| Essa Cement Industries Limited |
|
|
|
|
|
|
| Annual
Report 2002 |
|
|
|
| CONTENTS |
|
|
|
|
| Company
Information |
|
|
| Notice of Meeting |
|
|
| Directors'
Report to the Members |
|
| Financial
Highlights |
|
|
| Auditors' Report to the Members |
|
| Balance Sheet |
|
|
| Profit and Loss Account |
|
|
| Cash
Flow Statement |
|
|
| Statement
of Changes in Equity |
|
|
| Notes
to the Accounts |
|
|
| Pattern of Share Holding |
|
|
|
|
| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
| MR.
ABDUL AZIZ ESSA |
|
(CHAIRMAN & CHIEF
EXECUTIVE) |
|
| MRS.
HUMERA ESSA |
|
| HAJI
YOUNUS DADA |
|
| MRS.
ZAITOON HAMZA DADA |
|
| MRS.
SHAZINA JAWED ESSA |
|
| MR.
IFRAN AZIZ ESSA |
|
| MR.
ZAFARUDDIN SIDDIQUI |
|
|
| COMPANY
SECRETARY |
|
| MR.
ABDUL HAMEED |
|
|
| BOARD
OF AUDIT COMMITTEE |
|
| HAJI
YOUNUS DADA |
|
Chairman |
|
| MRS. SHAZINA JAWED ESSA |
|
Member |
|
| MR. ZAFARUDDIN SIDDIQUI |
|
Member |
|
|
| AUDITORS |
|
| F.R.MERCHANT
& CO. |
|
| CHARTERED
ACCOUNTANTS |
|
|
| BANKERS |
|
| HABIB
BANK LIMITED |
|
| NATIONAL
BANK OF PAKISTAN |
|
| MUSLIM
COMMERCIAL BANK LIMITED |
|
| STANDARD
CHARTERED GRINDLAYS BANK LIMITED |
|
| ALLIED
BANK OF PAKISTAN LIMITED |
|
| BOLAN
BANK LIMITED |
|
| SONERI
BANK LIMITED |
|
| BANK
AL HABIB LIMITED |
|
| FAYSAL
BANK LIMITED |
|
| THE
BANK OF PUNJAB |
|
| PRIME
COMMERCIAL BANK LIMITED |
|
| PLATINUM
COMMERCIAL BANK LIMITED |
|
|
| REGISTERED
OFFICE |
|
| FL-2/1,
BLOCK-6, |
|
| GULSHAN-E-IQBAL |
|
| KARACHI
- 75300 |
|
|
| FACTORY |
|
| DEH
KALO KOHAR |
|
| NOORIABAD
INDUSTRIAL AREA, |
|
| DISTRICT
DADU, (SINDH) |
|
|
|
| DIRECTORS'
REPORT TO THE MEMBERS |
|
|
| Your
directors have the pleasure in presenting the audited accounts and auditors'
report thereon for the |
|
| financial
year ended June 30, 2002 |
|
|
| PRODUCTION |
|
| The
economic growth in the country slightly improved and due to increase in
market demand we have also |
|
| increased
our production about 30% from the last year. The production of clinker and
Cement for the period is |
|
| as under. |
|
|
2002 |
2001 |
|
| Clinker |
|
295,805 |
251,153 |
|
| Cement |
|
350,920 |
268,780 |
|
| SALES
& MARKETING |
|
| Due
to improvement in demand of cement, the Company was able to sell 338.618
m.tons of cement during |
|
| the
year ended June 30, 2002 as against 268.121 m.tons sold during the preceding
year which shows that we |
|
| managed
to increase our sales to the extent of 26%. |
|
|
| Net
sale revenues in the year under review has increased to Rs. 681.234 million,
comparing with last year |
|
| Rs.
622.170 million. |
|
|
| OPERATING
RESULTS |
|
2002 |
2001 |
|
| Profit
for the year |
|
22,349,340 |
10,256,988 |
|
| Prior
Years' adjustments |
|
2,315,096 |
-- |
|
|
---------- |
---------- |
|
| Profit
before taxation |
|
24,664,436 |
10,256,988 |
|
| Taxation |
|
3,407,540 |
3,200,000 |
|
|
---------- |
---------- |
|
| Profit
after taxation |
|
21,256,896 |
7,056,988 |
|
| Accumulated
profit brought forward |
21,082,818 |
14,025,830 |
|
|
---------- |
---------- |
|
|
42,339,714 |
21,082,818 |
|
| Proposed
Cash Dividend @5% |
|
19,046,353 |
-- |
|
|
---------- |
---------- |
|
| Accumulated
profit carried forward |
23,293,361 |
21,082,818 |
|
|
========== |
========== |
|
|
| FUTURE
PROSPECTS |
|
| To
decrease the Cost of production and to remain in market competition, we
partly replace furnace oil to |
|
| Coal
and we have been able to increase the net profit from last year 7.057 million
to 21.257 million. |
|
|
| Further
efforts are being made to convert our cement plant to maximum use of Coal,
for this we have imported |
|
| low
sulpher and high Calorific value Coal from South Africa and hope to reduce
the cost of production and |
|
| increase
the net profit. |
|
|
| DIVIDEND |
|
| The
directors recommended cash dividend of Re. 0.50 per share i.e 5% for the year
ended June 30, 2002 |
|
|
| AUDITORS |
|
| The
present auditors M/S F.R.Merchant & Co., Chartered Accountants, retire
and being eligible offer themselves |
|
| for
reappointment, |
|
|
| As
required by the code of corporate governance, The Board Audit Committee has
recommended the |
|
| re-appointment
of M/S F.R.Merchant & Co., Chartered Accountants, as auditors of the
Company for the |
|
| next year. |
|
|
| PATTERN
OF SHARE HOLDING |
|
| The
pattern of share holding as at 30 June 2002 is annexed to this report |
|
|
| AUDIT
COMMITTEE |
|
| The
Board of Directors has established an audit committee comprising the
following members: |
|
|
| HAJI
YOUNUS DADA |
|
Chairman |
|
| MRS.
HUMERA ESSA |
|
Member |
|
| MR.
ZAFARUDDIN SIDDIQUl |
|
Member |
|
|
| Corporate
Governance |
|
| The
board of directors has reviewed the code of corporate governance and confirms
that: |
|
|
| a.
The financial statements, cash flow and changes in equity, prepared by the
management of the Company, |
|
| present
fairly its' state of affairs and the result of its' operations. |
|
|
| b.
Company has maintained proper books of accounts. |
|
|
| c.
In preparation of financial statements, appropriate accounting policies have
been consistently applied |
|
| and
accounting estimates are based on reasonable and prudent judgement. |
|
|
| d.
In preparation of financial statements International Accounting Standards, as
applicable in Pakistan, |
|
| have
been followed and non-applicability, if any, has been adequately disclosed. |
|
|
| e.
The existing system of internal control and other procedures is being
continuously reviewed by internal |
|
| auditor.
The process of review will continue and any weakness in controls will have
immediate attention |
|
| of
the Management. |
|
|
| f.
There are no significant doubts upon the Companys' ability to continue as a
going concern. |
|
|
| g.
There has been no material departure from the best practices of corporate
governance as detailed in |
|
| the
listing rules |
|
|
| h.
Key operating and financial data for the last six years in summarized form is
annexed. |
|
|
| i. During the year ( 4 ) meetings of the Board
of Directors were held. Attendance by each Director is as |
|
| follows:- |
|
|
No. of Meetings |
|
| Name
of Director |
|
Attended |
|
| MR.
ABDUL AZIZ ESSA |
|
4 |
|
| MRS.
HUMERA ESSA |
|
4 |
|
| HAJI
YOUNUS DADA |
|
4 |
|
| MRS.
ZAITOON HAMZA DADA |
-- |
|
| MRS.
SHAZINA JAWED ESSA |
3 |
|
| MR.
IFRAN AZIZ ESSA |
|
-- |
|
| MR.
ZAFARUDDIN SIDDIQUI |
|
3 |
|
|
| ACKNOWLEDGEMENT |
|
| The
management, staff and workers of the Company deserve our appreciation for
their dedicated efforts |
|
| and
valuable contribution in achieving the improved results in all areas of
operations |
|
|
|
ABDUL AZIZ ESSA |
|
|
CHIEF EXECUTIVE |
|
|
|
| FINANCIAL
HIGHLIGHTS |
|
|
|
|
(Figures in Thousand) |
|
|
2002 |
2001 |
2000 |
1999 |
1998 |
1997 |
|
| NET SALES |
|
681,234 |
622,170 |
573,483 |
377,904 |
172,571 |
270,954 |
|
| RESULTS |
|
|
|
| PROFIT
BEFORE TAX |
|
24,664 |
10,257 |
9,086 |
50,920 |
(10,143) |
11,918 |
|
| PROFIT
AFTER TAX |
|
21,257 |
7,057 |
6,086 |
48,920 |
(11,043) |
16,267 |
|
|
|
|
| NET
RETURN OF TURNOVER % |
3.12 |
1.13 |
1.06 |
12.94 |
(6.40) |
6.00 |
|
|
|
|
| CURRENT
ASSETS |
|
186,430 |
182,444 |
203,407 |
281,339 |
229,423 |
188,831 |
|
|
|
|
| CURRENT
LIABILITIES |
|
204,243 |
174,730 |
184,021 |
281,336 |
254,363 |
171,174 |
|
|
|
|
| CURRENT
RATIO |
|
|
|
| ASSETS
LIABILITIES |
|
0.91:1 |
1.04: 1 |
1.11:1 |
1.00:1 |
0.90'1 |
1.10:1 |
|
|
|
|
| DISTRIBUTABLE
RESERVES |
|
203,293 |
201,083 |
194,026 |
222,570 |
173,650 |
216,175 |
|
|
|
|
| SHAREHOLDERS
EQUITY |
|
584,220 |
582,010 |
574,953 |
568,867 |
519,948 |
530,991 |
|
|
|
|
| NUMBER
OF SHARES |
|
38,093 |
38,093 |
38,093 |
34,630 |
34,630 |
31,482 |
|
|
|
|
| EARNING
PER SHARE |
|
|
|
| OF
RS. 10 EACH |
|
0.56 |
0.19 |
O. 16 |
1.41 |
(0.32) |
0.52 |
|
|
|
|
| BREAKUP
VALUE |
|
|
|
| PER
SHARE RS. |
|
15.34 |
15.28 |
15.09 |
16.43 |
15.01 |
16.87 |
|
|
|
| Statement
of Compliance with Best Practices of Corporate Governance |
|
|
| The
Company is in process of implementing all facets of the Code of Corporate
Governance issued by the |
|
| Karachi
Stock Exchange and the Board feel pleasure in stating that provisions of the
code, relevant for the |
|
| year
ended June 30, 2002 have been duly complied with. |
|
|
|
ABDUL AZIZ ESSA |
|
|
CHIEF EXECUTIVE |
|
|
| Review
Report to the Members on Statement of Compliance with best Practices |
|
| of
Code of Corporate Governance |
|
|
| We
have reviewed the Statement of Compliance with the best practices contained
in the Code of Corporate |
|
| Governance
as applicable to the Company for the year ended June 30, 2002 prepared by the
Board of |
|
| Directors
of Essa Cement Industries Limited, to comply with the Listing Regulation No.,
37 of the Karachi Stock |
|
| Exchange
(Guarantee) Limited where the Company is listed. |
|
|
| The
responsibility for compliance with the Code of Corporate Governance is that
of the Board of Directors of |
|
| the
Company. Our responsibility is to review, to the extent where such compliance
can be objectively verified |
|
| whether
the Statement of Compliance reflects the status of the company's compliance
with the provisions of |
|
| the
Code of Corporate Governance and report if it does not. A review is limited
primarily to inquiries of the |
|
| Company
personnel and review of various documents prepared by the Company to comply
with the Code. |
|
|
| As
part of our audit of financial statements we are required to obtain an
understanding of the accounting |
|
| and
internal control systems sufficient to plan the audit and develop an
effective audit approach. We are |
|
| not
required to consider whether the Board's statement on internal control covers
all risks and controls, or to |
|
| form
an opinion on the effectiveness of such internal controls, the Company's
corporate governance |
|
| procedures
and risks. |
|
|
| Based
on our review, nothing has come to our attention which causes us to believe
that the Statement of |
|
| compliance
does not appropriately reflect the Company's compliance, in all material
respects, with the best |
|
| practices
contained in the Code of Corporate Governance. |
|
|
| Karachi: |
|
F,R.MERCHNAT & CO. |
|
| Date:
September 28, 2002 |
|
Chartered Accountants |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of ESSA CEMENT INDUSTRIES LIMITED. as
at June 30, 2002and |
|
| the
related profit and loss account, cash flow statement and statement of changes
in equity together with |
|
| the
notes forming part thereof, for the year then ended and we state that we have
obtained all the information |
|
| and
explanations which, to the best of our knowledge and belief, were necessary
for the purpose of our |
|
| audit. |
|
|
| It
is the responsibility of the company's management to establish and maintain a
system of internal control |
|
| and
prepare and present the above said statements in conformity with the approved
accounting standards |
|
| and
the requirements of the Companies Ordinance, 1984. Our responsibility is to
express an opinion on these |
|
| statement
based on our audit. |
|
|
| We
conducted our audit in accordance with the auditing standards as applicable
in Pakistan. These standards |
|
| require
that we plan and perform the audit to obtain reasonable assurance about
whether the above said |
|
| statement
are free of any material misstatement. An audit includes examining, on a test
basis, evidence |
|
| supporting
the amounts and disclosures in the above said statements. An audit also
includes assessing the |
|
| accounting
policies and significant estimates made by the management, as well as
evaluating the overall |
|
| presentation
of the above said statements. We believe that our audit provides a reasonable
basis for our |
|
| opinion
and after due verification we report that: |
|
|
| a)
In our opinion, proper books of accounts have been kept by the Company as
required |
|
| by
the Company Ordinance 1984. |
|
|
| b)
In our opinion · |
|
| i)
the balance sheet and profit and loss account together with the notes thereon
have |
|
| been
drawn up in conformity with the Companies Ordinance, 1984 and are in
agreement |
|
| with
the books of account and are further in accordance with accounting policies |
|
| consistently
applied. |
|
|
| ii)
the expenditure incurred during the year was for the purpose of the company's |
|
| business:
and |
|
|
| iii)
the business conducted, Investment made and the expenditure incurred during |
|
| the
year were in accordance with the objects of the company. |
|
|
| c)
In our opinion and to the best of our information and according to the
explanations given to us, |
|
| the
balance sheet, profit and loss account, cash flow statement and statement of
changes in |
|
| equity
together with the notes forming part thereof conform with approved accounting |
|
| standards
as applicable in Pakistan and give the information required by the Companies |
|
| Ordinance,
1984, in the manner so required and respectively give a true and fair view of
the |
|
| state
of the company's affairs as at June 30, 2002 and of the Profit, its cash
flows and changes |
|
| in
equity for the year then ended:and |
|
|
| d)
In our opinion, no Zakat was deductible at source under the Zakat & Ushr
Ordinance, 1980. |
|
|
|
F,R.MERCHNAT & CO. |
|
| KARACHI:September28,2002 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 2002 |
|
|
| SHARE
CAPITAL AND RESERVES |
|
NOTE |
2002 |
2001 |
|
| Authorised |
|
| 50,000,000
ordinary shares of Rs. 10/~ each |
|
500,000,000 |
500,000,000 |
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up-capital |
|
3 |
380,927,050 |
380,927,050 |
|
| Reserves |
|
4 |
203,293,361 |
201,082,818 |
|
|
|
---------- |
---------- |
|
|
|
584,220,411 |
582,009,868 |
|
|
|
|
|
| LONG
TERM LOANS |
|
5 |
652,056,052 |
702,795,870 |
|
|
|
|
|
| LIABILITIES
AGAINST ASSETS |
|
|
|
|
| SUBJECT
TO FINANCE LEASE |
|
6 |
-- |
2,477,714 |
|
| DEFERRED
LIABILITIES |
|
7 |
18,271,122 |
13,660,051 |
|
| CURRENT
LIABILITIES |
|
|
|
|
| Current
maturity of long term loans |
|
5 |
292,573,997 |
299,285,977 |
|
| Current
maturity of liabilities against |
|
|
|
|
| assets
subject to finance lease |
|
6 |
9,875,484 |
21,632,039 |
|
| Creditors,
accrued and other liabilities |
|
8 |
162,069,632 |
153,997,190 |
|
| Running
finances under mark-up arrangements |
9 |
10,902,059 |
11,915,632 |
|
| Provision
for taxation |
|
|
12,224,873 |
8,817,333 |
|
| Proposed
dividend |
|
|
19,046,353 |
-- |
|
|
|
---------- |
---------- |
|
|
|
506,692,398 |
495,648,171 |
|
|
|
|
|
| CONTINGENCIES
AND COMMITMENTS |
|
10 |
---------- |
---------- |
|
|
Rupees |
1,761,239,983 |
1,796,591,674 |
|
|
========== |
========== |
|
| FIXED
ASSETS - Tangible |
|
|
|
| Operating
Assets |
|
11 |
1,556,260,265 |
1,158,128,629 |
|
| Capital
work-in-Progress |
|
12 |
14,409,668 |
451,878,361 |
|
|
|
---------- |
---------- |
|
|
1,570,669,933 |
1,610,006,990 |
|
|
|
|
| LONG
TERM DEPOSITS |
|
4,140,346 |
4,140,346 |
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores
and spares |
|
13 |
105,023,404 |
116,019,200 |
|
| Stock-in-trade |
|
14 |
42,748,479 |
45,375,121 |
|
| Trade debts |
|
15 |
2,552,596 |
3,411,058 |
|
| Advances,
deposits, prepayments |
|
|
|
|
| and
other receivables |
|
16 |
28,256,975 |
10,875,374 |
|
| Cash
and bank balances |
|
17 |
7,848,250 |
6,763,586 |
|
|
---------- |
---------- |
|
|
186,429,704 |
182,444,339 |
|
|
---------- |
---------- |
|
| Rupees |
|
1,761,239,983 |
1,796,591,675 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts |
|
|
|
ABDUL AZIZ ESSA |
|
HAJI YOUNUS DADA |
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 2002 |
|
|
|
NOTE |
2002 |
2001 |
|
| Sales-net |
|
18 |
681,234,000 |
622,170,027 |
|
| Cost of sales |
|
19 |
596,316,795 |
546,487,016 |
|
|
|
---------- |
---------- |
|
| Gross profit |
|
84,917,205 |
75,683,011 |
|
| Administration
and selling |
|
| expenses |
|
20 |
13,818,111 |
11,915,738 |
|
|
|
---------- |
---------- |
|
| Operating
profit |
|
|
71,099,094 |
63,767,273 |
|
| Other
Income |
|
21 |
274,167 |
113,569 |
|
|
|
---------- |
---------- |
|
|
|
71,373,261 |
63,880,842 |
|
| Financial
charges |
|
22 |
47,847,640 |
53,084,013 |
|
| Other
charges |
|
23 |
1,176,281 |
539,841 |
|
|
|
---------- |
---------- |
|
|
|
49,023,921 |
53,623,854 |
|
|
|
---------- |
---------- |
|
| Profit
for the year |
|
|
22,349,340 |
10,256,988 |
|
| Prior
years' adjustments |
|
24 |
2,315,096 |
-- |
|
|
|
---------- |
---------- |
|
| Profit
before taxation |
|
|
24,664,436 |
10,256,988 |
|
| Taxation |
|
25 |
3,407,540 |
3,200,000 |
|
|
|
---------- |
---------- |
|
| Profit
after taxation |
|
|
21,256,896 |
7,056,988 |
|
| Accumulated
Profit brought forward |
|
|
21,082,818 |
14,025,830 |
|
|
|
---------- |
---------- |
|
|
|
42,339,714 |
21,082,818 |
|
| Appropriation |
|
|
|
|
| Proposed
Cash dividend @ 5% (2001 Nil) |
|
|
19,046,353 |
-- |
|
|
|
---------- |
---------- |
|
| Accumulated
Profit carried forward |
|
|
23,293,361 |
21,082,818 |
|
|
|
========== |
========== |
|
| Earnings
per share |
|
26 |
0.56 |
0.19 |
|
| The
annexed notes form an integral pad of these accounts |
|
|
|
ABDUL AZIZ ESSA |
|
HAJI YOUNUS DADA |
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30,2002 |
|
|
|
|
2002 |
2001 |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Profit
for the year |
|
24,664,436 |
10,256,988 |
|
| Add
/ (less) adjustments for non cash charges |
|
|
|
| Depreciation |
|
67,907,426 |
50,722,435 |
|
| Provision
for gratuity |
|
4,611,071 |
3,246,604 |
|
|
---------- |
---------- |
|
| Operating
profit before working capital changes |
|
97,182,933 |
64,226,027 |
|
|
| Movement
in working capital |
|
| (Increase)/decrease
in current assets |
|
| Stores
and spares |
|
10,995,796 |
(5,526,901) |
|
| Stock-
in-trade |
|
2,626,642 |
20,665,017 |
|
| Trade debts |
|
858,462 |
3,499,692 |
|
| Advances,
deposits, prepayments |
|
|
|
| and
other receivables |
|
(17,381,601) |
3,841,469 |
|
|
---------- |
---------- |
|
|
(2,900,701) |
22,479,277 |
|
| Increase/(decrease)
in current liabilities |
|
|
|
| Creditors,
accrued and other liabilities |
|
8,072,442 |
(12,462,113) |
|
| Running
finances under mark-up-arrangements |
|
(1,013,573) |
(28,520) |
|
|
---------- |
---------- |
|
|
7,058,869 |
(12,490,633) |
|
|
---------- |
---------- |
|
| Net
cash (used in) / from operating activities |
|
101,341,101 |
74,214,671 |
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
| Capital
expenditure |
|
(71,384,496) |
(205,579,141 ) |
|
|
---------- |
---------- |
|
| Net
cash (used in) / from investing activities |
|
29,956,605 |
(131,364,470) |
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Long
term loans |
|
(14,637,672) |
138,390,779 |
|
| Liabilities
subject to finance lease |
|
(14,234,269) |
(5,510,183) |
|
|
|
---------- |
---------- |
|
| Net
cash (used in)/flow from financing activities |
|
(28,871,941) |
132,880,596 |
|
|
---------- |
---------- |
|
| Net
increase in cash and bank balances |
|
1,084,664 |
1,516,127 |
|
| Cash
and bank balances at the beginning of the year |
|
6,763,586 |
5,247,459 |
|
|
---------- |
---------- |
|
| Cash
and bank balances at the end of the year |
|
7,848,250 |
6,763,586 |
|
|
========== |
========== |
|
|
|
|
ABDUL AZIZ ESSA |
|
HAJI YOUNUS DADA |
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
