| PAKISTAN CABLES LIMITED. |
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| Annual Reports 2002 |
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| Contents |
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| Company
Information |
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| Notice
of Meeting |
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| Highlights |
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| Ten-Year
Review |
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| Directors'Report |
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| Pattern of Shareholdings |
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| Graphic Illustrations |
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| Mission Statement |
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| Statement of
Compliance with Best Practices of |
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| Corporate
Governance and Auditors' Review thereon , |
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| Auditors'Report to the Members |
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| Balance
Sheet |
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| Profit and Loss Account |
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| Statement of Changes in Equity |
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| Cash
Flow Statement |
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| Notes
to and Forming Part of the Accounts |
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| Company Information |
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| BOARD
OF DIRECTORS |
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| Executive Directors |
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| 1, Kamal A, Chinoy |
(Chief Executive) |
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| 2, Shahpur Channah |
(Deputy Chief Executive) |
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| 3. Aslam Sadruddin |
(Finance Director) |
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| |
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| Non-Executive
Directors |
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| 1.
Towfiq H, Chinoy (Chairman) |
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| 2. Mustapha A, Chinoy |
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| 3. Haroun Rashid |
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| 4. Syed Naseem Ahmed |
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| 5. Aziz Husain |
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| 6. Behram Hasan |
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| 7. Zafar Mahmood |
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| BOARD
AUDIT COMMITTEE |
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| 1, Haroun Rashid |
(Chairman) |
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| 2, Mustapha A, Chinoy |
(Member) |
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| 3, Aziz Husain |
(Member) |
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| BOARD
HUMAN RESOURCE AND COMPENSATION COMMITTEE |
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| 1 Towfiq H. Chinoy |
(Chairman) |
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| 2 Syed Naseem Ahmed |
(Member) |
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| 3 Mustapha A. Chinoy |
(Member) |
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| COMPANY
SECRETARY |
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| Aslam Sadruddin |
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| AUDITORS |
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| A.
F. Ferguson & Co. |
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| Chartered Accountants |
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| LEGAL ADVISOR |
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| Ghani Law Associates |
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| BANKERS |
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| Credit
Agricole Indosuez |
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| Habib Bank Limited |
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| Hongkong
and Shanghai Banking Corporation Limited |
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| Muslim
Commercial Bank Limited |
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| Oman
International Bank |
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| Standard
Chartered Bank |
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| Standard
Chartered Grindlays Bank Limited |
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| Union Bank |
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| REGISTERED
OFFICE, FACTORY AND MARKETING OFFICE |
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| B/21, Sindh Industrial
Trading Estates, |
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| Manghopir Road, P. 0.
Box 5050, Karachi-75700 |
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| Telephone Nos,
2561170-75, Fax: 92-21-2564614 |
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| E-mail: pakcables@cyber.net.pk |
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| Web
site: www.pakcables.com |
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| REGIONAL OFFICE |
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| Lahore |
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| Co-operative
Insurance Building, Shahra-e-Quaid-e-Azam, Lahore |
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| Telephone
Nos. (042) 7355783,7120790-91,7353520, Fax: 7355480 |
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| BRANCH OFFICES |
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| Multan |
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| 1592,
Quaid-e-Azam Shopping Centre No,1, Multan Cantt, |
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| Telephone
No. (061) 583332, Fax: 549336 |
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| Rawalpindi |
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| 455-A, Adamjee Street,
Rawalpindi, |
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| Telephone
Nos, (051) 5568895,5512797, Fax: 5587029 |
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| Abbottabad |
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| 13-14, Sitara
Market, Mansehra Road, Abbottabad, |
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| Telephone
No. (0992)383616 |
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| Notice
of Annual General Meeting |
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| NOTICE
IS HEREBY GIVEN THAT THE 49th Annual General Meeting of the shareholders of
Pakistan |
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| Cables
Limited will be held on Thursday, the 31 st October, 2002 at 11:00 a.m. at
Council Hall of the |
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| Overseas
Investors Chamber of Commerce and Industry, Chamber of Commerce Building,
Talpur |
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| Road,
Karachi, to transact the following business: |
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| |
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| Ordinary Business |
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| 1. To receive and consider the Statement of
Accounts for the year ended June 30,2002 together |
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| with
the Reports of the Directors and Auditors thereon, |
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| |
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| 2. To approve the payment of dividend as
recommended by the Directors. The Directors have |
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| |
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| recommended
a dividend of 30%, |
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| 3. To appoint Auditors for the ensuing year
and to fix their remuneration (Messrs, A, F. Ferguson & |
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| Co.
Chartered Accountants, retire, and being eligible, have offered themselves
for re- |
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| appointment).
As required by paragraph xxxix of the Code of Corporate Governance, the |
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| Board
of Directors recommends the appointment of Messrs, A, F, Ferguson & Co, |
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| 4. To transact any other business which may
legally be transacted at an Annual General |
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| Meeting. |
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| By Order of the Board |
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| Aslam
Sadruddin |
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| Finance
Director and |
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| Company Secretary |
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| KARACHI:
September 26,2002 |
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| NOTES: |
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| 1. The Shares Transfer Books of the Company
will remain closed from October 18, 2002 to |
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| October
31,2002 (both days inclusive). No transfer will be accepted for registration
during this |
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| period, |
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| |
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| 2. A member entitled to attend and vote at
this Meeting is entitled to appoint a proxy to attend |
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| and
vote instead of him. A proxy need not be a member of the Company, |
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| 3. The instrument appointing the proxy and the
Power of Attorney or other authority under which |
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| it
is signed, or a notarially certified copy thereof, must be lodged at the
Company's Registered |
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| Office
i.e. B/21, S.l.T.E., Karachi, not later than 48 hours before the time of the
Meeting, |
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| |
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| 4. CDC Account Holders will have to follow the
guidelines below as laid down in circular 1 dated |
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| January
26,2000 issued by Securities and Exchange Commission of Pakistan; |
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| A,
For Attending the Meeting |
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| |
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| (i) In case of individual, the account holder
or sub-account holder and/or the person |
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| whose
securities are in group account and their registration details are uploaded
as |
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| per
the Regulations, shall authenticate his identity by showing his original
National |
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| Identity
Card (NIC) or original passport at the time of attending the Meeting. |
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| |
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| (ii)
In case of corporate entity, the Board of Directors' resolution / power of
attorney with |
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| specimen
signature of the nominee shall be produced at the time of the Meeting. |
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| B.
For Appointing Proxies |
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| (i) In case of individual, the account holder
or sub-account holder and/or the person |
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| whose
securities are in group account and their registration details are uploaded
as |
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| per
the Regulations, shall submit the proxy form as per above requirement. |
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| |
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| Qi)
The proxy form shall be witnessed by two persons whose names, addresses and
NIC |
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| numbers
shall be mentioned on the form. |
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| |
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| (iii)
Attested copies of NIC or the passport of the beneficial owners and the proxy
shall |
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| be
furnished with the proxy form, |
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| |
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| (iv)
The proxy shall produce his original NIC or original passport at the time of
the |
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| Meeting. |
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| |
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| (v)
In case of corporate entity, the Board of Directors' resolution / power of
attorney with |
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| specimen
signature shall be submitted alongwith proxy form to the Company, |
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| |
2001-2002 |
2000-2001 |
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| |
Rs. Million |
Rs. Million |
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| Sales |
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799.86 |
763.68 |
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| Profit after tax |
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11.66 |
6.73 |
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| Dividend |
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9.36 |
6.24 |
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| Net assets employed |
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141.19 |
134.67 |
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| Shareholders' fund |
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122.74 |
120.45 |
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| Net earning per share |
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Rs. |
3.74 |
2.16 |
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| Net
earning per rupee sales |
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RS. |
0.01 |
0.01 |
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| |
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| Ten-Year Review |
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| |
2001-2002 |
2000-2001 |
1999-2000 |
1998-99 |
1997-98 |
1996-97 |
1995-96 |
1994 |
1993 |
1992 |
| |
Rs. |
Rs. |
Rs, |
Rs. |
Rs, |
Rs. |
Rs, |
Rs. |
Rs. |
Rs. |
| |
Million |
Million |
Million |
Million |
Million |
Million |
Million |
Million |
Million |
Million |
| |
| Sales |
|
799.86 |
763.683 |
721.279 |
578,895 |
500,151 |
636.476 |
964.652 |
438,239 |
380.362 |
302,149 |
| Operating profit |
|
39.61 |
34,816 |
40,424 |
39.695 |
24,583 |
54,204 |
63.998 |
30.117 |
30.39 |
16,914 |
| Profit before tax |
|
18.348 |
9,281 |
11.717 |
13.218 |
11.321 |
20.751 |
35,058 |
21.15 |
15.954 |
8.242 |
| Profit after tax |
|
11.663 |
6,733 |
12.317 |
9,248 |
8,321 |
13.151 |
19.733 |
9,157 |
7.868 |
4,173 |
| Dividend |
|
9.365 |
6.244 |
9,365 |
7,805 |
7.024 |
10,927 |
14.829 |
8.585 |
7.805 |
2.178 |
| Bonus issue |
|
- |
- |
- |
- |
- |
- |
- |
- |
- |
2,178 |
| Capital expenditure |
|
5.965 |
4,847 |
13.781 |
10,015 |
2,628 |
6.569 |
64,762 |
3,145 |
0.741 |
1,142 |
| Fixed assets at cost |
|
284.314 |
279.697 |
275,823 |
262,971 |
252,531 |
246,532 |
244.126 |
179.055 |
175.979 |
175.42 |
| Current assets less |
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| current liabilities |
|
61.234 |
55.82 |
44.429 |
40.944 |
47.596 |
37,359 |
27,687 |
41.609 |
48,633 |
61,234 |
| Current assets: |
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| Current liabilities |
|
1.2:1 |
1.1:1 |
1,1:1 |
1,1:1 |
1,2:1 |
1,1:1 |
1,1:1 |
1.2:1 |
1,3:1 |
1.4:1 |
| Shareholders' funds |
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| Issued capital |
|
31.218 |
31.218 |
31,218 |
31.218 |
31,218 |
31.218 |
31.218 |
31,218 |
31,218 |
29.04 |
| Reserve & retained |
|
| earnings |
|
91.526 |
89,228 |
88,739 |
85,787 |
84,344 |
83,047 |
80,823 |
75,919 |
75,347 |
77,462 |
| Total
shareholders' fund |
122,744 |
120,446 |
119.957 |
117,005 |
115,562 |
114.265 |
112,041 |
107,137 |
106.565 |
106,502 |
| Long
term loans & liabilities |
18.448 |
14.22 |
15.352 |
20.016 |
31.967 |
38,203 |
47.582 |
21.708 |
37,568 |
47.105 |
| Net assets employed |
|
141.192 |
134,666 |
135,309 |
137.021 |
147,529 |
152,468 |
159,623 |
128.845 |
144.133 |
153,607 |
| Net
earnings as percentage |
|
| of
net assets employed % |
8 |
5 |
9 |
7 |
6 |
9 |
12 |
7 |
5 |
3 |
| Earning
per rupee of sales Rs, |
0.01 |
0.01 |
0.02 |
0.02 |
0.02 |
0.02 |
0.02 |
0.02 |
0.02 |
0,01 |
| Earning per share Rs, |
|
3.74 |
2.16 |
3.95 |
2.96 |
2.67 |
4.21 |
6.32 |
2.93 |
2.52 |
1.44 |
| Cash
dividend per share Rs, |
3 |
2 |
3 |
2.5 |
2.25 |
3.5 |
4.75 |
2.75 |
2.5 |
0.75 |
| Break-up
value per share Rs, |
39.32 |
38.59 |
38.43 |
37.48 |
37.02 |
36.6 |
35.89 |
34.32 |
34.14 |
36.67 |
| |
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| *
Eighteen months ended June 30,1996. |
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| |
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| Directors' Report |
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| |
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| The
Directors have pleasure in presenting their Annual Report together with the
company's audited |
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| accounts
for the year ended June 30,2002. |
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| |
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| BOARD CHANGES |
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| |
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| The
following directors were elected unopposed with effect from May 16th, 2002 in
the |
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| Extraordinary
General Meeting of the Company held on May 16th, 2002: |
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| |
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| Mr. Towfiq H, Chinoy |
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| Mr,
Mustapha A, Chinoy |
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| Mr, Haroun Rashid |
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| Syed Naseem Ahmad |
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| Mr, Aziz Husain - representing
NIT |
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| Mr. Behram Hasan - representing
NIT |
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| Mr, Zafar Mahmood -
representing SLIC |
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| Mr,
Shahpur Channah |
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| Mr,
Aslam Sadruddin |
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| Mr, Kamal A, Chinoy |
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| |
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| During
the year the following changes took place in the Board: |
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| |
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| i) Mr, Behram Hasan replaced Syed Zubair
Ahmed as NIT's nominee director on the Board |
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| of
your company on 11-02-2002, |
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| |
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| ii) Mr, Zafar Mahmood replaced Mr. M. Saeed
Akhter as State Life Insurance Corporation's |
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| nominee
director effective 16-5-2002, |
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| |
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| The
Board wishes to place on record its warm appreciation for the valuable
contributions made by |
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| the
retiring directors and takes pleasure in welcoming the new directors, |
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| |
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| OPERATING
PERFORMANCE |
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| |
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| Commercial
activity and industrial demand during the current year remained low, KESC did
not |
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| place
any major order during the year, however, we were successful in securing some
business from |
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| WAPDA, |
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| |
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| Inspite
of these conditions, we are pleased to inform you that your company achieved
net sales of |
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| Rs,
799.9 million which is 5% higher than the last year's sales of Rs. 763,7
million mainly due to higher |
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| sales
to WAPDA as compared to last year, |
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| |
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| Gross
profit of Rs, 98.0 million is 12% of sales against Rs, 86,7 million last year
which was 11% of sales. |
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| Higher
gross profit was mainly due to higher volume of sales and also to better
control over |
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| manufacturing cost, |
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| |
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| Operating
profit for the year is Rs, 39,6 million against Rs. 34,8 million last year,
Financial charges for |
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| the
year are Rs, 25,2 million which have been substantially reduced from the last
year's charge of |
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| Rs,
31,7 million, This reduction is mainly due to strict control on borrowings as
well as the downward |
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| trend
of mark-up on bank borrowings, Moreover, the company negotiated various short
term loans |
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| at
low rates which played a major role in reducing our financial charges
significantly. Profit before |
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| tax
for the year is Rs. 18,3 million against Rs. 9.3 million last year while the
profit after tax of Rs, 11.7 |
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| million
is an improvement of 75% as compared to Rs, 6,7 million last year, |
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| |
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| DIVIDENDS
AND APPROPRIATION |
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| |
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| For
the current year, your Directors recommend payment of Rs, 3,00 per share
(30%) compared to |
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| Rs.
2,00 per share (20%) last year. The appropriation of profit will be as under: |
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| |
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| |
2002 |
2001 |
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| |
Rs. '000 |
Rs, '000 |
|
| The
net profit after tax amounted to |
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11,663 |
6,733 |
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| To
this is added unappropriated profit |
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| brought
forward from last year |
|
228 |
239 |
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| |
11,891 |
6,972 |
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| The
Directors recommend: |
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| Payment
of Cash dividend at the |
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| rate
of Rs, 3,00 per share (30%) |
|
9,365 |
6,244 |
|
| Transfer
to General Reserve |
|
2,500 |
500 |
|
| Leaving
unappropriated profit to be |
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| carried forward |
|
26 |
228 |
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| |
11,891 |
6,972 |
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| Earning per share |
|
3.74 |
2.16 |
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| |
| |
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| CORPORATE
GOVERNANCE |
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| |
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| During
the year, the Stock Exchange made certain amendments in its listing
regulations in order to |
|
| establish
a framework of good corporate governance, Your company has taken
necessary |
|
| measures
to comply with the new statutory requirements and we are pleased to state
that: |
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| |
|
| a,
The financial statements, prepared by the management of the company, present
fairly |
|
| its
state of affairs, the result of its operations, cash flows and the changes in
equity, |
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| |
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| b,
Proper books of accounts have been maintained by the company, |
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| |
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| c, Appropriate accounting policies have been
applied in preparation of financial |
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| statements
and these policies are consistently applied except otherwise mentioned in
this |
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| report,
Further, accounting estimates are based on reasonable and prudent judgments, |
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| |
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| d, International Accounting Standards, as
applicable in Pakistan, have been followed in |
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| |
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| preparation
of financial statements, |
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| |
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| e.
The system of internal control is sound in design and has been effectively
implemented |
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| and monitored. |
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| |
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| f, There are no significant doubts upon the
company's ability to continue as a going |
|
| concern, |
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| |
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| g.
There has been no material departure from the best practice of corporate
governance, |
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| as
detailed in the listing regulations. |
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| |
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| h. There are no outstanding statutory
payments, however, there are some disputed cases |
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| which
are appearing in note 12,1 of the financial statements, |
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| |
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| The
key operating and financial data of last ten years is given on page 7, while
the pattern of |
|
| shareholding
is provided on page 12, |
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| |
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| The
following is the value of investments based on respective audited accounts
for the year ended |
|
| December 31,2001, |
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| |
|
| Provident
Fund |
|
| Pension Fund |
|
| |
|
| Rs,
34,530 Million |
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| Rs. 30,130 Million |
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| |
|
| During
the year four (04) meetings of Board of Directors were held, Attendance by
each Director |
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| is as follows: |
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| |
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| Directors |
|
No. of meetings |
|
| |
attended |
|
| Mr, Towfiq H, Chinoy |
|
4 |
|
| Mr,
Mustapha A. Chinoy |
|
4 |
|
| Mr, Haroun Rashid |
|
2 |
|
| Syed Naseem Ahmed |
|
4 |
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| Mr, Aziz Husain |
|
4 |
|
| Mr, M, Saeed Akhter |
|
2 |
|
| Syed Zubair Ahmed |
|
1 |
|
| Mr, Behram Hasan |
|
2 |
|
| Mr. Shahpur Channah |
|
4 |
|
| Mr, Aslam Sadruddin |
|
4 |
|
| 'Mr, Kamal A, Chinoy |
|
3 |
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| |
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| Mrs,
Kamal A, Chinoy has purchased 3000 shares of the company since the changes in
listing |
|
| regulations
of the Karachi Stock Exchange, |
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| |
|
| INDUSTRY
CONCERNS |
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| |
|
| In
the Capital Goods Industry, Electric Wire & Cables are still the only
item on which both excise duty |
|
| and
sales tax are levied, making a total levy of 26,5%, in addition to which a
further 3% sales tax is |
|
| also
chargeable for goods sold to unregistered customers, This is extremely high
and only serves to |
|
| encourage
tax evasion, affecting government revenues on the one hand and abetting the
supply |
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| of
substandard goods on the other hand by unscrupulous manufacturers in the
unorganized sector, |
|
| We
urge the government to promote a culture of production & thus use, of
quality cables, This can |
|
| be
done by withdrawing excise duty on Electric Wire & Cables, as they have
done for Enamel Wire, |
|
| which
will reduce the incentive for backyard manufacturers of spurious quality
cables, |
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| |
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| Not
only will the government gain in the form of increased sales tax collection,
but the public will |
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| also
benefit by savings on their electricity bills, |
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| |
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| FUTURE PROSPECTS |
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| |
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| The
government policy is aimed at increasing sustainable growth in the domestic
economy via |
|
| restoration
of investor confidence, removal of infrastructure bottlenecks and lowering of
interest |
|
| rates,
which is quite encouraging, However, political stability, continuity of
policy direction and |
|
| strong
international geo-political situation needs to be maintained. Any social or
political unrest, |
|
| change
in Pakistan's new found international support, continuation of the
standoffwith India could |
|
| divert
the attention and undermine the government's efforts to rebuild the economy.
Your |
|
| company's
success is inextricably linked to the country's broad based economic recovery
and the |
|
| future
needs to be viewed in that context, In this regard we would view it with
cautious optimism. |
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| |
|
| STAFF RELATIONS |
|
| |
|
| The
total number of employees as on June 30th, 2002 was 281. The continued
competition in the |
|
| cable
industry places considerable stress on the management and staff and they need
to be |
|
| commended
for their respective contribution to the performance of your company during
the |
|
| year.
The relationship with the employees at all levels remained warm and cordial,
A two year |
|
| agreement
with the CBA was amicably negotiated which is valid upto December 2003, On
behalf |
|
| of
the Board of Directors and employees of the company, we express our gratitude
to all our valued |
|
| customers,
distributors and banks for their confidence and support, |
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| |
|
| AUDITORS |
|
| |
