Vision Statement
To be the leader in textile industry by building the Companys' image through quality, competitive prices, customer's satisfaction and meeting social obligation.
Mission Statement
Our Mission is to be recognized as a premium quality yarn
manufacturing unit.
The Unit is setup with an idea to cater to the premium market of
fine count compact yarn to satisfy the valuable customers.
To assume leadership role in the technological advancement of the
industry.
To benefit the customers, employees and
shareholders and to fulfill our commitments to the society.
Our trademark is honesty, innovation, fairness, teamwork of our people
and integrity in relationship with our customers, associates,
shareholders, community and stake holders.
CONTENTS
Company Information | 4 |
Notice of Annual General Meeting | 5 |
Chairman's Review | 7 |
Directors' Report | 8 |
Financial Highlights | 13 |
Statement of Compliance with Listed Companies | |
(Code of Corporate Governance) Regulations, 2019 | 14 |
Independent Auditors' Review Report to the Member on Statement of Compliance | |
contained in Listed Companies (Code of Corporate Governance) Regulations, 2019 | 16 |
Independent Auditors' Report | 17 |
Statement of Financial Position | 21 |
Statement of Profit or Loss | 22 |
Statement of Comprehensive Income | 23 |
Statement of Cash Flows | 24 |
Statement of Changes in Equity | 25 |
Notes to the Financial Statements | 26 |
Pattern of Share Holding | 49 |
55 |
57
Jama Punji
Form of Proxy
COMPANY INFORMATION
BOARD OF DIRECTORS | ||
Executive Directors | : | Syed Maqbool Ali |
Chief Executive Officer & Director | ||
Non-Exective Director | : | Mehmood-Ul-Hassan Asghar - Chairman, Board of Directors |
Mr. Ghazanfar Baber Siddiqi | ||
Mr. Abdul Basit | ||
Mr. Muhammad Hanif German | ||
Mrs. Nida Jamil | ||
Independent Director | : | Mr. Aziz -ul-Haque |
Audit Committee | : | Mr. Aziz -ul-Haque (Chairman) |
Mr. Abdul Basit (Member) | ||
Mr. Ghazanfar Baber Siddiqi (Member) | ||
Human Resources & Remuneration | : | Mr. Aziz -ul-Haque (Chairman) |
Committee | Mr. Mehmood-Ul-Hassan Asghar (Member) | |
Syed Maqbool Ali (Member) | ||
Auditors | : | Feroze Sharif Tariq & Company |
Chartered Accountants | ||
4/N/4 Block-6, P.E.C.H.S. Karachi | ||
Company Secretary | : | Mr. Muhammad Hanif German |
Chief Financial Officer | : | Mr. Muhammad Irfan Ali |
Tax Advisor | : | Abbas & Atif Law Associates |
Legal Advisor | : | Sharif & Co. Advocates |
Bankers | : | United Bank Limited |
Bank Islami Pakistan Limited | ||
MCB Bank Limited | ||
Silk Bank Limited | ||
Askari Bank Limited | ||
Allied Bank Limited | ||
Bank Makramah Limited | ||
Registered Office | : | Dewan Centre |
3-A, Lalazar Beach Hotel Road | ||
Karachi. | ||
Shares Registrar & Transfer Agent | : | BMF Consultants Pakistan (Private) Limited |
Anum Estate Building, Room No. 310 & 311, | ||
3rd Floor, 49, Darul Aman Society, | ||
Main Shahrah-e-Faisal, adjacent to Baloch Colony Bridge, | ||
Karachi 75350, Pakistan. | ||
Factory Office | : | 54 Km, Multan Road, Phool Nagar By Pass |
District Kasur, Punjab , Pakistan. | ||
Website | : | www.yousufdewan.com |
04 ANNUAL REPORT 2024
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that 21st Annual General Meeting of Dewan Farooque Spinning Mills Limited will be held at Dewan Cement Limited Factory Site, at Deh Dhando, Dhabeji, District Malir, Karachi, Pakistan on Thursday, November 28, 2024 at 12:00 noon. to transact the following businesses;
- To confirm the minutes of the preceding Extra Ordinary General Meeting of the Company held on Tuesday, August 27, 2024;
- To receive, consider, approve and adopt the annual audited financial statements of the Company for the year ended June 30, 2024, together with the Directors' and Auditors' Reports thereon;
- To confirm the appointment of the Statutory Auditors of the Company for the year ended June 30, 2025, and to fix their remuneration;
- To consider any other business with the permission of the Chair.
By order of the Board
Karachi: November 04, 2024 | Muhammad Hanif German |
NOTES: | Director & Company Secretary |
- The share transfer books of the company will remain closed from November 22, 2024 to November 28, 2024 (both days inclusive). Transfers received in order at the share registrar office M/s. BMF Consultants Pakistan (Private) Limited, Located at Anum Estate Building, Room No.310 & 311,3rd Floor,49, Darul Aman Society, Main Shahrah-e-Faisal, adjacent to Baloch Colony Bridge, Karachi, Pakistan.
- A member entitled to attend and vote at this meeting may appoint another member as his/her proxy to attend the meeting and vote for his/her behalf. proxies in order to be effective must be received at the Shares Registrar Office duly stamped and signed not less than 48 hours (Working days only) before the time of holding of the meeting.
CDC Account Holder will further have to follow the guidelines as laid down in Circular 1 dated January 26,2000 issued by Securities and Exchange commission of Pakistan for attending the meeting and appointment of proxies. - members are requested to promptly communicate the change in their addresses, if any, to the Company's share registrar.
-
Electronic Transmission of Financial Statements Etc.:
SECP through its notification No. SRO 787(1)/2014 dated September 8, 2014 has allowed companies to circulate Annual Audited Financial Statements along with Notice of Annual General Meeting through email instead of sending the same through post, to those members who desires to avail this facility? The members who desire to opt to receive aforesaid statements and notice of AGM through e-mail are requested to provide their written consent on the Standard Request Form available on the Company's website: http://www.yousufdewan.com/Dfsml/index.html -
Video Conference Facility:
Pursuant to the provisions of the Companies Act, 2017, member can avail video conference facility to participate in this Annual General Meeting provided that the company receives consent from the members holding in aggregate 10% or more shareholding, residing in a city, at least seven (7) days prior to the date of meeting. Subject to the fulfillment of the above conditions, members shall be informed of the venue along with complete information necessary to access the facility. Format of request form has been placed on the Company's website.
ANNUAL REPORT 2024 05
-
Attendance through Zoom:
The members may attend the AGM online through ZOOM, by following the below guidelines: - The member shall get himself/herself registered by sending his/her request to the Company at e- mail ID dfsml.corp@yousufdewan.com as per Standard Request Form available on the Company's website (http://www.yousufdewan.com/DFSML/index.html or can send his/her request to the Company Secretary at Dewan Centre, 3-A Lalazar Beach Hotel Road Karachi along with a legible copy of CNIC not later than November 26, 2024.
- Zoom link shall be sent by the Company only on email ID or Mobile/WhatsApp Number mentioned in Standard request Form.
-
Deposit of physical Shares into CDC Account;
As per section 72 of the Companies Act,2017 every existing company shall be required to replace its physical shares with book-entry form in a manner as may be specified and from the date notified by the commission, within a period not exceeding four years from the commencement of the Act i.e May 30,2017.
The physical Shareholders having physical shareholding are encouraged to open CDC Investor Account with CDC or CDC Sub-Account with any of the brokers to place their physical shares into Script less form. - E-VotingProcedure
- Details of the e-voting facility will be shared through an email with those members of the Company who have their valid CNIC numbers, cell numbers, and email addresses available in the register of members of the Company within due course.
- The web address, login details, will be communicated to members via email.
- Identity of the members indenting to case vote through E-voting shall be authenticated through authenticated login.
- E-Votinglines will start from November 22, 2024 at 10 am and shall close on November 27, 2024 at 5 p.m. Members can cast their votes any time in the period.
- Postal Ballot
For voting through Postal Ballot members may exercise their right to vote as per provisions of the Companies (Postal Ballot) Regulations, 2018 subject to the requirement of Section 143 and 144 of the Companies Act, 2017. Further details in this regard will be communicated to the shareholders within the legal time frame as stipulated under these said Regulations, if required.
The members shall ensure that duly filed and signed ballot paper along with copy of CNIC should reach the Chairman of the meeting through post on the Company's Registered office or email at dfsml.corp@yousufdewan.com one day before the Annual General Meeting i.e., November 27, 2024 during the working hours. The signature on the ballot paper shall match with the signature on CNIC or Company records. - Particulars of Physical Shareholders:
According to section 119 of the Companies Act, 2017 and Regulation 19 of the Companies (General Provisions and Forms) Regulations, 2018, all physical Shareholders are advised to provide their mandatory information such as CNIC number, address, email address, contact mobile/telephone number, International Bank Account Number (IBAN), etc. to Company's Share Registrar at their address M/s. BMF Consultants Pakistan (Private) Limited, Located at Anum Estate Building, Room No. 310 & 311, 3rd Floor, 49, Darul Aman Society, Main Shahrah-e-Faisal, adjacent to Baloch Colony Bridge, Karachi, email (bmfconsultantspakistan@gmail.com) immediately to avoid any non-compliance of law or any inconvenience in future.
06 ANNUAL REPORT 2024
CHAIRMAN'S REVIEW
I am pleased to present a report on the overall performance of the Board of Directors and effectiveness of the role played by the board in achieving the company's objectives. The board of directors is responsible for the management of the company, which formulates all significant policies and strategies. The board is governed by relevant laws & regulations and its obligation, rights, responsibilities and duties are as specified and prescribed therein.
The Board of Directors comprises of individuals with diversified knowledge who endeavour to contribute towards the aim of the Company with the best of their abilities.
An annual self-evaluation of the Board of Directors of the Company is carried out. The purpose of this evaluation is to ensure that the Board's overall performance and effectiveness is measured and benchmarked against expectations in the context of objectives set for the Company.
During financial year ended June 30, 2024, four board meetings were held. The Board of Directors of the Company received agendas and supporting material in advance prior to the board and its committee meetings. All Directors are equally involved in important decisions. The Board's overall performance and effectiveness for the year under review was satisfactory.
Mehmood-ul-Hassan Asghar
Chairman Board of Directors
Date: November 04, 2024
Place: Karachi
ANNUAL REPORT 2024 07
DIRECTORS' REPORT
IN THE NAME OF ALLAH; THE MOST GRACIOUS AND THE MERCIFUL
IF YE GIVE THANKS, I WILL GIVE YOU MORE (HOLY QURAN)
Dear Shareholder(s),
Assalam-o-Alykum!
The Board of Directors of your Company are pleased to present the Annual Audited Financial Statements of the Company for the year ended June 30, 2024 together with the Auditors' Report thereon.
Economic Overview
The restoration of macroeconomic stability is imperative for establishing a platform to stimulate growth, enhance employment, and improve the overall quality of life for the people. The year was marked by numerous challenges and uncertainties, including low foreign exchange reserves, international economic slowdown, unprecedented surge in energy prices and finance costs, and political instability. The operating environment was further complicated by a slowdown in economic activity due to high production costs. However, in the latter part of ?scal year 2024, despite of these challenges Pakistan's economy experienced a resurgence in moderate growth and a reduction in external pressures due to government's disciplined ?scal and monetary policies that played a key role in restoring market confidence and boosting growth across various sectors. In fiscal year 2024, Pakistan's GDP increased by 2.38 percent, with strong growth in agriculture sector which expanded by 6.25 percent (2.27% in FY23). While both the industrial and services sectors grew by 1.21 percent (-2.94% in FY 23). The State Bank of Pakistan has reduced its policy rate in last three monetary policy committee meetings from 22.0% to 17.50% while Inflation decreased significantly from 38.0% to 17.3% year over year. Due to import compression policy import bills remained slightly decreased by 0.72% (12.7% in FY23). In contrast, the country's exports, on the other hand, witnessed commendable growth of 10.65% to USD 30.67 (USD 27.72 in FY23). Similarly, the remittances also plunged by 10.7% to USD 31.25 billion (USD 27.72 in FY23) thus significantly supporting foreign reserves. As a result, the current account deficit sharply declined by 79% to USD 681 million.
Industrial Overview
Textile, being a major sector of Pakistan's economy contributes around 60% to the country's exports and provides employment to 40% of the country's total labor force. Textile sector has recorded slight growth and its exports experienced an increase of 0.93% during the FY 2024 totaling USD 16.5 billion (USD 16.5 billion in FY23). The spinning industry at the start of cotton year was very optimistic that the price for cotton would be reduced due to anticipated growth in cotton crop but in contrary to this, country has witnessed a significant negative growth of 63.55% in cotton production. According to the latest cotton statistics released by the Pakistan Cotton Ginners Association (PCGA) as of September 15, 2024, total cotton arrivals have reached 1.434 million bales (3.934 million in FY 2023). As per experts estimate that 25% of the overall cotton crop has been damaged by rains, prompting the textile industry to place import orders for 1.6 million bales to meet domestic demand, which is expected to rise further, burdening the national economy by billions of dollars.
Operating results and performance:
The operating results for the year under review are as follows:
"Rupees" | |
REVENUE | 446,380,125 |
COST OF REVENUE | (887,457,918) |
GROSS LOSS | (441,077,793) |
OPERATING EXPENSES | (41,495,317) |
OPERATING LOSS | (482,573,110) |
OTHER INCOME | 79,848,618 |
FINANCE COST | (267,486) |
LEVIES | (5,279,752) |
LOSS BEFORE TAXATION | (408,271,730) |
TAXATION - NET | 25,212,835 |
LOSS AFTER TAXATION | (383,058,895) |
08 ANNUAL REPORT 2024
During the year ended 30th June 2024, Company's net revenue has decreased to Rs.446.380 million from Rs. 448.344 million of last year. Company has suffered gross loss of Rs. 441.078 million, whereas operating expenses of the company remained at Rs. 41.495 million as compared to Rs. 44.636 million of corresponding year. Due to working capital constraints, the company continued the production of yarn on contract basis to keep the company operational.
In financial year ended 2012, Company had settled with its lenders through Compromise Agreement against which consent decrees had been passed by the Honorable High Court of Sindh, Karachi. Company's short term and long term loans had been rescheduled in the form of long term loans, however certain lenders having suits of Rs.37.405 million, did not accept the restructuring proposal at that time. Consequent to default in repayment of restructured liabilities as per compromise agreement, the lenders filed for executions of consent decrees. The Company filed suits in Honorable High Court of Sindh at Karachi wherein it has been strongly contested that filing of executions is unjust and against the law. Management of the Company expects favorable outcome therefrom.
The Auditors of the company have expressed qualified opinion in their report on default in repayment of installments of restructured liabilities and related non-provisioning of mark-up as explained in their report. They have also added matter of emphasis paragraph in their report regarding doubt about company's ability to continue as going concern.
Company has approached its lenders for further restructuring of its liabilities without markup, which is in process. Management is hopeful that such revision will be finalized soon. Moreover, the markup outstanding up to the date of restructuring is Rs.210.713 million, for which the company would be liable to pay in the event of default of terms of agreement, the management is confident that upon finalization of revised restructuring, this amount will remain eligible for waiver, hence no provision of the same has been made in these financial statements.
These financial statements have been prepared using going concern assumption as the conditions referred in note 2 are temporary and would reverse in foreseeable future. Further, sponsors also provide the support as and when required to meet the working capital requirements of the company and accordingly, the preparation of these financial statements using going concern assumption is justified.
Future Outlook
The country's economic stability would largely depend on political firmness, proactive & prudent monetary policy and will remain heavily dependent on Extended Fund Facility (EFF) comes from IMF program. The economic outlook will largely depend on political stability and the continued implementation of reforms under the IMF program. The path ahead also presents numerous challenges for the economy and industries as the fresh EFF comes at the cost of a substantial increase in energy prices and the withdrawal of various subsidies, which may lead to a resurgence of inflation and exchange rate adjustment, impacting policy rates. The situation may further be compounded by the implications of recent budgetary measures on the textile industry, such as the withdrawal of zero-rating on local supplies under the Export Facilitation Scheme ("EFS"), imposition of duties on the import of certain raw materials, and change in taxation regime from Final Tax Regime (FTR) to Normal Tax Regime (NTR). These measures may not only exacerbate the cash flow issues and create unnecessary hassle but will potentially affect the export competitiveness of the industries. Therefore, we foresee that the spinning industry will go through a tough period threatening to result in the decreased profitability of the industry.
Further, for the globally competitiveness in the wake of prevalent economic crunch, we expect the government will focus on structural reforms, addressing the fundamental flaws those lead to recurring economic crises. To boost exports and foreign exchange, and to enable the exporters to compete internationally, the government should prioritize export-oriented sectors, including the textile industry. This involves facilitating the import of raw materials, parts, and accessories, further decrease in current interest rate presently too exorbitant for any business to sustain and also ensuring the availability of utilities at rationalized power tariff. Further, Taxation structure is expected to create ease of doing business and with a focus on expanding the tax-base rather than over burdening existing payers. The next year is a challenging year for not only the company but also for the economy of Pakistan.
Corporate Social Responsibilities
We are also committed to Corporate Social Responsibility (CSR) and integrating sound social practices in our day to day business activities. The Company is committed to make conscious effort to consider and balance the interest of all stakeholders, in particular the community in which we live and workers who are the core of our business. We measure our success not only in terms of financial criteria but also in building customer satisfaction and supporting the communities we serve.
ANNUAL REPORT 2024 09
Health, Safety and Environment
The management of the company is aware of its responsibility to provide a safe and healthy working environment to our associates and give highest priority to it. Our safety culture is founded on the premise that all injuries are preventable if due care is taken. Continual efforts for provision of safe, healthy and comfortable working conditions for the employees are made. We follow up and investigate on all incidents and injuries to address their root causes. We believe that safety and health is a journey of continuous improvement and eternal diligence. We will continue to take steps to improve the safety and health of our associates.
Human Resource
The management of the Company is committed to excellence and has a clear vision that human resources and strong leadership practices are important enablers of high productivity and sustainable competitive advantage of our Company. Therefore, management of the Company gives much importance to the optimal use of human resources by way of training proper guidance, motivation and incentive schemes for the employees.
Corporate and Financial Reporting
Your Company is committed to good corporate governance. The Board acknowledges its responsibility in respect of Corporate and Financial Reporting Framework. The Directors confirm that:
- The financial Statements presented by the management of the Company give a fair account of the state of affairs, the results of its operations, cash flow and changes in equity.
- Proper books of accounts have been maintained.
- Accounting policies have been consistently applied in the preparation of financial statements, except for certain changes whose impact have been appropriately disclosed in the financial statements and accounting estimates are based on reasonable and prudent judgment.
- International Financial Reporting Standards as applicable in Pakistan have been followed in preparation of financial statements and any departure there from, if any, has been adequately disclosed.
- The system of internal controls, which is in place, is sound in design and has been effectively implemented and monitored.
- There has been no material departure from the best practices of the corporate governance, except as disclosed in auditors review report.
- The Company has constituted an Audit Committee from amongst the non-executive members of its Board.
- The Board has prepared and circulated a Statement of Ethics and Business Practices amongst its members and the company's employees.
- Doubts upon the company's Going Concern and mitigating factors have appropriately been disclosed in the financial statements.
- Information regarding the outstanding taxes and Levies is given in the notes to the financial statements.
- As required under the Code of Corporate Governance, the following information has been presented in this report:
- Pattern of Shareholding;
- Shares held by associated undertaking and related persons;
Board
The Board of Directors comprises of individuals with diversified knowledge who endeavor to contribute towards the aim of the Company with the best of their abilities. Complete details of remuneration of CEO and directors are given in note 34 to the financial statements.
10 ANNUAL REPORT 2024
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