| Bata Pakistan Ltd - 2006 |
|
BALANCE SHEET AS AT DECEMBER 31, 2006
==================================================================================
2006 2005
Note Rs. '000s Rs. '000s
==================================================================================
CAPITAL AND RESERVES
Authorized capital
10,000,000 ordinary shares of Rs. 10 each 100,000 100,000
Issued, subscribed and paid up capital 4 75,600 75,600
Reserves and surplus
Capital reserve 5 483 483
General reserve 6 582,000 510,000
Unappropriated profit 39,480 32,099
621,963 542,582
697,563 618,182
NON-CURRENT LIABILITIES
Long term deposits 7 22,136 20,467
Deferred Liabilities 8 66,610 67,836
88,746 88,303
CURRENT LIABILITIES
Trade and other payables 9 616,519 431,112
Mark - up accrued 10 1,991 8,607
Short term borrowings 11 - 215,766
Provision for taxation 12 9,912 3,211
628,422 658,696
CONTINGENCIES AND COMMITMENTS 13
TOTAL EQUITY AND LIABILITIES
NON-CURRENT ASSETS
Property, plant and equipment 14 332,726 282,645
Intangible assets 15 - 1,295
Long term investments 16 22,136 20,467
Long term deposits and prepayments 17 28,607 31,672
Deferred taxation 18 17,280 9,925
400,749 346,004
CURRENT ASSETS
Stores and spares 19 14,418 29,998
Stock in trade 20 716,738 606,765
Trade debts 21 129,434 317,722
Loans and advances 22 1,709 691
Deposits, short term prepayments and
other receivables 23 36,028 28,953
Tax refunds due from Government 24 32,772 -
Cash and bank balances 25 82,883 35,048
1,013,982 1,019,177
TOTAL ASSETS 1,414,731 1,365,181
==================================================================================PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED DECEMBER 31, 2006==================================================================================
2006 2005
Note Rs. '000s Rs. '000s
==================================================================================
NET SALES 26 2,989,474 2,543,344
COST OF SALES 27 1,876,653 1,605,938
GROSS PROFIT 1,112,821 937,406
OPERATING EXPENSES
Selling and distribution 28 626,844 542,283
Administrative 29 223,391 210,654
850,235 752,937
OPERATING PROFIT 262,586 184,469
FINANCE COST 30 33,151 40,087
229,435 144,382
OTHER INCOME 31 7,215 2,784
PROFIT FOR THE YEAR 236,650 147,166
OTHER OPERATING EXPENSES 32 69,830 18,631
PROFIT BEFORE TAXATION 166,820 128,535
PROVISION FOR TAXATION
Current 64,712 54,402
Prior years (158) (3,366)
Deferred (7,355) (6,417)
57,199 44,619
PROFIT AFTER TAXATION 109,621 83,916
EARNINGS PER SHARE 33 Rs.14.50 Rs.11.10
==================================================================================CASH FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2006==================================================================================
2006 2005
Rs. '000s Rs. '000s
==================================================================================
CASH FLOW FROM OPERATING ACTIVITIES
Profit before taxation 166,820 128,535
Adjustment for non - cash charges and other items:
Depreciation 39,007 39,657
Amortization 1,295 1,294
Provision for gratuity 5,609 4,547
Profit on property, plant and equipment sold and scrapped (1,779) (1,360)
Finance cost 33,151 40,087
77,283 84,225
Operating profit before working capital changes 244,103 212,760
Net changes in operating assets
and liabilities (Schedule attached) 243,171 (92,367)
Finance cost paid (39,767) (33,676)
Income taxes paid (57,853) (69,424)
Gratuity paid (6,835) (3,033)
Net cash inflow from operating activities 382,819 14,260
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (91,515) (57,689)
Proceeds of property, plant and equipment sold 4,206 3,234
Increase in long term investments (1,669) (1,106)
Net cash outflow from investing activities (88,978) (55,561)
CASH FLOW FROM FINANCING ACTIVITIES
Change in short term borrowings (215,766) 47,202
Dividends paid (30,240) (11,340)
Net cash (outflow) / inflow from financing activities (246,006) 35,862
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS 47,835 (5,439)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 35,048 40,487
CASH AND CASH EQUIVALENTS AT END OF YEAR (Note - 25) 82,883 35,048
==================================================================================SCHEDULE OF NET CHANGES IN OPERATING ASSETS AND LIABILITIES FOR THE YEAR ENDED DECEMBER 31, 2006==================================================================================
2006 2005
Rs. '000s Rs. '000s
==================================================================================
Stores and spares 15,580 7,924
Stock in trade (109,973) (65,518)
Trade debts 188,288 (3,358)
Loans and advances (1,018) 3,543
Deposits, short term prepayments and other receivables (7,075) (6,150)
Tax refunds due from Government (32,772) -
Trade and other payables 185,407 (20,148)
Long term deposits - employees securities 1,669 1,106
Long term deposits and prepayments 3,065 (9,766)
243,171 (92,367)
==================================================================================STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED DECEMBER 31, 2006=======================================================================================================
(Rupees in '000s)
Share Capital General Unappropriated
Capital Reserve Reserve Profit Total
=======================================================================================================
Balance at December 31, 2004 75,600 483 457,000 12,523 545,606
Net profit for the year - - - 83,916 83,916
Final dividend 2004 @ Rs. 1.50 per s - - - (11,340) (11,340)
Transfer to general reserve - - 53,000 (53,000) -
Balance at December 31, 2005 75,600 483 510,000 32,099 618,182
Net profit for the year - - - 109,621 109,621
Final dividend 2005 @ Rs. 4.00 per s - - - (30,240) (30,240)
Transfer to general reserve - - 72,000 (72,000) -
Balance at December 31, 2006 75,600 483 582,000 39,480 697,563
=======================================================================================================NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2006az.1!1. LEGAL STATUS AND OPERATIONS Bata Pakistan Limited is a public limited company incorporated in Pakistan and is quoted on Lahore and Karachi Stock Exchanges. The address of its registered office is Batapur, Lahore. The Company is engaged mainly in the manufacturing and sale of footwear of all kinds. 2. STATEMENT OF COMPLIANCE These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan and the requirements of the Companies Ordinance, 1984. Approved accounting standards comprise of such International Accounting Standards as notified under the provisions of the Companies Ordinance, 1984. Wherever, the requirements of the Companies Ordinance, 1984 or directives issued by the Securities and Exchange Commission of Pakistan differ with the requirements of these standards, the requirements of the Companies Ordinance, 1984 or the requirements of the said directives take precedence. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 3.1. Basis of Preparation These financial statements have been prepared under the historical cost convention except that certain employee benefits are recognized on the basis mentioned in note 3.3. In these financial statements, except for cash flow statement, all the transactions have been accounted for on accrual basis. The preparation of financial statements in conformity with IASs requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underline assumptions are reviewed on an on going basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised. Significant areas requiring the use of the management estimates in these financial statements relate to the useful life of depreciable assets, investment held to maturity, provision for doubtful receivables and slow moving inventory. However, assumptions and judgments made by management in the application of accounting policies that have significant effect on the financial statements are not expected to result in material adjustment to the carrying amounts of assets and liabilities in the next year. 3.2. Standards, Interpretations and Amendments to Published Approved Accounting Standards that are not yet effective During the year International Accounting Standard Board has revised LAS - 1, "Presentation of Financial Statements". The amendments impose additional requirements for capital disclosures effective for financial period beginning on or after January 1, 2007. Adoption of the above amendments may only impact to the extent of disclosures presented in the financial statements. 3.3. Staff Retirement Benefits Defined Benefit Plan The Company operates an un-funded gratuity scheme covering all employees, excluding managerial staff. The entitlement to gratuity is determined as follows: (a) For employees who are member of the provident fund scheme, the provision is calculated with reference to 3 weeks' basic salary for each completed year of service. (b) For employees who are not member of the provident fund scheme, provision is based on 30 days gross highest salaries / wages drawn during the year for each completed year of service. The valuation for provision of gratuity was carried out as on December 31, 2006 using the Projected Unit Credit Method. Actuarial gains and losses are recognized in accordance with the provision of IAS 19 (revised 2000) "Employee Benefits" i.e. by recognizing 50% of the opening actuarial gains and losses in the current year. Defined Contribution Plan The company operates a recognized provident fund scheme for its employees. Equal monthly contributions by the company and employees at the rates of 8% and 10% of the basic salary are made to employees provident fund and managerial staff provident fund respectively. 3.4. Taxation Current The charge for current taxation is provided on taxable income relatable to local sales at current rate of tax after recognizing tax credit and rebates available, if any or minimum tax under section 113 of the Income Tax Ordinance, 2001 whichever is higher. In case of import and export of shoes, the current taxation is provided on the basis of presumptive tax regime in accordance with the provisions of Section 169 of the Income Tax Ordinance, 2001. Deferred Deferred taxation is provided on all temporary timing differences by using the balance sheet liability method. The deferred income tax assets are recognized for all deductible temporary differences, carry-forward unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary difference, carry-forward of unused tax assets and unused tax losses can be utilized. The carrying amount of deferred income 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 of the deferred income tax assets to be utilized. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the liability is settled based on tax rates that have been enacted or substantively enacted at the balance sheet date. 3.5. Property, plant & equipment and depreciation Tangible (a) Fixed assets are stated at cost less accumulated depreciation and impairment losses, if any, except land and capital work in progress which are stated at actual cost. (b) Depreciation is charged to income applying reducing balance method at the rates prescribed in note - 14 of these financial statements to write off the cost over the useful lives of these assets. The basis of depreciation are changed in accordance with the requirements of IAS 16 "Property, Plant and Equipment" whereby depreciation with effect from January 1, 2006 is charged on basis of period of use. Depreciation on additions to property, plant and equipment is charged from the month in which an asset is available for use while no depreciation is charged for the month in which the asset is disposed off. (c) Subsequent expenditure relating to an item of property, plant and equipment that has already been recognized is added to the carrying amount of the asset when it is probable that future economic benefits, in excess of the originally assessed standard of performance of the existing asset, will flow to the company. Every other subsequent expenditure is recognized as an expense in the period in which it is incurred. (d) Gains and losses on deleted assets are included in the profit and loss account. Intangible (a) Costs that are clearly associated with an identifiable asset, which has a probable benefit beyond one year, are recognized as intangible asset. (b) Intangible assets are amortized using the straight line method over their estimated useful lives, at the rates prescribed in note - 15 of these financial statements. In transit (a) Plant and equipment in transit is stated at cost. 3.6. Investments These are classified as Held -to- Maturity and stated at cost. Profit received / accrued on these investments is reflected in income currently. 3.7. Stores and Spares These have been valued on the following basis, subject to an estimated obsolescence reserve maintained with effect from the year 2004 whereby the value of these items will be amortized over a period of three years or earlier on actual redundancy: ==============================================================================
BASIS
==============================================================================
Own production At production cost
Purchased At lower of moving average cost and net realizable value
In transit At actual cost
==============================================================================3.8. Stock in TradeThese have been valued on the basis of lower of cost and net realizable value, as under: ==============================================================================
BASIS
==============================================================================
Raw material
Own production At production cost
Purchased At lower of moving average cost and net realizable value
In transit At actual cost
Goods in process At production cost
Finished goods
Own production At lower of production cost and net realizable value
Purchased products At lower of actual cost and net realizable value
In transit At actual cost
==============================================================================Production cost consists of prime cost and proportionate production overheads. While net realizable value means the selling prices in the ordinary course of business less estimated cost of completion and incidental selling expenses.3.9. Trade Debts and Other Receivables Receivables considered bad by the management are provided for or written off but no general provision is made for doubtful balances. 3.10. 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 future for goods and services. 3.11. Commitments and Contingencies Capital commitments and contingencies, unless those are actual liabilities, are not incorporated in the accounts. 3.12. Foreign Currencies Foreign currency transactions during the year are translated into Pak Rupees at the exchange rates prevailing on the date of transaction. Monetary assets and liabilities in foreign currencies are translated into Pak rupees at the rate of exchange ruling on the balance sheet date. Exchange gains and losses are included in the income currently. 3.13. Borrowing Cost Borrowing cost is charged to income when incurred. 3.14. Provisions A provision is recognized in the balance sheet when the company has a legal or constructive obligation as a result of a past event; it is probable that an outflow of economic resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of obligation. 3.15. Dividend Dividend is recognized as a liability in the period in which it is approved. 3.16. Cash and Cash Equivalents Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of cash flow statement, cash and cash equivalents comprise of cash in hand, cash in transit and bank balances. 3.17. Financial Instruments Recognition and measurement The financial assets and liabilities are recognized at cost when the company becomes a party to the contractual provisions of the instrument. Financial instruments includes investments, trade debts, loans and advances, deposits, cash and bank balances, short term borrowings, trade and other payable. Any gain or loss on subsequent re-measurement to fair value of financial assets and financial liabilities is taken to profit and loss account on occurrence. Offsetting of financial assets and financial liabilities A financial asset and liability is offset against each other and the net amount is reported in the balance sheet if the company has legally enforceable right to set off the recognized amount and intends either to settle on net basis or realize the asset and settle the liability simultaneously. 3.18. Impairment The carrying amounts of the company's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment loss. If any such indication exists, the recoverable amount of such assets is estimated and impairment loss is recognized in the profit and loss account. 3.19. Related Party Transactions All transactions involving related parties arising in the normal course of business are conducted at arm's length at normal commercial rates on the same terms and conditions as third party transactions using valuation modes as admissible, except in extremely rare circumstances where, subject to approval of the Board of Directors, it is in the interest of the company to do so. 3.20. Revenue Recognition Revenue from sale is recognized on delivery of goods to customers. Export sales are recorded on the basis of goods shipped to customers. Profit on investments is accounted for on accrual basis, while profit on saving bank account is accounted for on the basis of actual receipt. 4. ISSUED, SUBSCRIBED AND PAID UP CAPITAL =============================================================================================
2006 2005
Rs. '000s Rs. '000s
=============================================================================================
2006 2005
Number of Number of
Share Share
=============================================================================================
Ordinary shares of Rs. 10 each
1,890,000 1,890,000 fully paid in cash 18,900 18,900
Ordinary shares of Rs. 10 each
300,000 300,000 Issued for consideration other than cash 3,000 3,000
Ordinary shares of Rs. 10 each
5,370,000 5,370,000 Issued as fully paid bonus shares 53,700 53,700
7,560,000 7,560,000 Paid-up-Capital 75,600 75,600
=============================================================================================4.1. Bafin (Nederland) B.V., held 4,536,000 (2005: 4,536,000) ordinary shares of Rs. 10 each fully paid up.4.2. Bata Limited, Canada, is the ultimate holding company of Bata Pakistan Limited. 5. aCAPITAL RESERVE ===================================================================================
2006 2005
Rs. '000s Rs. '000s
===================================================================================
483 483
===================================================================================This represents the balance of foreign shareholders' equity in Globe Commercial Enterprises Limited (an associated undertaking) gifted to the company on its winding up and it is not available for distribution.6. GENERAL RESERVE ===================================================================================
2006 2005
Rs. '000s Rs. '000s
===================================================================================
Balance at January 1, 510,000 457,000
Transfer from profit and loss account 72,000 53,000
582,000 510,000
===================================================================================7. LONG TERM DEPOSITS===================================================================================
2006 2005
Rs. '000s Rs. '000s
===================================================================================
Employees' securities and personal account 22,136 20,467
===================================================================================7.1. This represents the securities deposited by the employees in accordance with the terms of employment and the amounts credited on account if commission etc. to the sales staff. Interest at the rate of 8.5 % per annum is being paid on thc monthly outstanding balances.7.2. In accordance with provisions of Section 227 of the Companies Ordinance, 1984 this amount has been invested in Habib Zurich Fixed Deposit Certificates and PLS saving bank account and is shown separately as long term investments (Note - 16). 8. DEFERRED LIABILITIES Provision for gratuity - defined benefits plan 8.1. The principal actuarial assumptions used in the valuation 31st December are as follows: =================================================================================
2006 2005
=================================================================================
Contribution rates As per Rules As per Rules
Expected rate of salary increase in future years 9% 8%
Discount rate 10% 9%
Average expected remaining
working life time of employees l2 Years 11 Years
=================================================================================The discount rate used in last actuarial valuation as on December 31, 2005 was 9%. However, in the current investment environment, where there is an upward trend in the interest rate structure, the discount rate has been increased to 10% in line with the requirements of the IAS - 19 Correspondingly the rate of expected long term future salary has been increased to 9% per annum.8.2. Movement in the net liability recognized in the balance sheet is as follows: =================================================================================
2006 2005
Rs. '000s Rs. '000s
=================================================================================
Opening liability 67,836 66,322
Amount recognized during the year 5,609 4,547
Payments made by the Company during the year (6,835) (3,033)
Closing liability 66,610 67,836
=================================================================================8.3. The amount recognized on the balance sheet is as follows:=================================================================================
2006 2005
Rs. '000s Rs. '000s
=================================================================================
Present Value of defined benefit obligation 64,326 66,470
Less: Non-vested past service
cost to be recognized in later periods (1,255) (1,713)
Add: Actuarial gains to be recognized in later periods 3,539 3,079
66,610 67,836
=================================================================================8.4. The amount recognized in the profit and loss account is as follows:=================================================================================
2006 2005
Rs. '000s Rs. '000s
=================================================================================
Current service cost 709 791
Interest cost 5,982 5,179
Actuarial gains recognized during the year (1,539) (1,880)
Non-vested past service cost charge 457 457
5,609 4,547
=================================================================================9. TRADE AND OTHER PAYABLES=================================================================================
2006 2005
Rs. '000s Rs. '000s
=================================================================================
Creditors 373,433 255,204
Due to associated undertakings (Note - 9.1) 33,590 1,310
407,023 256,514
Accrued liabilities 150,203 109,872
Advances from customers 282 1,736
Due to provident fund trust (Note - 9.2) 4,252 5,028
Deposits (Note - 9.3) 18,532 18,846
Workers' profit participation fund (Note - 9.4) 8,969 6,887
Sales tax payable 5,998 17,511
Taxes deducted at source payable 13,980 8,692
Unclaimed dividend 1,856 1,671
Other liabilities 5,424 4,355
616,519 431,112
=================================================================================9.1. Due to associated undertakings - unsecured=================================================================================
2006 2005
Rs. '000s Rs. '000s
=================================================================================
Bata Limited, Canada 861 644
Bata Marketing Sdn. Bhd., Malaysia 285 127
Bata Shoe Singapore Pte Ltd. 30,187 -
Bata P.T. Sepatu, Indonesia 1,830 -
Global Footwear Services, Singapore 427 539
(Formerly Bata International Group, Singapore)
33,590 1,310
=================================================================================No interest has been paid I accrued on the amounts due to associated undertakings.9.2. The balance due to provident fund trust has been paid on January 12, 2007. 9.3. Deposits These represent the security money received from the registered wholesale dealers, agency holders and other customers in accordance with the terms of the contract with them. Deposits from agency holders carry interest at the rate of 8.5% per annum. These are repayable on termination / completion of the contract and on returning the company's property already provided to them. 9.4. Workers' profit participation fund =================================================================================
2006 2005
Rs. '000s Rs. '000s
=================================================================================
Balance at January 1, 6,887 9,526
Allocation for the year 8,969 6,887
Interest on funds utilized in company's business 96 151
15,952 16,564
Less: Amount adjusted I paid to fund's trustees 6,983 9,677
8,969 6,887
=================================================================================10. MARK - UP ACCRUED=================================================================================
2006 2005
Rs. '000s Rs. '000s
=================================================================================
1,991 7,879
On cash finance - secured - 728
On export refinance - secured 1,991 8,607
=================================================================================11. SHORT TERM BORROWINGS - SECURED=================================================================================
2006 2005
Rs. '000s Rs. '000s
=================================================================================
Cash finance
Secured against hypothecation of stock in trade,
stores & spares and receivables of the company - 180,766
Export refinance
Secured against hypothecation of stock of finished goods - 35,000
- 215,766
=================================================================================11.1. The cash finance and export refinance from total credit facilities available to the company aggregating to Rs. 735 Million (2005: Rs. 735 Million) are provided by Habib Bank Limited, Bank Al Habib Limited, Habib Metropolitan Bank Limited and Muslim Commercial Bank Limited. In addition to this, non funded facilities of letters of guarantee and letters of credit amounting to Rs. 185 Million (2005: Rs. 185 Million) were also provided by these banks against the above stated securities.11.2. Mark up on cash finance is based on 3 months KIBOR plus 0.50.to 0.75% as per agreement with banks and on export refinance has been charged at the rate 7.25 to 8.25% per annum respectively. 12. PROVISION FOR TAXATION =================================================================================
2006 2005
Rs. '000s Rs. '000s
=================================================================================
Income tax Balance at January 1, 3,211 21,599
Income tax paid for prior years - (12,452)
Provision written back for prior years (158) (3,366)
3,053 5,781
Provision for the year 64,712 54,402
67,765 60,183
Advance tax paid and tax deducted / collected at source (57,853) (56,972)
9,912 3,211
Other taxes
Workers' welfare fund Balance at January 1, - 2,798
Provision for prior years written back - (49)
Payments / adjustments made during the year (3,487) (4,912)
(3,487) (2,163)
Provision for the year 3,487 2,163
9,912 3,211
=================================================================================12.1. The tax charge for the current year is reconciled to accounting profit as follows:=================================================================================
2006 2005
Rs. '000s Rs. '000s
=================================================================================
166,820 128,535
Profit before tax 35% 35%
Tax rate
58,387 44,988
Tax at applicable rate on accounting profit
Tax effect of expenses that are not deductible
in computing taxable income 57 122
Effect of difference in tax rates under normal
assessment and presumptive tax regime (1,076) 5,531
Tax effect of temporary differences of last year (11) (2,656)
Tax charge for the year 57,357 47,985
Classified into:
Provision for taxation - current year 64,712 54,402
Deferred (7,355) (6,417)
57,357 47,985
=================================================================================13. CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS13.1. The Company is contingently liable for: =================================================================================
2006 2005
Rs. '000s Rs. '000s
=================================================================================
Counter Guarantees given to banks 6,231 7,255
Indemnity Bonds given to Custom Authorities 8,589 3,971
Claims not acknowledged as debts - under appeal 10,261 13,366
Show cause notices by sales tax
department-under appeals
(Note - 13.2) 346,875 398,886
371,956 423,478
=================================================================================13.2. Show cause notices issued by the sales tax department were on account of:=================================================================================
2006 2005
Rs. '000s Rs. '000s
=================================================================================
a) Sales tax on partly manufactured
goods / contracted footwear 334,000 334,000
b) Demand of sales tax on stock lying in
shops / depots in 1996 - 52,011
c) Further sales tax on sales to un - registered
dealers in 1998-99 12,875 12,875
346,875 398,886
================================================================================= The legitimate status of these show cause notices is as under:a) The Sales Tax Department had issued a show cause notice to the company as to why the sales tax amounting to Rs. 347 million (including additional tax of Rs. 197 million) was not paid to the government in regard to certain internal processing of the material used within the factories and also on sale of contracted footwear. Against this show cause notice, the company had filed a writ petition in the Lahore High Court. The Lahore High Court had admitted the company's petition for regular hearing and had directed the sales tax authorities to continue the proceedings but they should not pass any final order. In the meantime, the learned Collector Adjudication Sales Tax had heard the detailed arguments of the company and after rejecting these, had passed an order for the recovery of so called evasion of sales tax by the company. The company had filed an appeal before the Appellate Tribunal Sales Tax, Lahore, which had remanded back the case for re-assessment. The company had also filed an appeal before the Lahore High Court on legal grounds against this action of the Appellate Authority. No hearing of this case is fixed so far. In the re-assessment proceedings, the Assessing Officer had just repeated the action of her predecessor without applying her own independent mind and thus passed order contrary to the directions of the Appellate Authority in an arbitrary and illegitimate manner. Accordingly the company has again filed an appeal before the Appellate Tribunal Sales Tax, Lahore against this order. The case has so far been heard, pending adjudication. The company and its legal advisors are positive and affirmed that such sales tax levies being entirely in excess of law will be deleted in appeals before the higher courts, particularly in view of the following legal and factual grounds: (I) No tax can be charged on self consumption of goods as it would be unconstitutional in view of the fact that parliament is not competent to tax supplies other than sale of goods to other persons. (II) Otherwise company had paid substantial amount of sales tax on raw-material used in such processes during these years, never claimed as input, as the supplies of the finished products were exempted. The legal advisors are however of the opinion that sales tax leviable on the contracted footwear may have to be paid which amounts to Rs. 14 million, and has been booked accordingly. The company has also referred this case to "Alternative Dispute Resolution Committee" (ADRC) through Central Board of Revenue. The committee has been constituted but no progress has been made uptil now. The company is continuously persuading Central Board of Revenue either to start hearing by the present ADRC or to reconstitute the new ADRC as quickly as possible. In this context, the Central Board of Revenue has issued letter dated December 20, 2006 to ADRC to start hearing within 45 days, but no hearing could be fixed so far. b) During the year under review, the show cause notice for the sales tax demand of Rs. 52.011 million has been settled by the Alternate Dispute Resolution Committee (ADRC) constituted by the Central Board of Revenue (CBR) at the request of the company, on full and final payment of Rs. 16 million vide its recommendations made to Central Board of Revenue on June 28, 2006, the final order of which is forthcoming. c) The company considers these show cause notices as totally erroneous because of the fact that sales tax audit had been duly completed for this period and sales tax computed by the audit team had been paid including the arrears mentioned in this show cause notice. The case is pending before the Appellate Tribunal Sales Tax Lahore. The company expects a favourable decision. 13.3. Commitments in respect of: =================================================================================
2006 2005
Rs. '000s Rs. '000s
=================================================================================
Contracts for capital expenditure 5,442 4,890
Letters of credit other than capital expenditure 55,364 35,235
60,806 40,125
2006 2005
Rs. '000s Rs. '000s
=================================================================================14. PROPERTY, PLANT AND EQUIPMENT - TANGIBLE=================================================================================
2006 2005
Rs. '000s Rs. '000s
=================================================================================
Operating assets (Note - 14.1) 331,434 282,645
Capital work in progress (Note - 14.2) 1,292 -
332,726 282,645
=================================================================================14.1. Operating Assets==================================================================================================================================================================================================
COST DEPRECIATION Written down
DESCRIPTION value as at
As at Jan 1, Additions Disposals / As at Dec 31, Rate As at Jan 1, Adjustments Charge for As at Dec 31, Dec 31, 2006
2006 Adjustments 2006 % 2006 the year 2006
==================================================================================================================================================================================================
Land
Free hold 2,508 - - 2,508 - - - - - 2,508
Lease hold with super structure 35 - - 35 - - - - - 35
Buildings on free hold land
Factory 58,941 3,611 (2) 62,550 10 46,235 (2) 1,314 47,547 15,003
Others 59,218 1,854 - 61,072 5 32,562 - 1,393 33,955 27,117
Plant and machinery 391,459 7,486 (4,711) 394,234 10 289,306 (2,948) 10,435 296,793 97,441
Boiler 2,967 - - 2,967 10 2,534 - 43 2,577 390
Gas installations 1,044 9 1,053 10 863 - 19 882 171
Office equipment 3,862 178 - 4,040 10 2,445 - 154 2,599 1,441
Computers 22,202 4,276 (62) 26,416 25 15,268 (33) 2,245 17,480 8,936
Furniture, fixtures and fittings 213,277 70,847 (1,325) 282,799 15 84,756 (714) 22,990 107,032 175,767
Vehicles 9,833 1,962 (744) 11,051 20 8,732 (720) 414 8,426 2,625
Rs. '000s 2006 765,346 90,223 (6,844) 848,725 482,701 (4,417) 39,007 517,291 331,434
Rs. '000s 2005 717,668 57,689 (10,011) 765,346 451,181 (8,137) 39,657 482,701 282,645
==================================================================================================================================================================================================14.2. Capital work in progress=======================================================================================
2006 2005
Rs. '000s Rs. '000s
=======================================================================================
Plant and machinery in transit 1,292 -
=================================================================================14.3. The depreciation charge for the year has been allocated to:=======================================================================================
2006 2005
Rs. '000s Rs. '000s
=======================================================================================
Cost of goods manufactured 8,590 12,311
Selling and distribution expenses 28,335 25,138
Administrative expenses 2,082 2,208
39,007 39,657
=======================================================================================14.4. The disposal of property, plant & equipment during the year was as under:================================================================================================================================================================================
Particulars Original Accumulated Written Sale Profit/ Mode of
cost Depreciation down value proceeds (loss) sale Particulars of purchasers -
================================================================================================================================================================================
Buildings - Factory 2 2 - 4 4 Negotiation Mr. zulfiqar & Co., Attoke Awan, Lahore.
Plant and machinery 2,419 1,187 1,232 642 (590) Negotiation M/s Tec-Expo Industries, 92 Allama Iqbal Road, Lahore.
869 755 114 302 188 Negotiation Mr. Zulfiqar & Co., Attoke Awan, Lahore.
243 178 65 149 84 Negotiation Haji Asghar Enterprises, Altaf Colony Lahore.
94 68 26 25 (1) Negotiation Employee - Mr. Nasir Rafique
63 59 4 15 11 Negotiation M/s Q.T.C. Footwear, 17 KM G.T. Road, Lahore.
51 45 6 7 1 Negotiation Employee - Mr. Mazhar Iqbal Bhatti
5 5 - 10 10 Negotiation Mian Khalid Waheed, Daroghawala, Lahore.
5 3 2 2 - Negotiation Employee - Mr. M. Imran Malik
962 648 314 1,482 1,168 Insurance claim New Jublee Insurance Company Limited, Lahore.
4,711 2,948 1,763 2,634 871
Computers 51 25 26 29 3 Negotiation Employee - Mr. Faruq Ahmad
11 8 3 10 7 Insurance claim New Jublee Insurance Company Limited, Lahore.
62 33 29 39 10
Furniture, fixtures 961 433 528 996 468 Insurance claim New Jublee Insurance Company Limited, Lahore.
and fittings 98 81 17 20 3 Negotiation M/s Hussain Sons, Shalmi, Lahore.
90 63 27 25 (2) Negotiation Employee - Mr. Nasir Rafique
39 33 6 7 1 Negotiation Employee - Mr. Mazhar Iqbal Bhatti
28 22 6 3 (3) Negotiation Employee - Mrs. Saqib Saeed
28 19 9 25 16 Negotiation M/s Mardan Assets House, Abbotabad.
10 9 1 1 - Negotiation Employee - Mr. M. Imran Malik
10 8 2 46 44 Negotiation Mr. Ziaur Rehman, Mardan.
6 3 3 4 1 Negotiation M/s Habib ur Rehman, Bannu.
6 5 1 1 - Negotiation Employee - Mr. Habibullah
3 3 - - - Negotiation Mr. M. Mansha, Attoke Awan, Lahore.
2 2 - 1 1 Negotiation Employee - Syed Mujtaba Ali
44 33 11 - (11) Scrapped
1,325 714 611 1,129 518
Vehicles 744 720 24 400 376 Negotiation M/s Arshad Auto Workshop. Afzal Puli, Harbanpura, Lahore.
Rs. '000s 2006 6,844 4,417 2,427 4,206 1,779
Rs. '000s 2005 10,011 8,137 1,874 3,234 1,360
================================================================================================================================================================================15. INTANGIBLE ASSETS====================================================================================================================================================================
COST AMORTIZATION Written down
DESCRIPTION value as at
As at Jan 1, Additions Disposals / As at Dec 31, Rate As at Jan 1, Adjustments Charge for As at Dec 31, Dec 31, 2006
2006 Adjustments 2006 % 2006 the year 2006 _
====================================================================================================================================================================
Computer software 5,179 - - 5,179 25 3,884 - 1,295 5,179 -
Rs. '000s 2006 5,179 - - 5,179 3,884 - 1,295 5,179 -
Rs. '000s 2005 5,179 - - 5,179 2,590 - 1,294 3,884 1,295
====================================================================================================================================================================16. LONG TERM INVESTMENTS======================================================================================
2006 2005
Rs. '000s Rs. '000s
======================================================================================
Fixed Deposit with Habib Metropolitan
Bank Limited - Held to Maturity 22,120 20,451
In PLS saving bank account 16 16
22,136 20,467
======================================================================================16.1.The investments are earmarked against the balances due to employees securities and personal accounts (Note - 7). 17. LONG TERM DEPOSITS AND PREPAYMENTS ======================================================================================
2006 2005
Rs. '000s Rs. '000s
======================================================================================
Security deposit - rent 3,766 3,489
Security deposit - utilities 388 388
Advance rent 45,643 42,383
Less: Adjustable within one year (Note - 23) 21,190 14,588
24,453 27,795
28,607 31,672
======================================================================================18. DEFERRED TAXATION======================================================================================
2006 2005
Rs. '000s Rs. '000s
======================================================================================
This is comprised of:
Deferred tax assets
Provision for gratuity, doubtful debts, inventory
obsolescence and other timing differences 46,094 34,787
Deferred tax liabilities
Accelerated tax depreciation (28,814) (24,862)
Net deferred tax assets 17,280 9,925
======================================================================================19. STORES AND SPARES======================================================================================
2006 2005
Rs. '000s Rs. '000s
======================================================================================
Stores 2,628 2,948
Spares 39,703 41,121
42,331 44,069
Less: obsolescence reserve (Note - 27.3) 28,222 14,688
14,109 29,381
Spares in transit 309 617
14,418 29,998
======================================================================================19.1. The company does not hold any stores and spares for specific capitalization.20. STOCK IN TRADE ======================================================================================
2006 2005
Rs. '000s Rs. '000s
======================================================================================
Raw material 173,063 107,501
Goods in process 33,545 23,248
Finished goods
Own production 255,203 255,490
Purchased 254,927 220,526
510,130 476,016
716,738 606,765
======================================================================================20.1. Stock of raw material and finished goods - purchased includes inventories in transit amounting to Rs. '000s 63,491 (2005: Rs. '000s 40,592) and Rs. '000s 33,007 (2005: Rs. '000s 232) respectively.21. TRADE DEBTS - UNSECURED ======================================================================================
2006 2005
Rs. '000s Rs. '000s
======================================================================================
Considered good
Due from customers 126,085 308,684
Due from associated undertakings (Note - 21.1) 3,349 9,038
129,434 317,722
Considered doubtful
Due from customers - 1,749
129,434 319,471
Less: Provision for doubtful debts - 1,749
129,434 317,722
======================================================================================21.1. Due from associated undertakings - unsecured======================================================================================
2006 2005
Rs. '000s Rs. '000s
======================================================================================
Bata Shoe of Thailand Public Co. Ltd. 1,685 -
Bata Shoe Company, Sri Lanka 1,664 675
Bata Shoe (Singapore), PTE Limited - 226
The British Bata Limited U.K. - 8,137
3,349 9,038
======================================================================================21.2. The highest aggregated amount due from associated undertakings at the end of any month in 2006 was Rs. '000s 26,865 (2005: Rs. '000s 17,549). No interest has been charged on the amounts due from associated undertakings.22. LOANS AND ADVANCES - UNSECURED ======================================================================================
2006 2005
Rs. '000s Rs. '000s
======================================================================================
Considered good
Advances to employees for expenses 1,090 192
Advances to suppliers 619 499
1,709 691
======================================================================================23. DEPOSITS, SHORT TERM PREPAYMENTS AND OTHER RECEIVABLES======================================================================================
2006 2005
Rs. '000s Rs. '000s
======================================================================================
Deposits
Considered good
Custom duty and taxes 2,771 437
Letters of credit - Margin 254 -
Letters of guarantee - Margin 3,323 3,370
Others 1,248 765
7,596 4,572
Short term prepayments
Advance rent (Note - 17) 21,190 14,588
Prepaid sales tax 572 657
Prepaid expenses 1,718 1,936
23,480 17,181
Other receivables
Considered good
Export rebates 4,791 6,479
Insurance claims - 706
Others 161 15
4,952 7,200
Considered doubtful
Advance rent 1,748 -
Others 1,119 1,119
2,867 1,119
7,819 8,319
Less: Provision for doubtful balances 2,867 1,119
4,952 7,200
36,028 28,953
======================================================================================24. TAX REFUNDS DUE FROM GOVERNMENT======================================================================================
2006 2.005
Rs. '000s Rs. '000s
======================================================================================
Sales tax refundable 32,772 -
======================================================================================24.1. This represents sales tax paid on raw materials used in zero rated taxable shoes for which refund claims have been lodged with the Sales Tax Department.25. CASH AND BANK BALANCES ======================================================================================
2006 2.005
Rs. '000s Rs. '000s
======================================================================================
Cash in hand 584 4
Bank balances - in current accounts 36,888 928
Cash in transit 45,411 34,116
82,883 35,048
======================================================================================26. NET SALES======================================================================================
2006 2.005
Rs. '000s Rs. '000s
======================================================================================
Shoes and accessories
Local 3,111,145 2,734,860
Export 191,109 199,746
3,302,254 2,934,606
Sundry articles and scrap material 7,394 8,545
3,309,648 2,943,151
Less: Sales tax paid 166,666 286,192
Discounts to dealers and distributors 117,654 83,790
Commission to agents / business associates 35,854 29,825
320,174 399,807
2,989,474 2,543,344
======================================================================================27. COST OF SALES======================================================================================
2006 2.005
Rs. '000s Rs. '000s
======================================================================================
Cost of goods manufactured (Note - 27.1) 1,193,038 1,017,634
Finished goods purchased 717,729 654,354
Add: Opening stock of finished goods 476,016 409,966
2,386,783 2,081,954
Less: Closing stock of finished goods 510,130 476,016
1,876,653 1,605,938
======================================================================================27.1. Cost of goods manufactured======================================================================================
2006 2005
Rs. '000s Rs. '000s
======================================================================================
Raw material consumed
Opening stock 107,501 97,179
Add: Purchases 971,118 712,644
1,078,619 809,823
Less: Closing stock 173,063 107,501
905,556 702,322
Spares consumed 4,279 5,142
Fuel and power 40,438 41,157
Salaries, wages and benefits (Note - 27.2) 209,939 215,600
Repairs and maintenance (Note - 27.3) 28,432 24,838
Insurance 6,101 5,409
Depreciation 8,590 12,311
1,203,335 1,006,779
Add: Opening goods in process 23,248 34,103
1,226,583 1,040,882
Less: Closing goods in process 33,545 23,248
1,193,038 1,017,634
======================================================================================27.2. The salaries, wages and benefits include Rs. 000s 7,474 (2005: Rs. '000s 6,895) and Rs. '000s 3,197 (2005: Rs. '000s 3,127) in respect of contribution to provident fund trusts and provision for gratuity respectively.27.3. This includes provision for obsolescence of stores and spares amounting to Rs. '000s 13,534 (2005: Rs. '000s 7,098). 28. SELLING AND DISTRIBUTION EXPENSES ======================================================================================
2006 2005
Rs. '000s Rs. '000s
======================================================================================
Salaries and benefits (Note - 28.1) 235,165 192,610
Freight 50,495 47,405
Advertising and sales promotion 52,149 47,314
Rent 156,591 128,210
Insurance 6,210 6,103
Royalty 3,669 3,758
Fuel and power 61,024 50,411
Repairs and maintenance 26,377 34,629
Entertainment 3,579 3,385
Business and property taxes 1,906 1,839
Miscellaneous 49 187
Amortization 1,295 1,294
Depreciation 28,335 25,138
626,844 542,283
======================================================================================28.1. The salaries and benefits include Rs. '000s 7,746 (2005: Rs. '000s 5,823) and Rs. '000s 1,857 (2005: Rs. '000s 1,052) in respect of contribution to provident fund trusts and provision for gratuity respectively.29. ADMINISTRATIVE EXPENSES ======================================================================================
2006 2005
Rs. '000s Rs. '000s
======================================================================================
Salaries and benefits (Note - 29.1) 133,078 126,620
Employees' welfare 10,823 10,714
Fuel and power 5,708 6,616
Telephone and postage 12,104 12,237
Insurance 1,043 1,287
Travelling 35,960 31,087
Repairs and maintenance 6,767 7,251
Printing and stationery 9,230 8,964
Donations and subscription (Note - 29.2) 537 1,229
Legal and professional charges 4,312 1,740
Business and property taxes 774 592
Miscellaneous 973 109
Depreciation 2,082 2,208
223,391 210,654
======================================================================================29.1. The salaries and benefits include Rs. '000s 2,477 (2005: Rs. '000s 2,806) and Rs. '000s 555 (2005: Rs. '000s 368) in respect of contribution to provident fund trusts and provision for gratuity respectively.29.2. None of the directors of the company or any of their spouses has any interest in the funds of donees. 30. FINANCE COST ======================================================================================
2006 2005
Rs. '000s Rs. '000s
======================================================================================
Interest / mark-up on:
Short term borrowings 21,175 27,018
Workers' profit participation fund 96 151
Provident fund trust 97 148
Employees / agents' securities and personal account 2,162 1,013
23,530 28,330
Exchange loss - 3,007
Bank charges and commission 9,621 8,750
33,151 40,087
======================================================================================31. OTHER INCOME======================================================================================
2006 2005
Rs. '000s Rs. '000s
======================================================================================
Income from Financial Assets
Profit on long term investments 1,669 1,106
Exchange gain 3,443 -
Income from Non-Financial Assets Rent received 324 318
Profit on property, plant and
equipment sold / scrapped (Note - 14.4) 1,779 1,360
7,215 2,784
======================================================================================32. OTHER OPERATING EXPENSES======================================================================================
2006 2005
Rs. '000s Rs. '000s
======================================================================================
Workers' profit participation fund 8,969 6,887
Workers' welfare fund 3,487 2,163
Auditors' remuneration (Note - 32.1) 1,974 1,885
Voluntary Retirement Scheme 39,400 -
Sales tax paid for prior years 16,000 -
Loss due to Earthquake - Azad Kashmir/Northern Areas - 7,696
69,830 18,631
======================================================================================32.1. Auditors' remuneration======================================================================================
2006 2005
Rs. '000s Rs. '000s
======================================================================================
Statutory audit 750 750
Review of six monthly accounts 150 150
Audit of workers' profit participation fund,
share transfers and other certifications 269 216
Physical verification of stock at sale outlets 280 244
Tax advisory services 400 400
Out of pocket expenses 125 125
1,974 1,885
======================================================================================33. EARNINGS PER SHARE======================================================================================
2006 2005
Rs. '000s Rs. '000s
======================================================================================
Basic and diluted Profit after taxation for the year 109,621 83,916
Weighted average number of ordinary shares (in '000s) 7,560 7,560
Earnings per share - Basic Rs. 14.50 Rs. 11.10
======================================================================================There is no dilution effect on the basic earnings per share.34. REMUNERATION OF DIRECTORS AND EXECUTIVES Aggregated amounts charged in the accounts for the year for remuneration, including all benefits to Chief Executive, Executive Director and Executives of the Company are as follows: ============================================================================================================================
Chief Executive Executives
Executive Director
2006 2005 2006 2005 2006 2005
Rs. '000s Rs. '000s Rs. '000s
============================================================================================================================
Managerial remuneration 11,524 6,913 3,680 2,826 25,919 24,278
Company's contribution
to provident fund 984 691 253 222 1,891 1,818
Perquisites and allowances
Housing - - 270 270 2,408 2,626
Leave passage 360 360 - - - 212
Conveyance - - - - 169 543
Medical - - 127 38 1,243 847
Utilities 782 691 236 212 1,820 1,869
Others 2,510 2,517 - - 2,611 4,136
16,160 11,172 4,566 3,568 36,061 36,329
Number of persons 1 1 1 1 19 20
============================================================================================================================In addition, 5 (2005: 6) non executive directors were paid aggregated fee of Rs. '000s 240 (2005: Rs. '000s 125).35. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES 35.1. Interest rate risk exposure The company's exposure to interest rate risk on its financial assets and liabilities as of December 31, is summarized below: ========================================================================================================================================================
2006 2005
Rs. '000s Rs. '000s
Interest bearing Non Total Interest bearing Non Total
Maturity interest Maturity interest
more than bearing more than bearing
one year one year
Maturity and less Maturity and less
within than five within than five
one year years one year years
========================================================================================================================================================
Financial assets
Long term investments - 22,136 - 22,136 - 20,467 - 20,467
Long term deposits - - 4,154 4,154 - - 3,877 3,877
Trade debts - - 129,434 129,434 - - 317,722 317,722
Loans and advances - - 1,090 1,090 - - 192 192
Deposits, short term prepayments
and other receivables - - 1,391 1,391 - - 1,479 1,479
Cash and bank balances - - 82,883 82,883 - - 35,048 35,048
- 22,136 218,952 241,088 - 20,467 358,318 378,785
Financial liabilities
Long term deposits - 22,136 - 22,136 - 20,467 - 20,467
Short term borrowings - - - - 215,766 - - 215,766
Trade and other payables 9,986 - 539,052 549,038 8,016 - 369,226 377,242
Mark - up accrued - - 1,991 1,991 - - &,607 8,607
9,986 22,136 541,043 573,165 223,782 20,467 377,833 622,082
Off Balance Sheet items:
Counter Guarantees given to banks - - 6,231 6,231 - - 7,255 7,255
Indemnity Bonds given to Custom
Authorities - - 8,589 8,589 - - 3,971 3,971
Commitments - - 60,806 60,806 - - 40,125 40,125
- - 75,626 75,626 - - 51,351 51,351
9,986 22,136 616,669 648,791 223,782 20,467 429,184 673,433
========================================================================================================================================================35.2. Concentration of credit riskThe credit risk represents the accounting loss that would be recognized at the reporting date, if counter parties failed to perform as contracted. The maximum exposure to credit risk is represented by the carrying amount of each financial asset. Investments are allowed only in liquid securities and only with banks. Given their high credit rating, management does not expect any counter party to fail to meet its obligation. The management has a credit policy in place and exposure to credit risk is monitored on a continuous basis. Credit evaluations are performed on all customers requiring credit over a certain amount. The Company does not require a collateral in respect of financial assets. The Company, however, mitigates any possible exposure to credit risk by taking security deposits from its dealers and distributors as well as by executing formal agreements with them. Out of the total trade receivables, 61.13% is concentrated in six parties (2005: 40.95% in 6 parties) 35.3. Effective interest / markup rates and related risk ===================================================================================================
Fixed or
variable 2006 2005
===================================================================================================
Long term investment Fixed 8.50% 4.75 to 8.50%
Short term borrowings Variable 9.27 to 11.09% 5.00 to 9.45%
Long term deposits - employees' securities Fixed 8.50% 4.00%
Deposits - agents Fixed 8.50% 4.00%
Provident fund trust Variable 8.50% 7.20 to 8.60%
Workers' profit participation fund Variable 33.75% 33.75%
===================================================================================================The markup on cash finance as included in the short term borrowings is based on three months KIBOR plus 0.50 to 0.75% as per agreement with banks.35.4. Foreign Exchange Risk ====================================================================================
2006 2005
Rs. '000s Rs. '000s
====================================================================================
The assets / liabilities subject to foreign exchange
risk are detailed below:
Financial assets
Trade debts - Export customers 38,542 39,580
Financial liabilities
Trade and other payables - Foreign suppliers 33,633 1,473
====================================================================================35.5. Fair value of the financial instrumentsThe carrying value of all the financial instruments reflected in the financial statements approximates their fair value. 36. TRANSACTIONS WITH RELATED PARTIES 36.1. The related parties and associated undertakings comprise parent company, related group companies, provident fund trust, directors and key management personnel. Transactions with related parties during the year are as follows; ===========================================================================================================
2006 2005
Relationship with the Company Nature of transactions Rs. '000s Rs. '000s
===========================================================================================================
Associated Companies Purchase of goods and service 176,966 152,402
Sale of goods and services 27,013 31,044
Dividend paid 18,144 6,804
Ultimate holding company Royalty paid 3,669 3,758
Staff Retirement Benefits Contribution to provident 17,697 18,003
fund trusts
Key Management Personnel Remuneration 48,581 36,316
===========================================================================================================36.2. The company continues to have a policy whereby all transactions with related parties and associated undertakings are entered into at arm's length.37. CAPACITY AND ACTUAL PRODUCTION ======================================================================================================
Installed capacity
No. of shifts based on actual Actual
worked shifts worked production
Fig. in '000s Fig. in '000s
2006 2005 2006 2005 2006 2005
======================================================================================================
Footwear in pairs
Rubber and canvas 1 1 2,700 2,700 2,296 2,447
Thongs 1 to 2 1 to 2 3,500 3,500 3,058 3,125
Leather 1 1 5,000 5,000 4,329 4,106
Plastic 1 1 to 3 1,250 3,500 715 991
======================================================================================================37.1. The deviation in actual production from installed capacity is due to rapidly growing trend of fashion and also less I more demand of certain articles, inter - alia, the company has to change the major shoeline in accordance with the market trends. All this involves change in manufacturing operations which causes variances not only between the installed capacity and actual production but also between the actual production of any two years.38. DATE OF AUTHORIZATION These financial statements have been authorized for issue by the Board of Directors of the Company on February 22, 2007, where a final cash dividend @ of Rs. 5.00 per share has been proposed. This dividend is subject to approval by the members at Annual General Meeting and has not been included as liability in these financial statements. 39. GENERAL 39.1. Figures in these financial statements have been rounded off to the nearest thousand rupees unless otherwise stated. |