================================================8. STOCK-IN-TRADE========================================================================================
2005 2004
Notes (Rupees '000)
========================================================================================
IN HAND:
Manufacturing stock
Raw material and components 1,380,676 1,193,441
Work-in-process 106,130 104,553
Finished goods 8.1 & 8.2 214,482 199,961
(vehicles - own manufactured)
Trading stock
Vehicles 8.3 436,479 53,985
Spare parts 153,755 120,568
Special service tools and publications 345 292
590,579 174,845
In transit 876,988 864,413
3,168,855 2,537,213
========================================================================================8.1. These include finished goods amounting to Rs 26.768 million (2004: Rs 64.293 million) held with the company's authorised dealers at the year end.8.2. These include items costing Rs 2.848 million (2004: Rs 20.193 million) which have been valued at their net realisable value amounting to Rs 2.835 million (2004: Rs 19.654 million). 8.3. These include items costing Rs 63.309 million (2004: nil) which have been valued at their net realisable value amounting to Rs 60.962 million (2004: nil). 9. TRADE DEBTS - UNSECURED ========================================================================================
2005 2004
(Rupees '000)
========================================================================================
CONSIDERED GOOD:
Government agencies 258,518 300,036
Others 125,993 139,496
384,511 439,532
========================================================================================10. LOANS AND ADVANCES========================================================================================
2005 2004
Notes (Rupees '000)
========================================================================================
Current portion of long term
loans - considered good
Executives 1,383 587
Employees 1,057 911
2,440 1,498
Advances - considered good
Suppliers and contractors 10.1 44,476 18,713
Employees 1,539 725
Collector of Customs 10.2 254,433 286,573
300,448 306,011
302,888 307,509
========================================================================================10.1. This includes a sum of Rs nil (2004: Rs 4.334 million) bearing interest at the rate of nil (2004: 10.00% to 15.00%) per annum.10.2. This represents amount paid to the Collector of Customs in respect of import of raw materials. An amount of Rs 252.249 million (2004: Rs 281.015 million) was cleared subsequent to the year's end. 11. SHORT-TERM PREPAYMENTS ========================================================================================
2005 2004
(Rupees '000)
========================================================================================
Rent 1,530 1,282
Insurance 789 42
Maintenance 2,052 1,275
4,371 2,599
========================================================================================12. OTHER RECEIVABLES========================================================================================
2005 2004
Notes (Rupees '000)
========================================================================================
CONSIDERED GOOD:
Warranty claims, agency commission
and other receivables due
from a related party - Toyota 12.1 38,486 11,489
TSUSHO CORPORATION:
Warranty claims due from local vendors 1,816 2,286
Earnest money 2,006 5,164
Insurance claims 25,064 2,903
Sales tax - net 12.2 231,473 121,738
Net unrealised gain on revaluation
of forward foreign exchange contracts 12.3 - 73,672
Employees' Pension Fund 27 1,101 -
Others 2,225 643
302,171 217,895
========================================================================================12.1. These represent remittances receivable from Toyota Tsusho Corporation in Japanese Yen. The maximum aggregate amount due at the end of any month during the year was Rs 38.486 million (2004: Rs 36.974 million). 12.2. This represents excess of input over output sales tax and is fully adjustable. 12.3. Net unrealised gain on revaluation of forward foreign exchange contracts: ========================================================================================
2005 2004
(Rupees '000)
========================================================================================
Fair value hedge - 7,480
Cash flow hedge - 66,192
- 73,672
========================================================================================13. TAXATION-NETThe income tax assessments of the company have been finalised by the Income Tax Department upto the year ended June 30, 2004. 14. CASH AND BANK BALANCES ========================================================================================
2005 2004
Notes (Rupees '000)
========================================================================================
Cash in hand 441 1,182
With banks in
current accounts 42,037 429,966
deposit accounts 14.1 & 14.2 6,677,521 6,530,857
6,719,558 6,960,823
6,719,999 6,962,005
========================================================================================14.1. This includes a balance of Rs 195.306 million (2004: Rs 330.559 million) representing a book overdraft netted off against the balance in deposit accounts. 14.2. This includes a balance of Rs 5,976.700 million (2004: Rs 4,250 million) representing term deposit receipts having maturity dates ranging from 30 days to 179 days. These term deposit receipts carry profit at rates ranging between 5.00% and 9.50% (2004: 1.50% and 2.60%) per annum, which is due on maturity. 15. ISSUED, SUBSCRIBED AND PAID-UP CAPITAL ========================================================================================
Number of shares
2005 2004 2005 2004
(in '000) (Rupees '000)
========================================================================================
Ordinary shares of Rs 10 each
78,600 78,600 fully paid in cash 786,000 786,000
========================================================================================16. RESERVES========================================================================================
2005 2004
(Rupees '000)
========================================================================================
CAPITAL RESERVE:
Premium on issue of ordinary shares 196,500 196,500
REVENUE RESERVES
GENERAL RESERVE:
Balance brought forward 1,564,000 856,500
Transferred from profit and loss account 765,900 707,500
2,329,900 1,564,000
Unappropriated profit 1,170,249 1,158,903
Net unrealised (loss) / gain on hedging instruments (6,844) 66,192
3,689,805 2,985,595
========================================================================================17. LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASEMinimum lease payments under finance lease together with the present value of the minimum lease payments are as follows: =====================================================================================================
2005 2004
Minimum lease Present Minimum lease Present
payments value payments value
(Rupees '000) (Rupees '000)
=====================================================================================================
Within one year 29,599 27,925 29,376 27,816
After one year but not more than five years 12,761 11,957 8,292 7,633
Total minimum lease payments 42,360 39,882 37,668 35,449
Less: Finance costs for future periods 2,478 - 2,219 -
Present value of minimum lease payments 39,882 39,882 35,449 35,449
Less: Current portion 27,925 27,925 27,816 27,816
11,957 11,957 7,633 7,633
=====================================================================================================This represents finance leases entered into with a financial institution for plant and machinery, motor vehicles, computer equipment, tools and equipment and jigs and fixtures.Financing rate of 7.00% (2004: 7.00%) per annum has been used as a discounting factor. At the end of the lease period the company has a renewal option at an annual rental of Rs 0.437 million up to nine years in aggregate. These facilities are secured by demand promissory notes of Rs 87.619 million (2004: Rs 42.263 million). 18. DEFERRED TAXATION ========================================================================================
2005 2004
(Rupees '000)
========================================================================================
DEFERRED TAX CREDIT ARISING ON:
Differences between written down values
and tax bases of fixed assets 42,693 29,789
========================================================================================19. TRADE AND OTHER PAYABLES========================================================================================
2005 2004
Notes (Rupees '000)
========================================================================================
- Associated undertakings / related parties 19.1 249,919 119,686
- Others 441,112 162,425
Bills payable to associated 19.2 499,199 625,990
undertakings / related parties
Accrued liabilities 286,305 221,387
Employees Pension Fund 27 1,707
Unclaimed dividends 17,708 14,319
Royalty payable to
- Toyota Motor Corporation 161,909 190,814
- Daihatsu Motor Corporation 19,883 14,583
Security deposits from dealers 19.3 50,800 50,800
Provision for custom duty 19.4 90,910 173,057
Retention money 7,377 4,965
Workers' Profit Participation Fund 19.5 6,547 5,240
Workers' Welfare Fund 38,804 46,137
Technical fee payable 46,050 2,378
Warranty obligations 19.6 67,831 25,838
Commission payable to dealers 12,039 861
Tax deducted at source 13,353 9,991
Net unrealised loss on revaluation of
forward foreign exchange contracts 19.7 12,481 -
2,022,227 1,670,178
========================================================================================19.1. THESE INCLUDE AMOUNTS PAYABLE TO THE FOLLOWING ASSOCIATED UNDERTAKINGS / RELATED PARTIES========================================================================================
2005 2004
(Rupees '000)
========================================================================================
Toyota Tsusho Corporation 212,782 119,686
Thai Engineering Limited 37,137 -
249,919 119,686
========================================================================================19.2. THESE INCLUDE AMOUNTS PAYABLE TO THE FOLLOWING ASSOCIATED UNDERTAKINGS / RELATED PARTIES========================================================================================
2005 2004
(Rupees '000)
========================================================================================
Toyota Tsusho Corporation 428,703 532,547
Daihatsu Motor Corporation 70,496 93,443
499,199 625,990
========================================================================================19.3. These represent interest free deposits, repayable to dealers upon the termination of dealership agreements. 19.4. This represents expected demand of custom duties for possible shortfall in the deletion targets in respect of certain components of vehicles manufactured by the company during the year determined in accordance with SRO 436(I)/2001 dated June 18, 2001 and SRO 453(I)/2004 dated June 12, 2004. 19.5. WORKERS' PROFIT PARTICIPATION FUND ========================================================================================
2005 2004
(Rupees '000)
========================================================================================
Opening balance 5,240 103,860
Add: Allocation for the year 123,265 121,706
Interest on funds utilised in the company business 282 5,722
123,547 127,428
128,787 231,288
Less: Amount paid during the year 122,240 226,048
6,547 5,240
========================================================================================19.6. WARRANTY OBLIGATIONS========================================================================================
2005 2004
(Rupees '000)
========================================================================================
Opening balance 25,838 30,484
Charge for the year 131,021 7,654
156,859 38,138
Less: Claims paid during the year 89,028 12,300
67,831 25,838
========================================================================================19.7. NET UNREALISED LOSS ON REVALUATION OF FORWARD FOREIGN ========================================================================================
2005 2004
(Rupees '000)
========================================================================================
EXCHANGE CONTRACTS:
Fair value hedge 30 5,637
Cash flow hedge 6,844 -
12,481 -
========================================================================================20. ADVANCES FROM CUSTOMERS AND DEALERS========================================================================================
2005 2004
(Rupees '000)
========================================================================================
5,603,342 6,041,644
========================================================================================This represents advances received by the company from customers in respect of sale of vehicles.21. ACCRUED MARK-UP ========================================================================================
2005 2004
(Rupees '000)
========================================================================================
MARK-UP ACCRUED ON:
- advances from customers 10,403 7,765
- liabilities against assets subject 165 48
to finance lease
10,568 7,813
========================================================================================22. SHORT TERM RUNNING FINANCESAt June 30, 2005 the company has short term unutilised running finance facilities under mark-up arrangements in the aggregate of Rs 2,800 million (2004: Rs 980 million) available from various commercial banks carrying mark-up rates based on 1 month KIBOR Plus 0.20% to 0.25% (2004: 1 month KIBOR Plus 0.25%) per annum. The company also has a facility for opening letters of credit under mark-up arrangements as at June 30, 2005 amounting to Rs 6,030 million (2004: Rs 5,730 million) from various commercial banks. The unutilised balance at June 30, 2005 was Rs 3,246.554 million (2004: Rs 1,522.970 million). These arrangements are secured by pari passu hypothecation charge on movables and receivables to the extent of Rs 2,086 million (2004: Rs 2,086 million). 23. CONTINGENCIES AND COMMITMENTS Contingencies 23.1. The company during the year ended June 30, 2002, received a demand notice from the Assistant Collector of Customs, claiming short recovery of Rs 51.654 million on account of customs duties and sales tax on royalty paid to the Joint Venture Partner, Toyota Motor Corporation, taking the view that royalty pertains to the imported CKD Kits as opposed to the view of the company that the same relates to locally deleted parts only. The company has taken up this matter with the above-referred Authority and has attended a few hearings. A further hearing date is expected before decision. Pending a final decision in this matter, no provision has been made by the company in the financial statements of the current year against the above-referred sum as the management of the company is confident that the matter will be decided in favour of the company. 23.2. During the year ended June 30, 2002, the company received a notice under Section 85 of the repealed Income Tax Ordinance, 1979 from the Azad Jammu and Kashmir tax authorities, demanding Rs 126.690 million, in respect of income tax and education cess in Azad Jammu and Kashmir for the assessment years 1991-1992 to 2000-2001. The company thereafter filed appeals against the above-referred assessments with the Commissioner of Income Tax (Appeals) who has set aside the orders for the assessment years 1991-92 and 1999-2000 and instructed the subordinate tax authorities to re-examine the case. To give effect of the order of the CIT(A) the tax authorities have now dropped the proceedings for the assessment years 1991-1992 to 1996-1997 on the basis that demand notice under Section 56 of the repealed Ordinance cannot be issued beyond the period of five years. Moreover the Taxation Officer has now calculated the tax liability on the basis of tax assessed in Pakistan as against an arbitrary basis adopted earlier in the original assessment. The above basis of amended assessments has resulted in a reduction of tax liability from Rs 126.690 million to Rs 11.394 million (including Rs 0.543 million in respect of education cess). Further the Azad Jammu and Kashmir tax authorities have also finalised the assessment for the assessment year 2001-2002 and have raised a tax demand of Rs 3.347 million (including Rs 0.152 million in respect of education cess). However, the company continued to agitate the liability in Azad Jammu and Kashmir and accordingly had filed further appeals against the above mentioned assessments before the C II (A). During the year the CIT (A) has rejected the appeals filed by the company and confirmed the assessment orders framed by the income tax authorities. In addition the income tax authorities in Azad Jammu and Kashmir have levied a penalty amounting to Rs 0.702 million for non-payment of income tax to the Azad Jammu and Kashmir authorities. The management is still of the view that the income of the company is not taxable in Azad Jammu and Kashmir as it does not have its own presence in Azad Jammu and Kashmir and all sales are made in Pakistan ex-factory, therefore, no income accrues or arises to the company in Azad Jammu and Kashmir. Accordingly, the company has filed an appeal against the decision of CIT(A) with Income Tax Appellate Tribunal, Azad Jammu and Kashmir subsequent to the year end. Pending a final decision in this matter, no provision has been made by the company in the financial statements against the education cess liability and penalty pertaining to Azad Jammu and Kashmir assessments as the management of the company is confident that the matter will be decided in its favour. The company has not provided for the income tax liability, pertaining to Azad Jammu and Kashmir assessments as it would be adjustable against the company's total tax liability determined by the Pakistan tax authorities. 23.3. OUTSTANDING BANK GUARANTEES ========================================================================================
2005 2004
(Rupees '000)
========================================================================================
374,379 1,011,471
======================================================================================== Commitments23.4. Commitments in respect of capital expenditure at June 30, 2005 amounted to Rs 531.620 million (2004: Rs 36.492 million). 23.5. Commitments in respect of letters of credit, other than for capital expenditure, amounted to Rs 2,446.776 million (2004: Rs 4,207.030 million), out of which commitments, valuing Japanese Yen 3,908.032 million (2004: Japanese Yen 5,341.000 million) Rs 2,163.368 million (2004: Rs 2,797.355 million)], are covered under forward foreign exchange contracts. 24. OPERATING RESULTS =========================================================================================================================
Manufacturing Trading Total
2005 2004 2005 2004 2005 2004
Notes (Rupees '000)
=========================================================================================================================
Gross sales 29,652,268 25,160,370 3,065,386 1,531,332 32,717,654 26,691,702
Sales tax (3,865,338) (3,284,416) (394,371) (197,671) (4,259,709) (3,482,087)
25,786,930 21,875,954 2,671,015 1,333,661 28,457,945 23,209,615
Commission (743,977) (646,812) (69,480) (13,234) (813,457) (660,046)
Discounts - (448) (43,454) (27,784) (43,454) (28,232)
Net sales 25,042,953 21,228,694 2,558,081 1,292,643 27,601,034 22,521,337
Cost of sales
Opening stock 199,961 131361 174,845 121,109 374,806 252,470
Cost of goods manufactured 24.2 22,862,256 18,868,351 - - 22,862,256 18,868,351
Purchases - - 2,462,855 1,081,605 2,462,855 1,081,605
Closing stock (214,482) (199,961) (590,579) (174,845) (805,061) (374,806)
22,847,735 18,799,751 2,047,121 1,027,869 24,894,856 19,827,620
Gross profit 2,195,218 2,428,943 510,960 264,774 2,706,178 2,693,717
Distribution costs 25 278,578 171,929 15,726 10,978 294,304 182,907
Administrative expenses 26 251,920 218,709 25,733 13,317 277,653 232,026
530,498 390,638 41,459 24,295 571,957 414,933
1,664,720 2,038,305 469,501 240,479 2,134,221 2,278,784
Other operating expenses 28 184,339 191,267 2,275 1,416 186,614 192,683
1,480,381 1,847,038 467,226 239,063 1,947,607 2,086,101
Other operating income 29 353,963 182,740 95,480 57,018 449,443 239,758
1,834,344 2,029,778 562,706 296,081 2,397,050 2,325,859
Finance costs 30 85,372 56,173 8,721 3,395 94,093 59,568
Profit before taxation 1,748,972 1,973,605 553,985 292,686 2,302,957 2,266,291
=========================================================================================================================24.1. Finance costs, other operating expenses (other than charge in respect of Workers' Profit Participation Fund and Workers' Welfare Fund), administrative expenses and distribution costs (other than warranty claims and pre-delivery inspection charges, development expenditure and running royalty), have been allocated between manufacturing and trading activities on the basis of net sales.Warranty claims and pre-delivery inspection charges, development expenditure and charges in respect of Workers' Profit Participation Fund and Workers' Welfare Fund have been allocated to manufacturing activity. Running royalty has been allocated to trading activity. 24.2. COST OF GOODS MANUFACTURED ========================================================================================
2005 2004
Notes (Rupees '000)
========================================================================================
RAW MATERIALS AND VENDOR PARTS CONSUMED:
Opening stock 1,193,441 704,651
Purchases 21,748,778 18,132,606
Closing stock 1,380,676) (1,193,441)
21,561,543 17,643,816
Stores and spares consumed 475,117 438,442
Salaries, wages and other benefits 24.3 149,174 117,632
Rent, rates and taxes 1,760 1,727
Repairs and maintenance 64,519 54,887
Depreciation 3.4 260,030 236,973
Legal and professional 592 778
Travelling 11,741 11,818
Transportation 2,289 2,156
Insurance 9,272 17,033
Vehicle running 4,533 4,149
Communication 2,684 3,359
Printing, stationery and office supplies 3,079 2,862
Subscription 90 44
Fuel and power 88,491 90,927
Running royalty 184,203 217,019
Technical fee 39,008 25,005
Parts development 4,572 7,942
Staff training 17 4,556
Others 1,119 1,896
1,302,290 1,239,205
22,863,833 18,883,021
Add: Opening work-in-process 104,553 89,883
Less: Closing work-in-process 106,130 104,553
22,862,256 18,868,351
========================================================================================24.3. Included herein is a sum of Rs 3.304 million (2004: Rs 2.742 million) in respect of defined contribution plan and Rs 2.519 million (2004: Rs 2.443 million) in respect of defined benefit plan.25. DISTRIBUTION COSTS ========================================================================================
2005 2004
Notes (Rupees '000)
========================================================================================
Salaries, allowances and other benefits 25.1 38,882 32,245
Rent, rates and taxes 554 504
Insurance 129 876
Repairs and maintenance 2,961 2,652
Depreciation 3.4 24,143 27,944
Advertising and sales promotion 32,376 53,879
Travelling 11,556 9,081
Legal and professional 1,581 2,420
Vehicle running 4,254 4,204
Communication 3,989 4,034
Printing, stationery and office supplies 3,063 2,355
Staff training 2,284 691
Subscription 382 98
Warranty claims and pre-delivery inspection 151,507 24,962
Development expenditure 1,384 2,464
Utilities 151 113
Transportation 10,876 9,355
Running royalty 2,887 2,179
Bad debts written-off 1,345 2,851
294,304 182,907
========================================================================================25.1. Included herein is a sum of Rs 1.173 million (2004: Rs 0.954 million) in respect of defined contribution plan and Rs 0.946 million (2004: Rs 1.007 million) in respect of defined benefit plan.26. ADMINISTRATIVE EXPENSES ========================================================================================
2005 2004
Notes (Rupees '000)
========================================================================================
Salaries, allowances and other benefits 26.1 68,159 58,271
Rent, rates and taxes 1,425 2,517
Insurance 8,956 5,669
Repairs and maintenance 11,563 9,070
Depreciation 3.4 6,345 3,744
Amortisation 3.3 2,807 4,810
Travelling 22,279 12,019
Legal and professional 24,959 20,058
Vehicle running 8,902 8,123
Communication 4,363 4,601
Printing, stationery and office supplies 2,683 2,569
Staff training 23,496 9,816
Staff transport and canteen 72,718 53,659
Security 5,554 4,379
Subscription 1,596 1,855
Utilities 834 748
Share registrar and related expenses 4,062 3,180
Transportation 174 41
Others 6,778 26,897
277,653 232,026
========================================================================================26.1. Included herein is a sum of Rs 1.886 million (2004: Rs 1.892 million) in respect of defined contribution plan and Rs 4.830 million (2004: Rs 1.536 million) in respect of defined benefit plan. 27. DEFINED BENEFIT PLAN - APPROVED PENSION FUND As mentioned in note 2.15, the company operates an approved pension fund for its permanent employees. Based on the latest actuarial valuation carried out at June 30, 2005, the company has recognised the following amounts in the financial statements. ========================================================================================
2005 2004
(Rupees '000)
========================================================================================
THE AMOUNT RECOGNISED IN THE BALANCE SHEET IS AS FOLLOWS:
Fair value of plan assets 55,077 38,016
Present value of defined benefit obligation (49,268) 39,290
5,809 (1,274)
Unrecognised actuarial gains (4,708) (433)
1,101 (1,707)
Current service cost 4,358 3,578
Interest cost 3,316 1,798
Past service cost 3,839 -
Amortisation of transitional obligation - 1,546
Expected return on plan assets (3,218) (1,931)
Net actuarial gain recognised during the year - (5)
Pension cost recognised during the year 8,295 4,986
MOVEMENT IN NET LIABILITY RECOGNISED IN THE BALANCE SHEET:
Opening balance (1,707) -
Charge for the year (8,295) (4,986)
Contributions paid during the year 11,103 3,279
Closing balance 1,101 (1,707)
Expected and actual return on plan assets
Expected return on plan assets 3,218 1,931
Actuarial gain on plan assets 2,745 3,102
Actual return on plan assets 5,963 5,033 -
========================================================================================28. OTHER OPERATING EXPENSES========================================================================================
2005 2004
Notes (Rupees '000)
========================================================================================
Auditors' remuneration 28.1 757 1,688
Workers' Profit Participation Fund 19.5 123,265 121,706
Workers' Welfare Fund 38,804 46,129
Donations 28.2 23,788 23,160
186,614 192,683
========================================================================================28.1. AUDITORS' REMUNERATION========================================================================================
2005 2004
(Rupees '000)
========================================================================================
Audit fee 450 400
Tax services - 950
Interim review and other certifications 269 312
Out-of-pocket expenses 38 26
757 1,688
========================================================================================28.2. DONATIONSDonations include the following in whom a director or his spouse is interested: ==============================================================================================
Name of Interest Amount donated
Director(s) in Donee Name & Address of Donee 2005 2004
(Rupees '000)
==============================================================================================
1. Ali S. Habib Trustee Mohammedali Habib 75 75
Welfare Trust
2nd Floor, Siddiq Sons Tower,
Jinnah Co operative Housing Society
Shahrah-e-Faisat, Karachi.
2. Mohammedali Trustee Habib Education Trust, 15,000 15,000
Habib and 4th Floor, UBL Building,
Ali S. Habib I.I. Chundrigar Road, Karachi.
==============================================================================================29. OTHER OPERATING INCOME========================================================================================
2005 2004
(Rupees '000)
========================================================================================
INCOME FROM FINANCIAL ASSETS:
Return on bank deposits 378,016 181,590
Return on finance under musharika arrangements 2,486 651
Mark-up on advances to suppliers and contractors 128 780
Exchange gain 315 1,865
Income from other than financial assets
Agency commission, net of commission expense
of Rs 4.400 million (2004: Rs 2.698 million) 59,323 45,891
Gain on sale of fixed assets 9,175 2,492
Others - 6,489
449,443 239,758
========================================================================================30. FINANCE COSTS========================================================================================
2005 2004
Notes (Rupees '000)
========================================================================================
Mark-up on advances from customers 67,494 39,467
Mark-up on liabilities against 2,923 785
assets subject to finance lease
Bank charges 22,835 13,594
Interest on Workers' Profit Participation Fund 282 5,722
Unrealised (gain) / loss on (5,078) 7,480
revaluation of creditors
Unrealised loss / (gain) on revaluation
of forward foreign exchange contracts 19.7 & 12.3 5,637 (7,480)
559 -
94,093 59,568
========================================================================================31. TAXATION========================================================================================
2005 2004
Note (Rupees '000)
========================================================================================
Current - for the year 812,069 860,526
- for prior years (6,662) (5,528)
805,407 854,998
Deferred 12,904 (61,949)
31.1 818,311 793,049
========================================================================================31.1. RELATIONSHIP BETWEEN INCOME TAX EXPENSE AND ACCOUNTING PROFIT========================================================================================
2005 2004
(Rupees '000)
========================================================================================
Profit before taxation 2,302,957 2,266,291
Tax at the applicable tax 806,035 793,202
rate of 35% (2004: 35%)
Tax effect of expenses that are inadmissible
in determining taxable profit 22,363 29,170
Effect of tax on commercial imports (3,425) (23,795)
under Final Tax Regime
Effect of change in prior years' tax (6,662) (5,528)
818,311 793,049
========================================================================================32. EARNINGS PER SHARE 32.1. BASIC Basic earnings per share has been computed by dividing the net profit for the year after taxation by the weighted average number of shares outstanding during the year. ========================================================================================
2005 2004
========================================================================================
Profit for the year after taxation 1,484,646 1,473,242
umber of shares
Weighted average number of ordinary shares 78,600,000 78,600,000
(Rupees)
Basic earnings per share 18.89 18.74
========================================================================================32.2. DILUTEDNo figure for diluted earnings per share has been presented as the company has not as yet issued any instruments, which would have an impact on basic earnings per share when exercised. 33. CASH GENERATED FROM OPERATIONS ========================================================================================
2005 2004
Note (Rupees '000)
========================================================================================
Profit before taxation 2,302,957 2,266,291
ADJUSTMENT FOR NON-CASH
CHARGES AND OTHER ITEMS:
Depreciation 290,518 268,661
Amortisation 2,807 4,810
Gain on sale of fixed assets (9,175) (2,492)
Bad debts written-off directly 1,345 2,851
Net unrealised loss on revaluation of
creditors and forward foreign exchange contracts 559 -
Return on bank deposits (378,016) (181,590)
Return on finance under musharika arrangements (2,486) (651)
Workers' Profit Participation Fund 123,265 121,706
Workers' Welfare Fund 38,804 46,129
Mark-up on advances from customers 67,494 39,467
Mark-up on liabilities against assets 2,923 785
subject to finance lease
Working capital changes 33.1 (842,709) (968,371)
1,598,286 1,597,596
========================================================================================33.1. WORKING CAPITAL CHANGES========================================================================================
2005 2004
(Rupees '000)
========================================================================================
(INCREASE) / DECREASE IN CURRENT ASSETS:
Stores and spares (26,105) (39,412)
Stock-in-trade (631,642) (734,943)
Trade debts 53,676 76,437
Loans and advances 4,621 (851)
Short-term prepayments (1,772) (249,360)
Other receivables (157,948) (5,946)
(759,170) (954,075)
(DECREASE) / INCREASE IN CURRENT LIABILITIES:
Trade and other payables 354,763 702,158
Advances from customers (438,302) (716,454)
(83,539) (14,296)
(842,709) (968,371)
========================================================================================34. CASH AND CASH EQUIVALENTS========================================================================================
2005 2004
Notes (Rupees '000)
========================================================================================
COMPRISE OF THE FOLLOWING BALANCE SHEET AMOUNTS:
Cash and bank balances 14 6,719,999 6,962,005
Short-term running finances 22 - -
6,719,999 6,962,005
========================================================================================35. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES=================================================================================================
2005 2004
Chief Directors Executives Chief Directors Executives
Executive Executive
(Rupees '000)
=================================================================================================
Managerial remuneration 780 6,431 32,670 3,120 5,468 24,475
Retirement benefits 3,889 172 1,835 201 147 1,444
Utilities and upkeep 81 114 - 307 201 -
Leave passage / assistance - 293 - - 598 -
Medical expenses 22 66 1,168 106 39 1,129
4,772 7,076 35,673 3,734 6,453 27,048
Number of persons 1 2 28 1 2 26
=================================================================================================The Chief Executive, Directors and some Executives have been provided free use of the company maintained cars and residential telephones.36. TRANSACTIONS WITH ASSOCIATED UNDERTAKINGS / RELATED PARTIES The related parties and associated undertakings comprise of associated companies, staff retirement funds, directors and key management personnel. Transactions with related parties and associated undertakings, other than remuneration and benefits to key management personnel under the terms of their employment and staff retirement funds, are as follows: ========================================================================================
2005 2004
(Rupees '000)
========================================================================================
Sales 3,557 1,169
Purchases 14,354,402 11,388,532
Insurance premium 108,606 83,140
Agency commission 63,723 48,589
Running royalty 187,090 219,198
Technical fee 39,008 25,005
Share registrar's fee, charges and other services 8,924 8,502
Return on bank deposits 71,629 -
Proceeds from sale of fixed assets / insurance claim 9,040 -
========================================================================================Transactions with associated undertakings and related parties are made under normal commercial terms and conditions.Number of units 37. PLANT CAPACITY AND PRODUCTION ========================================================================================
2005 2004
(Rupees '000)
========================================================================================
Capacity based on double shift basis 37,000 30,000
Production 34,928 29,222
========================================================================================The company has been operating on a double shift basis from March 2003 based on market demand.38. FINANCIAL INSTRUMENTS 38.1. INTEREST / MARK-UP RATE RISK MANAGEMENT Interest / mark-up rate risk is the risk that the value of a financial instrument will fluctuate due to changes in the market interest / mark-up rates. Sensitivity to interest / mark-up rate risk arises from mismatches of financial assets and financial liabilities that mature or reprice in a given period. The company manages these mismatches through risk management strategies where significant changes in gap position can be adjusted. The company is exposed to interest / mark-up rate risk in respect of the following: ====================================================================================================================================
Effective interest/mark-up bearing Non-interest/Mark-up bearing Total
interest / Maturity Maturity Sub-total Maturity Maturity Sub-total June 30,
mark-up upto after one upto after one 2005
rate one year year one year year
% (Rupees '000)
====================================================================================================================================
June 30, 2005
FINANCIAL ASSETS:
Loans 3.5-6.00 1,596 388 1,984 844 - 844 2,828
Long term deposits - - - - - 5,149 5,149 5,149
Finance under musharika arrangements 6.00 29,259 12,153 41,412 - - - 41,412
Trade debts - - - - 384,511 - 384,511 384,511
Accrued mark-up - - - - 46,543 - 46,543 46,543
Other receivables - - - - 70,698 - 70,698 70,698
Cash and bank balances 5.00-9.50 6,677,521 - 6,677,521 42,478 - 42,478 6,719,999
6,708,376 12,541 6,720,917 545,074 5,149 550,223 7,271,140
FINANCIAL LIABILITIES:
Trade and other payables - - - - 1,963,523 - 1,963,523 1,963,523
Accrued mark-up - - 10,568 - 10,568 10,568
Liabilities against assets
subject to finance lease 7.00 27,925 11,957 39,882 - - - 39,882
27,925 11,957 39,882 1,974,091 - 1,974,091 2,013,973
====================================================================================================================================
====================================================================================================================================
Effective Interest Total
interest / Maturity Maturity Sub-total Maturity Maturity Sub-total June 30,
mark-up upto after one upto after one 2004
rate one year year one year year
% (Rupees '000)
====================================================================================================================================
June 30, 2004
FINANCIAL ASSETS:
Loans 3.5-6.00 845 234 1,079 653 - 653 1,732
Long term deposits - - - - - 5,254 5254 5,254
Finance under musharika arrangements 6.00 28,701 7,874 36,575 - - - 36,575
Trade debts - - - - 439,532 - 439,532 439,532
Accrued mark-up - - - 26,052 - 26,052 26,052
Other receivables - - - - 96,157 - 96,157 96,157
Cash and bank balances 1.50-3.00 6,530,857 - 6,530,857 431,148 - 431,148 6,962,005
6,560,403 8,108 6,568,511 993,542 5,254 998,796 7,567,307
FINANCIAL LIABILITIES:
Trade and other payables - - - 1,608,810 - 1,608,810 1,608,810
Accrued mark-up - - - - 7,813 - 7,813 7,813
Liabilities against assets
subject to finance lease 7.00 27,816 7,633 35,449 - - - 35,449
27,816 7,633 35,449 1,616,623 - 1,616,623 1,652,072
====================================================================================================================================38.2. CREDIT RISK EXPOSURE AND CONCENTRATION OF CREDIT RISKCredit risk is the risk which arises with the possibility that one party to a financial instrument will fail to discharge its obligation and cause the other party to incur a financial loss. The company attempts to control credit risk by monitoring credit exposures, limiting transactions with specific counterparties and continually assessing the creditworthiness of counterparties. Concentrations of credit risk arise when a number of counterparties are engaged in similar business activities or have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations of credit risk indicate the relative sensitivity of the company's performance to developments affecting a particular industry. Out of the total financial assets of Rs 7,271.140 million (2004: Rs 7,567.307 million), the financial assets which are subject to credit risk amounted to Rs 7,270.699 million (2004: Rs 7,566.125 million). The company manages credit risk in trade receivables by limiting significant exposure to any individual customers, by obtaining advance against sales. The company is exposed to credit risk on loans, advances, deposits, trade debts, finances under musharika arrangements and other receivables. The company seeks to minimise its credit risk exposure through limiting exposures to only customers considered credit worthy and by obtaining securities where applicable. 38.3. LIQUIDITY RISK Liquidity risk is the risk that the company will be unable to meet its funding requirements. To guard against the risk, the company has diversified funding sources and assets are managed with liquidity in mind, maintaining a healthy balance of cash and cash equivalents. The maturity profile is monitored to ensure adequate liquidity is maintained. 38.4. FOREIGN EXCHANGE RISK MANAGEMENT Foreign currency risk arises mainly where payables exist due to the transactions with foreign undertakings. Payables exposed to foreign currency risks are usually covered through forward foreign exchange contracts on the basis of the management's assessment of fluctuation in exchange rates. 38.5. FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arm's length transaction. Consequently, differences may arise between the carrying values and the fair value estimates. The estimated fair value of financial assets and liabilities are not materially different from their book values at the balance sheet date. Underlying the definition of fair value is the presumption that the company is a going concern without any intention or requirement to curtail materially the scale of its operations or to undertake a transaction on adverse terms. 39. NUMBER OF EMPLOYESS ========================================================================================
2005 2004
========================================================================================
Number of employees at the year's end 1 429 1 226
========================================================================================40. NON-ADJUSTING EVENT AFTER THE BALANCE SHEET DATEThe Board of Directors in its meeting held on September 16, 2005 has proposed a cash dividend in respect of the year ended June 30, 2005 of Rs 6 per share (2004: cash dividend Rs 5 per share). This is in addition to the interim dividend of Rs 4 per share resulting in a total dividend for the year of Rs 10 per share. The directors have also announced appropriation of Rs 698.6 million (2004: Rs 765.900 million) to general reserve. These appropriations will be approved in the forthcoming Annual General Meeting. The financial statements for the year ended June 30, 2005 do not include the effect of these appropriations, which will be accounted for in the financial statements for the year ending June 30, 2006. 41. CORRESPONDING FIGURES Corresponding figures have been rearranged and reclassified, wherever necessary, for the purpose of comparison. Significant reclassifications include: -- Accrued mark-up on advances from customers and on liabilities against assets subject to finance lease have been reclassified from trade and other payables and disclosed separately on the face of the balance sheet. -- Administrative and selling expenses have been bifurcated between distribution costs and administrative expenses. -- Loans and advances to executives and remuneration of executives have been restated due to the amendment in the definition of 'executive' under the Fourth Schedule to the Companies Ordinance, 1984. -- Capital work-in-progress has been reclassified and disclosed under property, plant and equipment. -- In addition to the above figures, comparative information has also been restated in order to comply with the change in accounting policy as explained in note 2.17. The above changes have been made to comply with the new disclosure requirements arising on account of amendments made in the Fourth Schedule to the Companies Ordinance, 1984. 42. DATE OF AUTHORISATION These financial statements were authorised for issue on September 16, 2005 by the Board of Directors of the company. 43. GENERAL Figures in these financial statements have been rounded off to the nearest thousand rupees. |