| Millat Tractors Ltd - 2005 |
============================================================================================= BALANCE SHEET AS AT JUNE 30, 2005 ============================================================================================= Notes 2005 2004 (Restated) (Rupees in thousand) ============================================================================================= EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES AUTHORISED CAPITAL 20,000,000 (2004: 10,000,000) ordinary shares of Rs 10/- each 200,000 100,000 Issued, subscribed and paid up capital 5 120,141 80,094 General reserve 1,362,000 1,111,500 Unappropriated profit 454,440 331,172 Unrealised gain on revaluation of investment 38,549 25,782 1,975,130 1,548,548 NON-CURRENT LIABILITIES: Accumulating compensated absences 14,841 11,599 Deferred revenue 6 159,431 - Security deposits 7 8,885 8,785 CURRENT LIABILITIES: Trade and other payables 8 4,163,342 1,975,029 Mark-up accrued on secured loans 9 155 237 Provision for warranty 10 1,018 8,132 4,164,515 1,983,398 Contingencies and commitments 11 - - 6,322,802 3,552,330 ASSETS NON-CURRENT ASSETS: Property, plant and equipment 12 238,783 240,587 Long - term investments 13 230,825 164,875 Long - term loans - considered good 14 4,404 4,099 Deferred tax 15 827 7,163 CURRENT ASSETS: Stores and spares 16 30,308 27,760 Stock - in - trade 17 2,314,457 1,402,533 Trade debts 18 133,435 120,022 Loans and advances 19 39,753 37,772 Trade deposits, prepayments and balances with statutory authorities 20 599,502 754,088 Interest accrued 21 8,122 1,209 Other receivables 22 70,007 55,081 Taxation - net 2,258 87,426 Short - term investments 23 2,352,278 - Cash and bank balances 24 297,843 649,715 5,847,963 3,135,606 6,322,802 3,552,330 ============================================================================================= ============================================================================================= PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2005 ============================================================================================= Notes 2005 2004 (Rupees in thousand) ============================================================================================= Sales 25 8,326,231 6,984,922 Cost of sales 26 7,398,872 6,137,586 Gross profit 927,359 847,336 Distribution cost 27 84,247 103,245 Administrative expenses 28 130,461 124,286 214,708 227,531 Operating profit 712,651 619,805 Other income 29 62,667 46,231 775,318 666,036 Finance cost 30 2,552 11,185 Other charges 31 72,568 59,509 75,120 70,694 Profit before taxation 700,198 595,342 Taxation 32 246,336 200,720 Profit after taxation 453,862 394,622 Basic earnings per share - Rupees 36 37,78 32,85 ============================================================================================= ============================================================================================= CASH FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 2005 ============================================================================================= Notes 2005 2004 (Rupees in thousand) ============================================================================================= CASH FLOWS FROM OPERATING ACTIVITIES: Cash generated from operations 37 1,491,065 917,422 Financial charges paid (2,634) (16,312) Taxes paid (154,832) (127,770) Accumulated absences paid - (199) Increase in deferred revenue 159,431 - Net increase in long term security deposits 100 - Net (increase)/decrease in long term loans to employees (275) 310 Net cash generated from operating activities 1,492,855 773,451 CASH FLOWS FROM INVESTING ACTIVITIES: Fixed capital expenditure (40,410) (14,061) Sale proceeds of fixed assets 8,605 3,471 Investments made in related parties (64,500) (22,446) Dividend received 14,453 17,566 Return on deposits received 26,869 17,409 Net cash (used in)/generated from investing activities (54,983) 1,939 CASH FLOWS FROM FINANCING ACTIVITIES: Dividend paid (39,744) (190,131) Net increase in cash and cash equivalents 1,398,128 585,259 Cash and cash equivalents at the beginning of the year 649,715 64,456 Cash and cash equivalents at the end of the year 38 2,047,843 649,715 ============================================================================================= ==================================================================================================================== STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED JUNE 30, 2005 ==================================================================================================================== (Rupees in thousand) Revenue reserves Share General Unapprop- Unrealized gain capital reserve riated on revaluation Total Notes profit of investments ==================================================================================================================== Balance as at June 30, 2003 - as previously reported 80,094 1,111,500 625 19,089 1,211,308 Effect of change in accounting policy 4.1 - (137,000) 265,150 - 128,150 Balance as at June 30, 2003 - as restated 80,094 974,500 265,775 19,089 1,339,458 Final dividend for the year ended June 30, 2003 - - (128,150) - (128,150) Transfer to general reserve - 137,000 (137,000) - - Interim dividend @ Rs 8 per share - - (64,075) - (64,075) Net profit of the year - - 394,622 - 394,622 Unrealised gain on revaluation of investment - - - 6,693 6,693 Balance as at June 30, 2004 - as restated 80,094 1,111,500 331,172 25,782 1,548,548 Final dividend for the year ended June 30, 2004 - - (40,0470) - (40,047) Transfer to general reserve - 250,500 (250,500) - - Issuance of bonus shares 40,047 - (40,047) - - Net profit for the year - - 453,862 - 453,862 Unrealised gain on revaluation of investments - - - 12,767 12,767 Balance as at June 30, 2005 120,141 1,362,000 454,440 38,549 1,975,130 ====================================================================================================================NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2005 1. LEGAL STATUS AND NATURE OF BUSINESS The Company is incorporated in Pakistan under the Companies Ordinance, 1984 and is listed on Karachi, Lahore and Islamabad Stock exchanges. Its registered office is situated at Sheikhupura Road, District Sheikhupura. It is engaged in assembly and manufacture of agricultural tractors, implements and equipments. 2. STATEMENT OF COMPLIANCE These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan and the requirements of 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 Companies Ordinance, 1984 or the said directives take precedence. 3. BASIC OF MEASUREMENT These financial statements have been prepared under the historical cost convention, except as modified by exchange differences referred to in note 4.15 and financial instruments which are stated at fair value. 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 4.1. CHANGE IN ACCOUNTING POLICY The company has changed its policy for the recognition of dividends declared and other appropriations made out of available profits after the balance sheet date. The change has been necessitated by amendment in the Companies Ordinance, 1984 and the current policy is now in compliance with the International Accounting Standards (IAS) 10 'Events After the Balance Sheet Date'. As per the new policy, the dividends declared and appropriations made out of available profits after the balance sheet date are considered as non-adjusting events and are not recognized in the financial statements. The change in accounting policy has been made retrospectively and comparative information is 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 accounting policy, the unappropriated profit would have been lower by Rs. 454,253 thousand (2004: Rs. 330,594 thousand), general reserves would have been higher by Rs 238,000 thousand (2004: Rs 250,500 thousand), the capital reserve for issuance of bonus shares and liability against proposed dividend would have been higher by Rs 36,042 (2004: Rs 40,047 thousand) and Rs 180,211 thousand (2004: Rs 40,047 thousand) respectively. 4.2. EMPLOYEE BENEFITS The main features of the schemes operated by the Company for its employees are as follows: (a) The company operates an approved defined benefit funded pension scheme for its employees eligible under Employees Pension Fund Rules. Monthly contributions are made to this fund on the basis of actuarial recommendation. The latest valuation was carried out as at June 30, 2005 using the projected unit credit method. The future contribution rates of this plan include allowances for deficit and surplus. Following significant assumptions are used for valuation of this scheme: -- Expected rate of increase in salary level 8 (2004: 5.9) percent per annum. -- Expected rate of return of 8 (2004: 8) percent per annum on plan assets. -- Discount rate of 9 (2004: 8) percent pr annum. Actual return on plan assets for the year was Rs. (78,020) thousand (2004: Rs. 162,873 thousand). The company policy with regard to actuarial gain/(loss) is to follow minimum recommended approach under IAS-19. (b) The company operates an approved defined contribution funded gratuity scheme of permanent employees who joined before July 1, 2004. Based on the graduated scale, under the scheme, the contributions are calculated with reference to last drawn salary and length of service of the employees and are paid over to the Employees Gratuity Fund Trust. During the year Rs 5,792 thousand (2004: Rs 5,919 thousand) has been recognised as an expense by the company. (c) The company operates and approved defined contribution provident fund for all permanent employees. Equal contributions are made by employees and the company at the rate of 10 percent of basic salary per month. During the year Rs 4,344 thousand) has been recognized as expense by the company. (d) The company provides for accumulating compensated absences, when the employees render services that increase their entitlement to future compensated absences. Retirement benefits are payable to staff on completion of prescribed qualifying period of service under the scheme. 4.3. TAXATION Current taxation The charge for current taxation for the year is based on taxable income at the current rates of taxation after taking into account tax credits and tax rebates realizable, if any. Current tax liabilities/(assets) for the current and prior years are measured at the amount to be paid to/(recovered from) the taxation authorities, using the applicable tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred taxation Deferred tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized for all deductible temporary differences to the extent it is probable that taxable profits will be available against which the deductible temporary differences will be utilized unless prohibited by the International Accounting Standard IAS-12. Deferred tax assets and liabilities are measured at the tax rates that 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 the tax rates, that have been enacted or substantively enacted by the balance sheet date. 4.4. PROPERTY, PLANT AND EQUIPMENT Operating fixed assets except land are stated at cost less accumulated depreciation. Land and capital work in progress are stated at cost. Depreciation on operating fixed assets except leasehold office building is charged to profit and loss account on reducing balance method so as to write off the cost of an asset over its estimated useful life at the rates given in note 12. Cost of leasehold building is amortized over 20 years @ 5 percent per annum. The full annual rate of depreciation is applied on the cost of additions, while no depreciation is charged on assets deleted during the year. Maintenance and repairs are charged to income as and when incurred. Major renewals and improvements are capitalized. Gains and losses on deletion of assets are taken to profit and loss account. 4.5. LONG TERM INVESTMENTS SUBSIDIARY Investment in subsidiary company is carried at cost less impairment loss, if any. Associates Investment in associated companies is stated at cost less impairment loss, if any. Other All other investments are initially recognized at cost, being fair value of the consideration given and including acquisition charges associated with investments and classified as held for trading or available for sale. After initial recognition, investments which are classified as held for trading and available for sale are measured at fair value. Investments held for trading are those which are either acquired for generating a profit from short term fluctuation in prices or dealer's margin, or are securities included in a portfolio in which a pattern of short term profit taking exists. Investment intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity or change in interest rates are classified as available for sale. After initial recognition, investments held to maturity are recognised at amortized cost using the effective interest rate method. Investments held to maturity are financial assets with fixed or determinable payments and fixed maturity that the enterprise has the positive intent and ability to hold to maturity other than loans and receivables originated by the enterprise. Gains and losses on investments held for trading are recognized in income. Gains and losses on investments available for sale are recognised as separate component of equity until investments are sold, disposed off or until the investment is determined to be impaired, at which time the accumulated gain/loss previously reported in equity is included in profit and loss account. All purchases and sales of investments are recognized on the trade date, which is the date when the company commits to purchase or sell the investments. The fair value of publicly traded investments is based on quoted market prices at the balance sheet date. 4.6. STORES AND SPARES These are valued principally at the lower of moving average cost and net realizable value. Items in transit are valued at cost comprising invoice value plus other charges paid thereon. Provision is made for slow moving and obsolete items. 4.7. STOCK IN TRADE Stock of raw material, except for raw material in transit, work in process and finished goods are valued principally at the lower of average cost and Net Realizable Value. Cost of work in process and finished goods comprised cost of direct material, labour and appropriate manufacturing overheads. Raw material in transit is stated at cost comprising invoice value plus other charges paid thereon. Net Realizable Value signifies the estimated selling price in the ordinary course of business less costs necessary to be incurred in order to make a sale. 4.8. TRADE DEBTS Receivables are carried at original invoice amount less an estimate for doubtful receivable balances based on review of outstanding amounts at the year's end. Bad debts are written off when identified. 4.9. IMPAIRMENT The Company assesses at each balance sheet date whether there is any indication that assets excluding inventory may be impaired. If such indication exists, the carrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverable amount. Where carrying values exceed recoverable amount, assets are written down to their recoverable amount and the difference is charged to the profit and loss account. 4.10. CASH AND CASH EQUIVALENTS For the purpose of cash flow statement, cash and cash equivalents consist of cash in hand, postage stamps, cheques/demand drafts in hand, deposits in banks and short term investments, net of bank overdrafts repayable on demand. 4.11. REVENUE RECOGNITION -- Revenue from sale of goods is recognized on dispatch of goods to customers. -- Revenue from warranty and maintenance services is recognized on the basis of services performed to date as a percentage of total services to be performed. -- Dividend is recognized as income when the right to receive dividend is established. -- Profit on bank deposits is recognized on accrual basis. 4.12. RESEARCH AND DEVELOPMENT COSTS These costs are charged to profit and loss account when incurred. 4.13. BORROWING COST Borrowing costs are charged to profit and loss account when incurred. 4.14. PROVISIONS Provision are recognized when the company has a legal or constructive obligation as a result of past events and 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. 4.15. FOREIGN CURRENCIES Transactions in foreign currencies are translated into Pak rupees at the rates of exchange approximating those prevailing on the date of transaction. Monetary assets and liabilities in foreign currencies are translated into rupees at the exchange rates prevailing at the balance sheet date. Exchange differences are included in profit and loss account currently. 4.16. FINANCIAL INSTRUMENTS Financial instruments carried on the balance sheet include investments, long term loans, receivables, cash and bank balances, short term running finances, creditors, accrued and other liabilities. Financial assets and liabilities are recognized at cost which is the fair value of the consideration given or received at the time the company becomes a party to the contractual provisions of the instruments. Financial assets and liabilities are derecognised on the cessation of effective control. Any gain or loss on subsequent measurement at fair value and derecognition is charged to profit and loss account currently, except for gain or loss on subsequent measurement of investments available for sale which are treated in the manner as referred to in note 4.5. 4.17. OFF SETTING OR FINANCIAL ASSETS AND FINANCIAL LIABILITIES A financial asset and a financial liability is offset and the net amount is reported in the balance sheet if the company has a legally enforceable right to set off the recognised amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. 4.18. PRICING FOR RELATED PARTY TRANSACTIONS Transactions with related parties are priced at comparable uncontrolled market price except for those transactions with key management personnel carried under the terms of employment as approved by the Board of Directors. 5. ISSUED, SUBSCRIBED AND PAID UP CAPITAL ========================================================================================
2005 2004 2005 2004
(Number of shares) (Rupees in thousand)
========================================================================================
2,542,857 2,542,857 Ordinary shares of Rs 10/- each
fully paid in cash 25,429 25,429
Ordinary shares of Rs 10/- each
issued as fully paid bonus shares
5,466,531 5,466,531 - Opening balance 54,665 54,665
4,004,694 - - Issued during the year 40,047 -
9,471,225 5,466,531 94,712 54,665
12,014,082 8,009,388 120,141 80,094
========================================================================================6. DEFERRED REVENUE=============================================================================================
2005 2004
Note (Rupees in thousand)
=============================================================================================
Receipts during the year 230,936 -
Less Recognised in profit and loss
during the year 25 71,505 -
Closing balance 159,431 -
=============================================================================================This represents amounts received from customers of tractors for providing warranty and maintenance services.7. SECURITY DEPOSITS These represent security deposits from dealers which by virtue of agreement, are interest free and used in company's business. 8. TRADE AND OTHER PAYABLES =============================================================================================
2005 2004
Notes (Rupees in thousand)
=============================================================================================
Creditors 8.1 364,526 231,552
Accrued liabilities 104,925 88,922
Bills payable 990,746 325,675
Advances from customers 8.2 2,472,748 1,128,211
Security deposits 8.3 3,533 2,793
Royalty/Technical service fee payable 124,153 106,519
Workers' profit participation fund 8.4 37,825 31,977
Workers' welfare fund 34,550 20,550
Custom duty and other taxes 6,976 12,731
Unclaimed dividend 10,785 10,482
Others 12,575 15,617
4,163,342 1,975,029
=============================================================================================8.1. Creditors include amount due to associated company Rs 67,614 thousand (2004: Rs 17,386 thousand).8.2. These represent advance against sale of tractors and carry no mark-up. 8.3. These represent security deposits from contractors which, by virtue of agreement, are interest free, repayable on demand and are used in Company's business. 8.4. WORKERS' PROFIT PARTICIPATION FUND =============================================================================================
2005 2004
Note (Rupees in thousand)
=============================================================================================
Opening balance 31,977 21,994
Add: Allocation for the year 31 37,812 31,977
69,789 53,971
Less: Payments made during the year 31,964 21,994
Closing balance 37,825 31,977
=============================================================================================9. MARK-UP ACCRUED ON SECURED LOANSThis represents mark-up accrued on secured loans obtained from different banks against aggregated sanctioned limit of Rs 1,020,870 thousand (2004: Rs 1,161,220 thousand). Mark-up is payable quarterly at rate ranging from paisas 20.08 to paisas 23.9 (2004: paisas 8.21 to 17.8 paisas) per Rs 1,000 per day. Additionally the company has the facilities for opening of letters of credit and guarantees aggregating to Rs 1,548,130 thousand (2004: Rs 1,675, 580 thousand) out of which Rs 956,582 thousand (2004: Rs 392,820 thousand) remained unutilized at the end of the year. These facilities are secured by pari passu hypothecation charge over current assets of the company, lien over import documents and counter guarantees of the company. 10. PROVISION FOR WARRANTY =============================================================================================
2005 2004
(Rupees in thousand)
=============================================================================================
Opening balance 8,132 3,678
Less: Utilised during the year 8,132 3,678
- -
Add: Provided during the year 1,018 8,132
Closing balance 1,018 8,132
=============================================================================================For corresponding year, these represented provision against warranty and free service for company's products based on the management's best estimate of future outflow of resources during the next financial year.During the year, the company discontinued providing warranty and service free of cost and started to charge for these services. However, the current provision is made against sales covered under free service and warranty. 11. CONTINGENCIES AND COMMITMENTS Contingencies -- Guarantees to bank for repayment of loan by employees amount to Rs 5,000 thousand (2004: Rs 10,000 thousand), the amount utilised as at June 30, 2005 was Rs 2,630 thousand (2004: 3,660 thousand). -- Guarantees issued by the banks on behalf of the company in the normal course of business amount to Rs. 125,790 thousand (2004: Rs. 220,500 thousand). -- Claims not acknowledged by the company as debt amount to Rs 518 thousand (2004: Rs 518 thousand). -- The company is defending a counter suit for Rs 19,579 thousand (2004: Rs 19,579 thousand), filed by an ex-vendor on account of damages and inconvenience. The management and the legal advisor are confident that outcome of the case would by in the company's favour and no loss in likely to occur. - The Deputy Collector (Adjudication) raised additional tax demand of Rs 16,189 thousand (2004: Rs 16,189 thousand) {including penalty of Rs 5,000} against certain claims of input tax by the company. The company has filed appeal against the demand. - However, an amount of Rs 14,913 thousand (2004: Rs 2,088 thousand) has been charged in these financial statements being the best estimate by the management of the company. -- The Deputy Collector (Adjudication) raised additional tax demand of Rs 7,745 thousand (2004: Rs 7,745 thousand) for prices charged in excess of those prescribed by the Government. The company filed appeal against the demand However, amount of Rs 1,797 thousand (2004: 1,797 thousand) has been provided in these financial statements being the best estimate of the possible outcome of the claim based on the legal advice obtained by the management. The Customs Excise and Sales Tax Appellate Tribunal Lahore, decided the case in favour of the company and set aside the demand of Rs 7,745 thousand being additional tax. The Collector of Sales Tax, Lahore, has filed an appeal in the Lahore High Court against the aforesaid judgement. -- The Collector (Adjudication) Customs, issued a show cause notice to the company regarding non-payment of customs duties amounting to Rs 14,785 thousand (2004: 14,785 thousand), sales tax amounting to Rs 7,998 thousand (2004: Rs 7,998 thousand) and income tax of Rs 3,088 thousand (2004: Rs 3,088 thousand) on import of components that were deleted under the approved deletion program. However, no provision in this respect has been made in these financial statements, as the management and the legal advisor of the company are of the view that the company has a prima facie valid claim. -- Employees Old Age Benefit Institution raised a demand of Rs 16,725 thousand (2004: Rs 16,725 thousand) including penalty amounting to Rs 5,571 thousand (2004: Rs 5,571 thousand). The basis of this demand are yet to be communicated to the company. The amount of liability can not be estimated reliably and thus no provision in this respect is recognised in these financial statements. -- The company is defending suits in the Social Security Court filed by the Social Security Department aggregating Rs 6,827 thousand regarding less payment of the social security contribution. The management and the legal adviser of the company are confident that no loss is likely to occur as a result of these cases and hence no provision there against is made in these financial statements. Commitments -- Commitments in respect of outstanding letters of credit amount to Rs 465,758 thousands (2004: Rs 1,062,260 thousand). 12. PROPERTY, PLANT AND EQUIPMENT =============================================================================================
2005 2004
Notes (Rupees in thousand)
=============================================================================================
Operating fixed assets - Tangible 12.1 236,408 226,763
Capital work in progress 12.2 - 940
Advance for purchase of vehicles 2,375 12,884
238,783 240,587
=============================================================================================12.1. OPERATING FIXED ASSETS - TANGIBLE==========================================================================================================================================================================
COST DEPRECIATION
Book value
As on Additions/ Assets As on As on For Adjustment Adjustment As on as on
PARTICULARS July 01, (deletions) written off June 30, July 01, the on on June 30, June 30, Rate
2004 during the during the 2005 2004 year disposal write off 2005 2005 (%)
year year
==========================================================================================================================================================================
(Rupees in thousand)
==========================================================================================================================================================================
land - Freehold 31,169 - - 31,169 - - - - - 31,169 -
- Leasehold 8 - - 8 - - - - - 8 -
Building on
freehold land 170,631 - - 170,631 112,716 5,423 - - 118,139 52,492 5-10
Office building
on leasehold land 2,900 - - 2,900 1,740 145 - - 1,885 1,015 5
Plant and machinery 215,147 3,947 - 219,094 162,672 5,642 - - 168,314 50,780 10
Tools and equipment 54.151 3,072 - 57,223 34,373 3,411 - - 37,784 19,439 15
Fumiture, fixture
and equipment 20,725 2,796 - 23,521 11,867 1,331 - - 13,198 10,323 10-20
Vehicles 112,294 37,799 - 125,708 60,810 16,428 (17,243) - 59,995 66,713 20
(24,385)
Computers 17,872 4,245 - 22,117 13,956 2,692 - - 16,648 5,469 33
2005 624,897 51,859 - 652,371 398,134 35,072 (17,243) - 415,963 236,763
2004 654,036 34,590 (51,912) 624,897 417,028 31,420 (8,367) (41,947) 398,134 226,763
(11,817)
==========================================================================================================================================================================Included in tools and equipment are assets having net book value of Rs 3,209 thousand (2004: Rs 3,775 thousand) held by a third party on behalf of the company.12.1.1. THE DEPRECIATION CHARGE FOR THE YEAR HAS BEEN ALLOCATED AS FOLLOWS =============================================================================================
2005 2004
Notes (Rupees in thousand)
=============================================================================================
Cost of sales 26 18,766 19,265
Distribution cost 27 4,419 4,764
Administrative expenses 28 11,887 7,391
35,072 31,420
=============================================================================================12.1.2.Detail of the assets disposed off having net book value exceeding Rs 50,000 is as follows: ==========================================================================================================================
Accumulated Sale
Descriptio Cost depreciation W.D.V proceeds Mode of disposal Sold to Designation
==========================================================================================================================
(Rupees in thousand)
==========================================================================================================================
VEHICLES:
540 482 58 270 Auction Mr. Akhtar Hussain -
517 430 87 355 Auction Mian Ashfaq -
280 221 59 235 Auction Mr. Khalid Mahmood -
253 200 53 145 Auciton Malik Chaudhary -
2,580 2,032 548 548 Company car scheme Mr. Laeequddin Ansari Director
2,505 1,971 534 534 Company car scheme Mr.Sohail Bashir Rana Director
2,649 1,955 694 694 Company car scheme Mr.Sikandar M. Khan Director
943 696 247 247 Company car scheme Mr. Muhammad Saleem Director
586 432 154 154 Company car scheme Mr. Bashir A. Chaudhary Director
586 432 154 154 Company car scheme Mr. Mubashir Iqbal Employee
616 455 161 161 Company car scheme Mr. Javed Munir Employee
280 207 73 73 Company car scheme Mr. Azhar Noor Employee
586 432 154 154 Company car scheme Mr. Shaukat Ali Sheikh Employee
616 455 161 161 Company car scheme Dr. Syed Amer Ali Employee
267 197 70 70 Company car scheme Mr. Mansoor Alvi Employee
562 415 147 147 Company car scheme Mr. Ashfaq Farooqi Employee
280 207 73 73 Company car scheme Mr. Anwar Naz Employee
280 207 73 73 Company car scheme Mr. Muhammad Ali Uppal Employee
562 415 147 147 Company car scheme Mr. Shafaat Ahmad Employee
368 272 96 96 Company car scheme Mr. Muhammad Akbar Employee
280 207 73 73 Company car scheme Mr. Qamar Islam Employee
280 207 73 73 Company car scheme Mr. Manzoor Ahmad Employee
606 447 159 159 Company car scheme Mr. Aslam Khokhar Employee
606 447 159 159 Company car scheme Mr. Asad Iqbal Employee
619 457 162 162 Company car scheme Mr. Muhammad Akram Employee
466 313 153 153 Company car scheme Mr. Pervaiz Butt Employee
759 448 311 311 Company car scheme Mr. Zaair Farid Shah Employee
599 292 307 307 Company car scheme Mr. Arshad Saeed Employee
774 279 495 495 Company car scheme Mr. Rehan A. Qureshi Employee
840 168 672 672 Company car scheme Mr. Zaair Farid Shah Employee
==========================================================================================================================12.2.Capital work in progress has been transferred to operating fixed assets. 13. LONG TERM INVESTMENTS =============================================================================================
2005 2004
Notes (Rupees in thousand)
=============================================================================================
INVESTMENT IN RELATED PARTIES
IN SUBSIDIARY COMPANIES
UNQUOTED:
Millat Industrial Products (Pvt) Limited
300,000 (2004: 240,000) fully paid
ordinary shares of Rs 100/ 30,000 24,000
Equity held 100% (2004: 100%). Value
of investment based on the net assets
shown in the audited accounts as at June 30, 2005
is Rs 19,364 thousand (2004: Rs 24,000 thousand)
Millat Equipment Limited
11,700,000 (2004: 5,000,000) fully
paid ordinary shares of Rs 10/- each 13.1 - 50,000
Equity held 45% (2004: 100%)
Value of investment based on
the net assets shown in the audited
accounts as at June 30, 2005 is
Rs 105,774 thousand (2004: Rs 38,133 thousand)
Less: Impairment loss - 20,916
- 29,084
Advance for subscription in
shares of Millat Equipment Ltd. - 8,500
IN ASSOCIATED COMPANIES
QUOTED:
Bolan Castings Limited
2,555,907 (2004: 2,555,907) fully
paid ordinary shares of Rs 65,364 65,364
Equity held 46.26% (2004: 46.26%). Market
value as at June 30, 2005 is Rs 173,802
thousand 2004: Rs 181,469 thousand).
UNQUOTED:
Millat Equipment Limited
11,700,000 (2004: 5,000,000) fully paid
ordinary shares of Rs 10/- each 13.1 117,000 -
Equity held 45% (2004: 100%)
Value of investment based on the net assets
shown in the audited accounts as at
June 30, 2005 is Rs 105,774 thousand
(2004: Rs 38,133 thousand)
Less: Impairment loss 20,916 -
96,084 -
Arabian Sea Country Club Limited
500,000 (2004: 500,000) fully paid
ordinary shares of Rs 10/- 5,000 5,000
Equity held 6.45% (2004: 6.45%). Value of
investment based on the net assets shown
in the audited accounts as at June 30, 2004
is Rs 2,945 (2003: Rs 2,971) thousand
Less: Impairment loss 5,000 5,000
- -
Agrimall (Private) Limited
2,000 (2004: 2,000) fully paid
ordinary shares of Rs 10/- each 20 20
Equity held 20% (2004: 20%). Value of
investment based on the net assets
shown in the audited accounts as at
June 30, 2004 is Rs (7,476) thousand (2003: Rs Nil)
Less: Impairment loss 20 20
- -
Other investment-Available for sale
Baluchistan Wheels Limited
1,115,500 (2004: 1,115,500)
fully paid ordinary shares of Rs 10/- each 12,145 12,145
Surplus on revaluation on investment 27,232 25,782
Market value as at June 30, 2005 39,377 37,927
230,825 164,875
=============================================================================================13.1. During the year, percentage of shareholding in Millat Equipment Limited has been reduced due to which its status has changed from a subsidiary to an associated company.14. LONG TERM LOANS - CONSIDERED GOOD =============================================================================================
2005 2004
Notes (Rupees in thousand)
=============================================================================================
Loan to related party 14.1 900 900
Other loans 14.2 6,001 5,726
Less: Current portion included in current assets 19 2,497 2,527
3,504 3,199
4,404 4,099
=============================================================================================14.1. Unsecured loan bearing mark up @ 6% per annum was advanced to Agrimall (Private) Limited, an associated undertaking engaged in agricultural business and acting interalia as a dealer of the company.The loan shall be exclusively used for promotion of the company's products. The repayment terms are yet to be finalised. The maximum aggregate amount due at the end of any month amount to Rs 900 thousand (2004: Rs 900 thousand). 14.2. These include interest fee loans to employees aggregating to Rs 2,817 thousand (2004: Rs 2,348 thousand) and are secured against their gratuity and provident fund balances. Interest free loans to employees for purchase of motor cycles aggregating to Rs 3,184 thousand (2004: Rs 3,377 thousand) are secured by joint registration of motor cycles in the name of the employees and the company. These loans are repayable in monthly installments over a period of 2 to 5 years. Long term loans outstanding for more than three years amount to Rs 495 thousand (2004: Rs 388 thousand). The maximum aggregate amount due at the end of any month during the year from the Chief Executive and Directors is Rs Nil (2004: Nil). 15. DEFERRED TAX In respect of each type of temporary difference, the amount of the deferred tax assets and liabilities recognised in the balance sheet are as follows: =============================================================================================
2005 2004
(Rupees in thousand)
=============================================================================================
Accelerated depreciation for tax purposes (5,015) (1,344)
Provision for doubtful advances, trade debts and receivables
that are deductible for tax
purposes only when written off 5,486 5,661
Provision for warranty and free
service that is deductible
for tax purposes only when paid 356 2,846
Net deferred tax asset at the year-end 827 7,163
=============================================================================================16. STORES AND SPARESMost of the items of stores and spares are of inter-changeable nature and can be used as machine spares or consumed as stores. Accordingly, it is not practical to distinguish stores from spares until their actual usage. 17. STOCK-IN-TRADE =============================================================================================
2005 2004
(Rupees in thousand)
=============================================================================================
Raw materials including in transit Rs 496,727 thousand
(2004: Rs 558,712 thousand) 2,092,219 1,227,898
Work - in - process 24,849 24,733
FINISHED GOODS:
Manufacturing 165,939 120,034
Trading 31,147 29,566
Others 303 302
2,314,457 1,402,533
=============================================================================================Included in stocks are raw material and components held with third Parties amounting to Rs. 26,335 thousand (2004: Rs. 20,037 thousand).18. TRADE DEBTS =============================================================================================
2005 2004
(Rupees in thousand)
=============================================================================================
Trade debts - Considered good 133,435 120,022
- Considered doubtful 12,605 12,605
Less: Provision for doubtful (12,605) (12,605)
- -
133,435 120,022
=============================================================================================All debts are unsecured except for Rs 2,350 thousand (2004: Rs 1,555 thousand) which are secured against deposits.19. LOANS AND ADVANCES =============================================================================================
2005 2004
Notes (Rupees in thousand)
=============================================================================================
Current portion of long term loans to employees 14 2,497 2,527
Advances to employees - considered good 19.1 1,465 1,891
Advances to suppliers - considered good 31,792 27,211
- considered doubtful 2,224 2,224
Less: Provision for doubtful advances (2,224) (2,224)
- -
31,792 27,211
Less: of credit - opening charges 3,999 6,143
39,753 37,772
=============================================================================================19.1. Included in advances to employees are amounts due from the Chief Executive and directors Rs Nil (2004: Rs Nil)The maximum aggregate amount at the end of any month during the year due from the Chief Executive is Rs 460 thousand (2004: Rs 293 thousand) and directors Rs 724 thousand (2004: Rs 476 thousand) in respect of travel advance. 20. TRADE DEPOSITS, PREPAYMENTS AND BALANCES WITH STATUTORY AUTHORITIES =============================================================================================
2005 2004
(Rupees in thousand)
=============================================================================================
Trade deposits and prepayments 5,251 9,077
Sales tax recoverable 594,251 636,507
Custom duty recoverable from government authorities - 108,504
599,502 754,088
=============================================================================================21. INTEREST ACCRUED=============================================================================================
2005 2004
(Rupees in thousand)
=============================================================================================
Return accrued on bank deposits 8,014 1,155
Return accrued on loan to associated undertaking 108 54
8,122 1,209
=============================================================================================22. OTHER RECEIVABLES=============================================================================================
2005 2004
Note (Rupees in thousand)
=============================================================================================
Pension fund 22.1 16,748 4,210
Claims receivable from principal suppliers 48,049 50,188
Other receivables - Considered good 5,210 683
- Considered doubtful 846 1,346
Less: Provision for doubtful receivables (846) (1,346)
- -
5,210 683
70,007 55,081
=============================================================================================22.1. PENSION FUND=============================================================================================
2005 2004
Notes (Rupees in thousand)
=============================================================================================
THE AMOUNTS RECOGNISED IN THE
BALANCE SHEET ARE AS FOLLOWS:
Present value of defined benefit obligation (253,518) (273,043)
Fair value of plan assets 311,868 386,348
Unrecognised actuarial gains - net (41,602) (109,095)
Asset at the end of the year 16,748 4,210
Asset at the beginning of the year 4,210 7,322
Charge for the year 22.1.1 5,148 (10,640)
Contribution by the company 7,390 7,528
Asset at the end of the year 16,748 4,210
=============================================================================================22.1.1. SALARIES, WAGES AND AMENITIES INCLUDE THE FOLLOWING=============================================================================================
2005 2004
(Rupees in thousand)
=============================================================================================
IN RESPECT OF EMPLOYEES' PENSION SCHEME:
Current service cost 11,746 11,390
Interest cost for the year 21,843 23,097
Expected return on plan assets (30,908) (24,335)
Net actuarial gain recognised in the year (7,829) -
Amortisation of non vested past service cost - 488
(5,148) 10,640
=============================================================================================23. SHORT-TERM INVESTMENTS=============================================================================================
2005 2004
(Rupees in thousand)
=============================================================================================
Held to maturity - Term deposits 1,750,000 -
Available for sale- Mutual fund units at cost 590,961 -
Surplus on revaluation of investment 11,317 -
Market value as at June 30 602,278 -
2,352,278 -
=============================================================================================24. CASH AND BANK BALANCES=============================================================================================
2005 2004
(Rupees in thousand)
=============================================================================================
AT BANKS:
Deposit accounts 117,125 416,577
Current accounts 166,007 226,494
283,132 643,071
IN HAND:
Demand drafts 14,438 6,638
Cash 273 6
297,843 649,715
=============================================================================================25. SALES=============================================================================================
2005 2004
Notes (Rupees in thousand)
=============================================================================================
LOCAL:
Tractors 7,905,366 6,699,847
Implements 15,733 11,837
Multiapplication products 176,169 154,364
Trading goods 113,588 86,270
Warranty and maintenance services 6 71,505
8,282,361 6,952,318
EXPORT:
Tractors 143,171 115,318
Multiapplication products 2,083 2,101
Trading goods - 104
145,254 117,523
8,427,615 7,069,841
Less: Commission 101,384 84,919
25.1 8,326,231 6,984,922
=============================================================================================25.1. Sales are exclusive of sales tax of Rs 30,231 thousand (2004: 51,279 thousand).26. COST OF SALES =============================================================================================
2005 2004
Notes (Rupees in thousand)
=============================================================================================
Components consumed 6,962,064 5,726,490
Salaries, wages and amenities 26.1 176,643 169,485
Fuel and power 24,543 21,935
Communication 1,441 1,606
Travelling and vehicle running 7,321 6,461
Printing and stationery 1,287 1,255
Insurance 8,371 8,517
Repair and maintenance 10,636 9,604
Stores and spares consumed 18,135 15,795
Royalty/Technical service fee 110,576 129,393
Research and development 209 73
Deprecation 12.1.1 18,766 19,265
Other expenses 1,693 1,920
7,341,685 6,111,799
Add: Opening work in process 24,733 26,837
Less: Closing work in process (24,849) (24,733)
(Increase)/Decrease in work-in-process (116) 2,104
Cost of goods manufactured 7,341,569 6,113,903
Add: Opening finished goods 120,034 79,147
Less: Closing finished goods (165,939) (120,034)
Increase in finished goods stock (45,905) (40,886)
Cost of ales - manufactured 7,295,664 6,073,017
Cost of sales - trading 26.2 89,360 64,569
Cost of sales - warranty and maintenance service 26.3 13,848 -
7,398,872 6,137,586
=============================================================================================26.1. Salaries, wages and amenities include Rs (2,663) thousand (2004: Rs 5,504 thousand) in respect of pension expense.26.2. COST OF SALES - TRADING =============================================================================================
2005 2004
(Rupees in thousand)
=============================================================================================
Opening stock 29,566 24,908
Purchases 90,941 69,227
Closing stock (31,147) (29,566)
Cost of goods sold 89,360 64,569
=============================================================================================26.3. COST OF SALES - WARRANTY AND MAINTENANCE SERVICES=============================================================================================
2005 2004
Note (Rupees in thousand)
=============================================================================================
Warranty expenses 2,619 -
Maintenance services 2,617 -
Service department expenses 26.3.1 8,612 -
13,848 -
=============================================================================================26.3.1.This includes salaries and amenities amounting to Rs 5,565 thousand (2004: Nil). 27. DISTRIBUTION COST =============================================================================================
2005 2004
Notes (Rupees in thousand)
=============================================================================================
Salaries and amenities 27.1 35,428 43,259
Fuel and power 1,992 2,054
Communication 1,372 1,658
Travelling and vehicle running 6,513 9,039
Rent, rates and taxes 510 698
Printing and stationery 5,043 4,026
Insurance 3,781 3,329
Warranty expenses 4,329 17,676
Free service 2,277 6,862
Advertisement and sale promotion 9,456 7,048
Depreciation 12.1.1 4,419 4,764
Meeting / convention 5,468 -
Other expenses 3,659 2,832
84,247 103,245
=============================================================================================27.1. Salaries and amenities include Rs (968) thousand (2004: Rs 2,001 thousand) in respect of pension expense.28. ADMINISTRATIVE EXPENSES =============================================================================================
2005 2004
Notes (Rupees in thousand)
=============================================================================================
Salaries and amenities 28.1 73,246 68,385
Fuel and power 2,977 2,679
Communication 2,104 2,203
Travelling and vehicle running 10,447 8,141
Printing and stationery 942 1,462
Insurance 3,725 3,219
Repairs and maintenance 7,278 4,704
Security expenses 4,670 4,204
Legal and professional charges 28.2 4,568 5,836
Depreciation 12.1.1 11,887 7,391
Fixed Assets written off - 9,965
Other expenses 8,617 6,097
130,461 124,286
=============================================================================================28.1.Salaries and amenities include Rs (1,517) thousand (2004: Rs 3,135 thousand) in respect of pension expense. 28.2. Legal and professional charges include the following in respect of auditors, services for: =============================================================================================
2005 2004
(Rupees in thousand)
=============================================================================================
Statutory audit including half year review 250 250
Special reports and sundry certifications 55 11
Out of pocket expenses 50 50
355 311
=============================================================================================29. OTHER INCOME=============================================================================================
2005 2004
(Rupees in thousand)
=============================================================================================
Rental income 2,084 1,959
Net profit on disposal of fixed assets 1,462 21
Return on bank deposits 33,728 16,355
Scrap sales 1,266 2,891
Interest income on loan to associated company 54 54
Dividend income from associated company 12,780 15,335
Dividend income from other investments 1,673 2,231
Interest charged on early payments and advances 2,292 2,547
Unclaimed balances written back 1,354 -
Others 5,974 4,838
62,667 46,231
=============================================================================================30. FINANCE COST=============================================================================================
2005 2004
(Rupees in thousand)
=============================================================================================
Mark up on short - term running finance - secured 1,631 8,746
Bank charges and commission 921 2,439
2,552 11,185
=============================================================================================31. OTHER CHARGES=============================================================================================
2005 2004
Notes (Rupees in thousand)
=============================================================================================
Workers, profit participation fund 8.4 37,812 31,977
Workers, welfare fund 14,000 12,200
Sales tax and additional tax charged 12,825 -
Sales Tax receivable written off 31.1 4,228 -
Allowance for doubtful debts - 12,605
Donations 31.2 320 166
Impairment loss on investment in associated company - 20
Exchange loss 3,383 2,541
72,568 59,509
=============================================================================================31.1. This represents sales tax on utilities disallowed by the Sales Tax authorities.31.2. A director is interested in donation of Rs 100 thousand given to Lahore Hospital Welfare Society, Lahore to the extent that his spouse is a council member of the hospital (2004: None). 32. TAXATION =============================================================================================
2005 2004
(Rupees in thousand)
=============================================================================================
Current year 240,000 210,500
Prior year - (117)
240,000 210,383
Deferred expense/income relating to origination
and reversal of temporary differences 6,336 (9,663)
246,336 200,720
=============================================================================================32.1. NUMERICAL RECONCILIATION BETWEEN AVERAGe=============================================================================================
2005 2004
% %
=============================================================================================
EFFECTIVE TAX RATE AND THE APPLICABLE TAX RATE:
Applicable tax rate 35.00 35.00
Effect of applicability of lower tax rates on certain items (0.85) (1.24)
Tax effect of amounts that are non deductible for tax purpose 1.03 (0.05)
0.18 (1.29)
=============================================================================================33. NON ADJUSTING EVENTS AFTER THE BALANCE SHEET DATEDividend declared after the balance sheet date amounts to Rs 180,211 thousand (Rs. 15.00 per share) {2004: Rs 40,047 thousand (Rs 5.00 per share)}, while appropriation to general reserve and for issuance of bonus shares made after the balance sheet date amount to Rs 238,000 thousand and Rs 36,042 thousand respectively (2004: Rs 250,500 thousand and Rs 40,407 thousand respectively). 34. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES The aggregate amounts charged in the accounts for the year for remuneration including certain benefits to the Chief Executive, full time working directors and executives of the Company are as follows: =================================================================================================
Chief Executive Directors Executives
2005 2004 2005 2004 2005 2004
=================================================================================================
(Rupees in thousand)
=================================================================================================
Number of persons 1 1 6 5 - -
Remuneration 898 886 3,472 3,017 - -
Bonus 1,646 1,272 6,401 4,406 - -
House rent 404 398 1,562 1,358 - -
Contribution to provident
and gratuity funds 245 240 240 814 - -
Pension contribution 153 151 151 513 - -
Medical expenses 30 89 89 894 - -
Utilities 176 154 154 753 - -
Other reimbursable expenses 677 590 590 2,049 - -
4,229 3,780 12,659 13,804 - -
=================================================================================================The company also provides the Chief Executive, directors and certain employees with free use of Company maintained cars and residential telepones.Remuneration to other directors: Aggregate amount charged to profit and loss account for the year in respect of fee to two directors (2004: two director) was Rs 10 thousand (2004: Rs 7 thousand). 35. RELATED PARTY TRANSACTIONS The related parties and associated undertaking comprise associated companies, companies in which directors are interested, staff retirement funds, directors and key management personnel. Transactions with related parties and associated undertakings, are as under:
======================================================================================
(Rupees in thousand)
======================================================================================
Relation with the company Nature and transaction 2005 2004
======================================================================================
Associated companies Sale of goods 1,525 2,988
Purchase of components 598,498 395,928
Dividend income 12,780 15,335
Rental income 60 -
Other related parties Purchase of components 47,671 36,815
Sale of equipment 269 -
Retirement benefit plans Contribution to staff
retirement benefit plans 4,286 20,989
====================================================================================== Information regarding vehicles sold to key management employees at written down value as approved by the Board of Directors is as follows:=========================================================================================
Nature of relationship No of Cumulative Cumulative Cumulative
employees market transaction price
value value difference
=========================================================================================
Key management employees 9 4,142 2,807 1,335
=========================================================================================The impact on net profit, equity and cash flows is Rs. 865 thousand (2004: Rs. 813 thousand).36. BASIC EARNINGS PER SHARE-RUPEES Earnings per share are calculated by dividing the net profit for the year by the weighted average number of shares outstanding during the year as follows: =============================================================================================
2005 2004
=============================================================================================
Profit for the year after tax (Rupees in thousand) 453,862 394,622
Average number of ordinary shares in issue 12,014,082 12,014,082
Earnings per share (Rupees) 37.78 32.85
=============================================================================================No figure for diluted earnings per share has been presented as the company has not issued any instruments carrying options which would have an impact on earnings per share when exercised.37. CASH GENERATED FROM OPERATIONS =============================================================================================
2005 2004
(Rupees in thousand)
=============================================================================================
Net profit before taxation 700,198 595,342
ADJUSTMENT FOR NON CASH CHARGES AND OTHER ITEMS:
Depreciation 35,072 31,420
Provision for accumulating compensated absences 2,468 (5,917)
Sales tax recoverable written off 12,825 -
Allowance for doubtful debts 4,228 -
Fixed assets written off - 9,965
(Reversal of provision)/Provision for doubtful debts (500) 12,605
Unclaimed balances written back (1,354) -
Impairment loss on investment in associated company - 20
Financial charges 2,552 11,185
Gain on disposal of fixed assets (1,462) (21)
Dividend income (14,453) (17,566)
Return on deposits (33,728) (16,355)
Operating profit before working capital changes 705,846 620,678
Increase in stores and spares (2,548) (4,520)
Increase in stock in trade (911,924) (592,132)
(Increase)/Decrease in trade debts (13,413) 17,389
Increase in loans and advances (2,011) (24,456)
Decrease/(Increase) in trade deposits, prepayments and balances
with statutory authorities 137,533 (382,260)
Increase in interest accrued (54) (54)
Increase in other receivables (14,426) (5,227)
Increase in short term investments (590,961) -
Increase in creditors, accrued and other liabilities 2,190,137 1,283,550
(Decrease)/Increase in provision for warranty/ free service (7,114) 4,454
785,219 296,744
Cash generated from operations 1,491,065 917,422
=============================================================================================38. CASH AND CASH EQUIVALENTS=============================================================================================
2005 2004
(Rupees in thousand)
=============================================================================================
Cash and bank balances 297,843 649,715
Short - term investments (Terms Deposits) 1,750,000 -
2,047,843 649,715
=============================================================================================39. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES===================================================================================================================================
2005
===================================================================================================================================
Interest/mark up bearing Non interest bearing
Mark-up Maturity Maturity Maturity Maturity
rate upto after Sub upto after Sub Total
(%) one year one year total one year one year total
(Rupees in thousand)
===================================================================================================================================
FINANCIAL ASSETS:
Long term investments - - - - - 39,377 39,377 39,377
Long term loans 6 - 900 900 - - - 900
Loans to employees - - - - 2,497 3,504 6,001 6,001
Trade debts - - - - 146,040 - 146,040 146,040
Trade deposits - - - - 4,911 - 4,911 4,911
Return accrued on deposit - - - - 8,122 - 8,122 8,122
Other receivables - - - - 70,853 - 70,853 70,853
Short term investments - 2,352,278 - 2,352,278 - - - 2,352,278
Cash and bank balances 7.3 to 8.7 117,125 - 117,125 180,718 - 180,718 297,843
2,469,403 900 2,470,303 413,141 42,881 456,022 2,926,325
FINANCIAL LIABILITIES:
Trade and other payables - - - 1,600,458 - 1,600,458 1,600,458
Mark-up accrued on
secured loans - - - 155 - 155 155
- - - 1,600,613 - 1,600,613 1,600,613
OFF-BALANCE SHEET
FINANCIAL INSTRUMENTS:
Guarantees - - - - 127,108 1,318 128,426 128,426
Letters of credit - - - - 465,758 - 465,758 465,758
- - - - 2,193,479 1,318 2,194,797 2,194,797
===================================================================================================================================
===================================================================================================================================
2004
===================================================================================================================================
Interest/mark up bearing Non interest bearing
Mark-up Maturity Maturity Maturity Maturity
rate upto after Sub upto after Sub Total
(%) one year one year total one year one year total
===================================================================================================================================
(Rupees in thousand)
===================================================================================================================================
FINANCIAL ASSETS:
Long term investments - - - - - 37,927 37,927 37,927
Long term loans 6 - 900 900 - - - 900
Loans to employees - - - - 2,526 3,199 5,725 5,725
Trade debts - - - - 132,627 - 132,627 132,627
Trade deposits - - - - 8,875 - 8,875 8,875
Return accrued on deposit - - - - 1,209 - 1,209 1,209
Other receivables - - - - 56,427 - 56,427 56,427
Cash and bank balances 2.7 to 4.5 416,577 - 416,577 233,138 - 233,138 649,715
416,577 900 417,477 434,802 41,126 475,928 893,405
FINANCIAL LIABILITIES:
Trade and other payables - - - 771,078 - 771,078 771,078
Mark-up accrued on
secured loans - - - 237
771,315 - 771,078 771,078
OFF-BALANCE SHEET
FINANCIAL INSTRUMENTS:
Guarantees - - - - 210,255 10,275 220,500 220,500
Letters of credit - - - 1,062,260 - 1,062,260 1,062,260
- - - 2,043,800 10,275 2,053,838 2,053,838
===================================================================================================================================39.1. FINANCIAL INSTRUMENTS AND RISK MANAGEMENTOverall, risks arising from the company's financial instruments are limited. (a) Interest rate risk management The company borrows funds usually at fixed interest rates as such the risk arising is minimal. However, short term borrowings and bank deposits are exposed to it. (b) Concentrations of credit risk Credit risk represents the accounting loss that would be recongised at the reporting date if counter parties failed completely to perform as contracted. Out of total financial assets of Rs 2,926,325 thousand (2004: Rs 893,405 thousand), the financial assets which are subject to credit risk amounted to Rs 226,355 thousand (2004: Rs 203.053 thousand). The company believes that it is not exposed to major concentration of credit risk. To manage exposure of credit risk, the company in certain cases obtains advances from dealers. (c) Foreign exchange risk management Foreign currency risk arises mainly where receivables and payables exist due to transactions with foreign undertakings. The Company believes that it is not exposed to major foreign exchange risk. (d) Fair value of financial assets and liabilities The carrying values of all financial assets and liabilities reflected in the financial statements approximate their fair values. 40. CAPACITY AND PRODUCTION =============================================================================================
2005 2004
(Units) (Units)
Per annum Per annum
=============================================================================================
TRACTORS:
Plant capacity (single shift) 15,000 15,000
Actual production 22,358 19,132
=============================================================================================41. DATE OF AUTHORISATION OF ISSUE These financial statements were authorised for issue on September 20, 2005 by the Board of Directors of the company. 42. NUMBER OF EMPLOYEES The Company employed 481 employees as of June 30, 2005 (2004: 465). 43. CORRENSPONDING FIGURES Corresponding figures have been rearranged in compliance with the revised 4th Schedule to the Companies Ordinance, 1984 for the purposes of comparison. Additionally following rearrangements have been made: Corresponding figure of earnings per share has been revised to give effect to the issuance of bonus shares as if they have always been in issue. -- Corresponding figures of proposed dividend, transfer to reserve for issue of bonus shares and transfers to general reserve have been restated to give effect to the change in accounting policy as referred to in note 4.1. -- Corresponding figure of advance for purchase of vehicles has been reclassified from advances to suppliers to property, plant and equipment. -- Corresponding figures of fixed assets have been reclassified from furniture, fixtures and equipment to tools and equipment (Cost: Rs 584 thousand; accumulated depreciation: Rs 32 thousand). Security deposits from dealers amounting to Rs 8,785 thousand have been reclassified from 'Trade and other payables', as current liabilities to non-current liabilities. 44. STATEMENT UNDER SECTION 237 Consolidated financial statements pursuant to section 237 of the Companies Ordinance, 1984 are attached. 45. GENERAL Figures have been rounded off to the nearest thousand of rupees. |