Shadman Cotton Mills Limited’s notice of extraordinary general meeting

Karachi, June 10, 2013 (PPI-OT): Notice is hereby given to the shareholders of Shadman Cotton Mills Limited (SHCM) that an Extraordinary General Meeting of the Company will be held on Saturday, June 29, 2013 at 9.00 a.m. at Hotel Crown Inn, Plot No.171 Off 21 AM, Frere Road Saddar, Karachi, to transact the following business;

1. To confirm the minutes of the Annual General Meeting held on January 22, 2013.

2. To consider and approve the sale of Sindh Segment including Kotri Unit, all fixed and current assets of Shadman Cotton Mills Limited, along with long term and current liabilities and other assets of the Company located at Sindh, i.e. Plots No. E-8, and E-II, situated at S.I.T.E., Kotri, industrial Plots No. A-293-294, situated at S.I.T.E. Nooriabad and office at Room No. 201-202, 2nd Floor, Commerce Centre, Hasrat Mohani Road, Karachi, and Room No. 801-802, 8th Floor, Lakson Square, Building No. 3-A, Sarwar Shaheed Road, Karachi to Nadeem Textile Mills Limited, and if deemed fit to pass with or without modification the following resolutions as ordinary Resolutions.

a) Resolved that pursuant to section 196(3) of the Companies Ordinance, 1984 the directors of the Company be are hereby authorized to sell Sindh Segment including Kotri Unit, all fixed and current assets of Shadman Cotton Mills Limited, along with long term and current liabilities and other assets of the Company located at Sindh, i.e. Plots No. E-8, and E-II, situated at S.I.T.E., Kotri, industrial Plots No. A-293-294, situated at S.I.T.E. Nooriabad and office at Room No. 201-202, 2nd Floor, Commerce Centre, Hasrat Mohani Road, Karachi, and Room No. 801-802, 8th Floor, Lakson Square, Building No. 3-A, Sarwar Shaheed Road, Karachi to Nadeem Textile Mills Limited.

b) Resolved that Mr. Zahid Mazhar, Chief Executive/ Director of the Company be and is here Authorized and empowered to sell the Sindh Segment including Kotri Unit (land, building, plant and machinery, offices along with current assets and long term and short term liabilities) along with other assets i.e. Industrial Plots No. E-8, and E-11, situated at S.I.T.E., Kotri, industrial Plots No. A-293-294, situated at S.I.T.E. Nooriabad and office at Room No. 201-202, 2nd Floor, Commerce Centre, Hasrat Mohani Road, Karachi, and Room No. 801-802, 8th Floor, Lakson Square, Building No. 3-A, Sarwar Shaheed Road, on behalf of the Company and complete all the legal formalities to give effect to the aforesaid Resolution.

c) Resolved that acts, deeds and things done by the above authorized person for and on behalf of the Company shall be binding acts and deeds upon the Company.

d) Resolved that the above resolutions are valid till July 31, 2013.

3. To consider any other business of the Company with the permission of the chair.

Notes:

1. The Share Transfer Books of the Company shall remain closed from 22-06-2013 to 29-06-2013 (both days inclusive).

2. A member entitled to attend and vote at the meeting may appoint another member as his/her proxy to attend and vote on his/ her behalf. The Proxy form, must be received at the Head office of the Company at 801-804, 8th Floor, Lakson Square Building No. 3-A, Sarwar Shaheed Road, Karachi duly stamped, signed and witnessed not later than forty-eight(48) hours before the meeting.

3. Shareholders whose shares are deposited with Central Depositary Company of Pakistan (CDC) are requested to bring their Computerized National Identity Card (CNIC) along with their CDC Account Number for verification. In case of corporate entity, the Board of Directors resolution/ power of attorney with specimen signatures of the nominees shall be produced (unless it has been provided earlier) at the time of the meeting.

4. For attending the meeting and appointing proxies CDC account holders will be further have to follow the guidelines as laid down in Circular No. 01, dated January 26, 2000, issued by the Securities and Exchange Commission of Pakistan.

5. Members are requested to immediately inform the Company of any change in their address.

6. A statement under section 160(1)(b) of the Companies Ordinance, 1984 regarding the business to be transacted at the Extraordinary General Meeting is being sent to the members along with a copy of this notice.

Statement under section 160(1)(b) of the Companies Ordinance, 1984 pertaining to the business to be transacted in extraordinary General Meeting.

1. Shadman Cotton Mills Limited is incorporated in Pakistan on November 24, 1979 under the previous Companies Act 1913 as a company limited by shares, having its registered office at 201-202, Commerce Centre, Hasrat Mohani Road, Karachi, Pakistan. Shadman Cotton Mills Limited is a public company and its share are traded on the Karachi and Lahore Stock Exchanges.

The authorised share capital of Shadman Cotton Mills Limited is Rs. 180,000,000/- divided into 18,000,000 ordinary shares of Rs.10/- each out of which 17,636,719 ordinary shares of the aggregate nominal value of Rs.176,367,190/- are issued and fully paid and the reminder are unissued. The main business of the Company is manufacturing and sale of yarn.

The Shadman Cotton Mills Limited belongs to Shadman Group of Companies. The group has two listed companies i.e. Shadman Cotton Mills Limited and Nadeem Textile Mills Limited. The Shadman Group of Companies is currently managed by two groups. Each group is headed by one of the two surviving sons of Late Mazhar Hussain, founder of the Shadman Group of Companies.

Mr. Zahid Mazhar leads a group comprising of his immediate kith and kin which is called ZM Group and Mr. Shahid Mazhar leads the other group comprising of his immediate kit and kin which is called SM Group. The two groups along with their other family members collectively hold majority shares of Shadman Group of Companies and separately each group holds the number of shares in both the companies as under:


Shadman Cotton Mills Limited

Description                                                     Number of Shares        Percentage

Total paid up capital                                               17,636,719            100.00
Shares held by ZM Group                                              7,782,428             44.13
Shares held by SM Group                                              7,727,371             43.81
Shares held by Mst. Rafia Sultana mother of
Mr. Zahid Mazhar and Mr. Shahid Mazhar                               1,105,528              6.27
Total holding of ZM and SM Group and their mother                   16,615,327             94.21

Nadeem Textile Mills Limited
Description                                                     Number of Shares        Percentage

Total paid up capital                                               12,015,000            100.00
Shares held by ZM Group                                              5,349,855             44.53
Shares held by SM Group                                              5,347,901             44.51
Shares held by Mst. Rafia Sultana mother of Mr.
Zahid Mazhar and Mr. Shahid Mazhar                                   1,103,399              9.18
Total holding of ZM and SM Group and their mother                   11,801,155             98.22

Shadman Cotton Mills Limited has three spinning units having total 79,560 spindles. The unit wise location and detail of installed spindles is as under:-


Unit                 Location                              Number of spindles
No.                                                             Installed

01. Plot No.E-11, S.I.T.E., Kotri Sindh.                         23,376
02. Kot Shah Muhammad, Warburton Road, Feroz Watoan,
    Tehsil Nankana Sahib, District Sheikhupura, Punjab           21,192
03. Kot Shah Muhammad, Warburton Road, Feroz Watoan,
    Tehsil Nankana Sahib, District Sheikhupura, Punjab           34,992

Nadeem Textile Mills Limited has one spinning unit, having 37,464 spindles and is located at Plot No. A-265, S.I.T.E., Nooriabad, District Dadu, Sindh.

The both the groups has decided to bifurcate Shadman Group of Companies into two equal Segments i.e. Sindh Segment and Punjab Segment, Sindh Segment will be owned and managed by ZM Group and Punjab Segment by SM Group. As a result of this settlement all the fixed and current assets, along with long term and short term liabilities of Shadman Cotton Mills Limited pertaining to Sindh Segment will be transferred/ sold to Nadeem Textile Mills Limited at an arm’s length transaction i.e. at market value. The detail of assets and liabilities to be transferred/ sold along with their market value is as under:-


Sr.            Description                                            Details                  Amount
No.                                                                                           (Rupees)

01. Complete Industrial Unit-Plot No. E-11                         23,376 spindles           294,541,577
    S.I.T.E., Kotri.                                                   8 Acres
02. Industrial Plot No. E-8, S.I.T.E., Kotri                           Godown                 14,830,757
                                                                       2 Acres
03. Industrial Plots No. A-293-294 S.I.T.E.,                           10.25 Acres            10,250,000
    Nooriabad
04. Office Premises Room nos. 201-202, Commerce Centre,
    Hasrat Mohani Road, Karachi.                                       1,092 Sq.Ft             2,730,000
05. Office Premises Room nos. 801-802, Lakson Square
    Building No.3-A, Sarwar Shaheed, Karachi                           4,815 Sq.Ft            12,037,500
06. Current assets                                                                           346,259,230
                                                                                             -----------
Less:                                                                                        680,649,064
    Long term liabilities                                                                    166,178,881
    Current liabilities                                                                      414,470,183
                                                                                             -----------
                                                                                             580,649,064
                                                                                             -----------
    Value of Net Assets as of 31-03-2013                                                     100,000,000
                                                                                             -----------

In addition to the above 72 Kanal 6 Marla open land owned by Nadeem Textile Mills Limited located at Kot Shah Muhammad, Warburton Road, Feroze Watson, Tehsil Nankana Sahib, District Sheikhupura, Punjab, adjacent to the plant of Shadman Cotton Mills Limited is proposed to be purchased from Nadeem Textile Mills Limited, at market value of Rs. 23,000,000/-.

Therefore, it is proposed that proposed that Sindh Segment including Kotri Unit, it’s all fixed current assets along with long term and current liabilities and other assets of the Company located at Sindh i.e. Industrial Plots No. E-8, and E-11, situated at Kotri, Industrial Plots No. A-293-294, situated at Nooriabad and office at Room No. 801-802, 8th Floor, Lakson Square Building No. 3-A, Sarwar Shaheed Road, Karachi, be transferred/ sold to Nadeem Textile Mills Limited at a net value of Rs. 100,000,000/- subject to the approval of shareholders U/s. 196(3) (a) of the Companies Ordinance, 1984.

2.A The detail of land to be disposed off, as required by SRO 1227/2005 dated December 12, 2005 issued by Securities and Exchange Commission of Pakistan is as under:


a. Complete Industrial Unit Kotri-E-11, S.I.T.E. Kotri.

i. Description of Assets                  Land, Building, Plant and Machinery, office
                                          equipment and vehicles etc.
ii. Net Cost                              Rs. 217,037,800/-
iii. Book value                           Rs. 363,996,366/-
iv. Current market value.                 Rs. 294,541,577/-
v. Location.                              Plot No. E-11, S.I.T.E. Kotri Sindh,
vi. Area of land                          8 Acres.

b. Industrial Plot No.-E-8, S.I.T.E. Kotri.

i. Description of Assets                  Gowon
ii. Net Cost                              Rs. 7,216,006/-
iii. Book value                           Rs. 4,853,965/-
iv. Current market value.                 Rs. 14,830,757/-
v. Location.                              Plot No. E-8, S.I.T.E. Kotri Sindh,
vi. Area of plot                          2 Acres.

c. Industrial Plot No.-A-293-294, S.I.T.E. Nooriabad.

i. Description of Assets                  Open Plots
ii. Net Cost                              Rs. 1,586,269/-
iii. Book value                           Rs. 10,000,000/-
iv. Current market value.                 Rs. 10,250,000/-
v. Location.                              Plot No. A-293-294, S.I.T.E. Nooriabad Sindh.
vi. Area of plot                          10.25 Acres.

d. Office at Commerce Centre, Karachi.

i. Description of Assets                  Office.
ii. Net Cost                              Rs. 51,694/-
iii. Book value                           Rs. 51,694/-
iv. Current market value.                 Rs. 2,730,000/-
v. Location.                              Office Nos. 201-202, Commerce Centre, Hasrat Mohani Road, Karachi
vi. Area of plot                          1,239 Sq. foot.

e. Office at Lakson Square, Karachi.

i. Description of Assets                  Office.
ii. Net Cost                              Rs. 1,893,560/-
iii. Book value                           Rs. 1,893,560/-
iv. Current market value.                 Rs. 12,037,500/-
v. Location.                              Office Nos. 801-802, Lakson Square Building No. 3-A, Sarwar
                                          Shaheed Road, Karachi
vi. Area of plot                          4,815 Sq. foot.

B The manner of disposal

At market value as agreed between both the groups.

C. Reasons for the sale and benefits to the shareholders.

Bifurcation of Shadman Group of Companies into two groups/segments as per settlement between Mr. Zahid Mazhar and Mr. Shahid Mazhar, two surviving sons of Late Mazhar Hussain, founder of the Shadman Group of Companies.

By disposal of Sindh Segment to Nadeem Textile Mills Limited, Shadman Cotton Mills Limited will have the following benefits;

a. Receive Rs. 100,000,000/- which will be utilized as working capital, which will ultimately reduce the bank borrowing.

b. Due to one location of the project it will be managed better.

c. The Company will get rid of wear and tear of old technology machinery.

Due to the above profitability of the Company will increase.

4. Interest of directors:

The directors of the Company are interested in the business to the extent of their shareholding in the Company.

For more information, contact:
Abdul Amin
Company Secretary
Shadman Cotton Mills Limited
801-804, 8th Floor,
Lakson Square Building No. 3,
Block – A, Sarwar Shaheed Road, Karachi.
Ph: (92-21) 35220481-88,
Fax: (92-21) 35220495-96
E-mail: info@nadeem.com.pk

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