Nimir Chemical Industries

For business information, annual reports, laws, ordinances, regulations and articles.

Nimir Industrial Chemicals Limited

Annual Reports 2002

CONTENTS

Company Information

BOARD OF DIRECTORS

Mr. Louis Tucker Link

(Chairman)

Mr. Saeed-uz-Zaman

(Chief Executive)

Mr. Sami Ba'arma

Mr. Cherif Sedky

Sh. Amar Hameed

Sh. Farooq Jamil

Mr. S. A. Rehman

AUDIT COMMITTEE ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^H

Sh. Amar Hameed

(Chairman)

Mr. Abdul Jalil Jamil

(As alternate director to Mr. Sami Ba'arma)

Sh. Farooq Jamil

COMPANY SECRETARY

Mr. Shamshad A. Naushahi

AUDITORS

Ford, Rhodes, Robson, Morrow

Chartered Accountants

LEGAL ADVISOR

Sheikh & Syed Law Associates

Advocates

BANKERS

United Bank Limited

Faysal Bank Limited

Fidelity Investment Bank Limited

Muslim Commercial Bank Limited

Industrial Development Bank of Pakistan

Habib Bank Limited

SHARES' REGISTRAR

SHARES REGISTRAR

Softlink (Pvt.) Limited

Wings Arcade 1-K, (Commercial)

Model Town, Lahore.

REGISTERED / HEAD OFFICE

51 -N, Culberg II, Lahore.

Tel: 92-42-571 8001-9 Fax:92-42-571 8013

E-mail: contact@nimir.com. pk

FACOTRY

14.8-Km, Sheikhupura - Faisalabad Road,

Mauza Bhikhi, Distt: Sheikhupura.

Ph: 04931-882198-99

Fax: 04931-882198

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the ninth Annual General Meeting of Nimir Industrial Chemicals Limited will be held c

Wednesday, the 23rd October, 2002 at 11:30 a.m. at 51-N, Industrial Area, Gulberg-ll, Lahore, to transact the followir

business:-

Ordinary Business

1. To confirm the minutes of the Annual General Meeting of the Company held on 8th February, 2002.

2. To receive, consider and adopt the audited accounts of the Company for the year ended 30th June, 2002 togetht

with the Directors' and Auditors' reports thereon.

3. To appoint Auditors and to fixtheir remuneration for the year ending 30th June, 2003. The retiring auditors M/s Fore

Rhodes, Robson, Morrow-Chartered Accountants being eligible offer themselves for re-appointment.

Special Business

4. To consider and pass the following special resolutions with or without modifications to amend the object clause of th

Memorandum of Association of the Company in accordance with Section 2J of the Companies Ordinance, 198

subject to the approval of Securities and Exchange Commission of Pakistan:

i) Resolved that "the existing sole object clause of Memorandum of the Association be replaced with the ne\

multiple purpose object clause to be read as under.

Clause -III The objects for which the company is established are :-

a) To set up industrial undertaking for manufacturing of chemicals such as Caustic Soda, Chlorine

Hydrochloric Acid, Sodium Hydro-oxide and fatty acids.

a-1) To carry on the business of Power generation, distribution, sale and supply of electric power, and a

other allied business thereto."

ii) Resolved that "the said alteration will not effect any one's interest unfavorably in the Company".

iii) Further Resolved that "the Company Secretary or any one of the director of the Company be and is hereb

authorized to take all the necessary steps and fulfill the legal, corporate and procedural formalitie

in connection therewith."

5. To consider and approve the increase in Authorized Share Capital of the Company from Rs. 1,260 million to Rs. 1,45i

million and to amend the memorandum and articles of association of the Company, by passing the following specij

resolutions with or without modification.

i) Resolved that "the Authorized Share Capital of the Company be increased from Rs. 1,260 million (om

thousand two hundred sixty million) divided into 126 million (one hundred twenty six million) ordinary share

of Rs. 10 (ten) each, to Rs. 1,450 million (one thousand four hundred fifty million) divided into 145 millioi

(one hundred forty five million) ordinary shares of Rs.10 (ten) each".

ii) Further Resolved that the "relevant clauses of Memorandum and Articles of Association be amende;

accordingly".

6. To consider the issuance of further 16.75 million ordinary shores of Rs.10/-each at 60% discount i.e. Rs.4/= per shan

to M/s Nimir Chemicals Company Limited u/s 86 (1) of the Companies Ordinance, 1984, subject to the approval o

Securities & Exchange Commission of Pakistan, by passing the following special resolutions with or without

modification.

i) Resolved that "the Board of Directors of the company be and is hereby authorized to offer further shares of

Rs.67 million at 60% discount i.e. Rs.4.00 per share to M/s Nimir Chemicals Company Limited u/s 86(1) of the

Companies Ordinance, 1984 subject to the approval of Securities & Exchange Commission of Pakistan.

ii) Further Resolved that "the Company Secretary be and is hereby authorized to take all the necessary steps and

fulfill the legal, corporate and procedural formalities in connection therewith."

A statement under section 160 (1 )(b) of the Companies Ordinance, 1984 pertaining to the Special Business is appended

below with this notice.

Any Other Business

7. To consider any other business which may be placed before the meeting with the permission of the Chair.

Lahore (Shamshad A. Naushahi)

25^th September, 2002 Company Secretary

Statement under section 160 (1)(b) of the Companies Ordinance, 1984

The Board has proposed to amend the object clause of the Memorandum of Association of the Company in order to

include the sale or electricity generated through its own power plant.

The proposed increase in the Authorized Share Capital would enable the management to enhance the paid-

up capital of the Company to issue further capital.

The member's approval is sought for the further issue of 16.75 million ordinary shares at discount of 60% i.e-

Rs.4.00 per share to Nimir Chemicals Company Limited u/s 86 (1) of the Companies Ordinance, 1984 subject to

the approval of Securities & Exchange Commission of Pakistan for the purpose of working capital.

The directors of the company don't have or have had any special interest in the transaction other than as

holders of ordinary shares in the company and / or any benefit accruing on such shares.

Notes:

1. The share transfer books of the company will remain closed from 16th October, 2002 to 23rd October, 2002 (both

days inclusive)

2. A member eligible to attend and vote at this meeting is entitled to appoint another member as his/her proxy to attend

and vote instead of him / her. A proxy must be a member of the company. Proxies in order to be effective must be

received at the registered office of the company not later than 48 hours before the meeting.

3. The corporate shareholders shall nominate someone to represent at the annual general meeting. The nominations, in

order to be effective must be received by the company not later than 48 hours before the time of holding the

meeting.

4. Any individual Beneficial Owner of CDC, entitled to attend and vote at this meeting, must bring his/her original NIC or

passport. Account and participants' I.D. numbers to prove his / her identity, and in case of proxy must enclose an

attested copy of his/her NIC or passport. Representatives of corporate members should bring the usual documents

required for such purpose.

5. Shareholders are requested to immediately notify change in address, if any, to the company's share registrar

M/s Softlink (Pvt.) Limited.

DIRECTORS' REPORT

Your directors take this opportunity to present before you the 9^th Annual Report together with audited accounts of the

company for the year ended 30ⁱⁿjune 2002.

Operating Results

2002

2001

Rupees

Sales

361,651,906

182,264,392

Gross Loss

(32,748,294)

(38,373,376)

Loss before tax and amortization of deferred cost

(162,996,189)

(142,561,528)

Amortization of deferred cost

(107,467,956)

(82,581,386)

Provision for taxation

(1,808,260)

(916,230)

Net loss for the year

(272,272,405)

(226,059,144)

Accumulated loss brought forward

(331,324,689)

(105,265,545)

Accumulated loss carried forward

(603,597,094)

(331,324,689)

The year under review has been a challenging one for the world economy in general and Pakistan economy in particular. The

event of 11-Sept, war in Afghanistan and escalation of tension between India and Pakistan had adversely affected the

business activities in the region.

We expanded the fatty acid plant by 12,000 tons per annum which was made operative with effect from 1^s' of January 2002.

This has resulted in a significant improvement in sales during the year under review over the last year, up by 98%.

Unfortunately just after the expansion of plant, margins between the feed stock and imported finished product were

unprecedentedly squeezed. Financial cost increased mainly due to additional borrowings to carry out the expansion of

plant, additional working capital and repayment of some of the long term liabilities.

Future Outlook

In order to achieve the full advantage of expanded capacity (for which we have sufficient market), there is a requirement of

additional working capital, which our parent company, Nimir Chemicals^Gompany Limited, has committed to inject in the

form of equity subject to the approval of Securities & Exchange Commission of Pakistan. Recently the margins between feed

stock and imported finished product have started showing a positive improvement.

In view of the above facts, we are, therefore confident about the future prospects of the company.

Summary of key operating and financial data of last six years

Summary of key operating and financial data of the company for last six years is annexed.

Dividend

Since the company has suffered net loss during the year, therefore, dividend is not declared for the year.

Outstanding statutory payments

There is no outstanding statutory payment due on account of taxes, duties, levies and charges except for the custom duties

on the plant as referred in Note 11 to the accounts under review. All other outstanding in this respect is of normal and routine

nature.

Significant plans and decisions

There are no significant plans and decisions except to improve the business and sales volumes. There are no significant risks

and uncertainties surrounding the company. The company is the only producer of fatty acids in Pakistan and supplying its

products to leading national and multinational companies. The products of the company are widely accepted in the market

due to its commitment on quality and emphasis on customer's satisfaction.

Gratuity Scheme

The company operates an un-funded gratuity scheme for its employees as referred in Note 3.9 to the accounts.

Board of Di rectors

Since the last review Mr. Abdullah Al Ami I ceased the office of director and Mr. Sami Ba'arma has been appointed as director

of the company.

Duringtheyear three board meetings were held and attended as follows:

Name of Director

Meetings

Attended

Mr. Louis Tucker Link

Represented by Mr. Javed S. Arif as alternate director

Mr. Saeed-uz-Zaman

Mr. Cherif Sedky •

Represented by Mr. Fareedullah Qureshi as alternate director

Sh. Amar Hameed

Mr. Abdullah Al Amil

Ceased the office u/s 188(b) of the Companies Ordinance, 1984

Mr. Sami Ba'arma

Appointed on 1 5.03.2002, represented by Mr. Abdul Jalil Jamil as

alternate director

Sh. Farooq Jamil

Mr. S. A. Rehman

Leave of absence was granted to directors who could not attend some of the board meetings.

Statement of compliance of code of corporate governance

The Board of Directors state that:

. The financial statements, prepared by the management of the company, present fairly its state of affairs, the results of

its operations, cash flows and changes in equity. Proper books of account of the company have been maintained.

. Appropriate accounting policies have been consistently applied in preparation of financial statements and accounting

estimates are based on reasonable and prudent judgement.

• International Accounting Standards, as applicable in Pakistan, have been followed in the preparation of financial

statements and any departure therefrom has been adequately disclosed.

• The system of internal control is sound in design and has been effectively implemented and monitored.

* There is no significant doubt upon the company's ability to continue as a going concern for the facts stated in Note

the accounts under review.

• There has been no material departure from the best practices of corporate governance, as detailed in the lis

regulations.

Audit Committee

The Board of Directors, in compliance with the code of corporate governance, has established an audit commi

and the following directors are its members:

• Sh. Amar Hamee

(Non-Executive Director)

Chairman

• Sh. Farooq Jamil

(Non-Executive Director)

Member

• Mr. Abdul Jalil Jamil

(as alternate directo

(Non-Executive Director)

Member

Auditors

The present retiring auditors M/s Ford, Rhodes, Robson, Morrow, Chartered Accountants being eligible have offe

themselves for reappointment and, as required by the code of corporate governance, audit committee

recommended their appointment as auditors of the company for the next year.

Pattern of Shareholding

A pattern of shareholding of the Company is annexed.

Trading of shares

Following is the summary of the shares of the company traded by its directors, CEO, CFO, Company Secretary;

their spouses and minor children through stock exchange during the year under review:

• Sh. Farooq Jamil, director, sold 112,500 shares.

Acknowledgement

We acknowledge with thanks the continued patronage of our valued customers, bankers, leasing companies ;

shareholders in reposing trust and confidence in the company and its management. We also appreciate

commitment of all employees and look forward to their continued support at all times in future.

KEY OPERATING & FINANCIAL DATA FOR LAST SIX YEARS

2002

2001

2000*

1999

1998

1997

Rs.'000

Net Sales

361,652

182,264

44,652

Gross Loss

(32,748)

(38,373)

(28,602)

Operating Loss

(64,972)

(64,808)

(39,985)

Loss before amortization

of deferred cost and tax

(162,996)

(142,562)

(81,277)

Loss before tax

(270,464)

(225,143)

(105,042)

Loss after tax

(272,272)

(226,059)

(105,266)

Paid-up Capital

1,251,179

1,002,500

377,500

280,000

Net Worth

654,930

927,202

904,582

454,825

377,500

280,000

* Six months commercial operations, as commercial production was started from 1st of January 2000.

PATTERN OF HOLDING OF SHARES