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|
FAUJI CEMENT COMAPANY LIMITED |
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|
ANNUAL REPORT 1996 |
|
|
|
|
| CONTENTS |
|
|
| COMPANY
INFORMATION AT A GLANCE |
|
2 |
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
3 |
|
| REPORT
OF THE DIRECTORS |
|
4 |
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
7 |
|
| BALANCE
SHEET |
|
|
8 |
|
| CASH
FLOW STATEMENT |
|
|
10 |
|
| NOTES
TO THE ACCOUNTS |
|
|
11 |
|
| PATFERN
OF SHAREHOLDING |
|
19 |
|
|
| COMPANY |
|
| INFORMATION |
|
| AT
A GLANCE |
|
|
| 1.
Board of Directors |
|
|
| Lt.
Gen M. Arif Bangash, HI (M) S.Bt |
|
Chairman & |
|
|
Chief Executive |
|
|
|
| Lt.
Gen Nazar Hussain, HI (M), T. Bt |
|
Addl Managing |
|
|
Director |
|
|
|
| Mr
Iltifat Rasul Khan, |
|
Director |
|
|
|
|
| Brig
Mushtaq Ali Khan (Retd), |
|
Director |
|
|
|
|
| Brig
Muhammad Ahsan Bhatti, SI (M) (Retd), |
|
Director |
|
|
|
|
| Brig
Muneeb Ur Rehman Farooqi, SI (M) (Retd), |
|
Director |
|
|
|
|
| Brig
Riaz Ahmed Qureshi (Retd), |
|
Director |
|
|
|
| Secretary |
|
|
Brig Bashir Hussain
Tareen (Retd) |
|
|
|
| Registered
Office |
|
70-Harley Street,
Rawalpindi Cantt. |
|
|
|
| Plant Site |
|
Near Village Jhang,
Tehsil Fateh |
|
|
|
Jang, District Attock |
|
|
| Auditors |
|
A.F. Ferguson & Co |
|
|
Chartered Accountant |
|
|
|
| Legal
Advisors |
|
Orr, Dignam & Co
Advocates |
|
|
|
| NOTICE OF ANNUAL GENERAL MEETING |
|
|
|
| Notice
is hereby given that the fourth Annual General Meeting of the Company will |
|
| be
held at 10 A.M. on 12 December 1996 at Hotel Pearl Continental, The Mall |
|
| Rawalpindi
to transact the following business :- |
|
|
|
| Ordinary
Business |
|
| a.
To consider, approve and adopt the Audited Accounts of the Company |
|
| for
the period commencing from 01 July 1995 ending on 30th June |
|
| 1996. |
|
|
|
| b.
To consider and approve the Directors' Report for the period ending on |
|
| 30tb
June 1996. |
|
|
|
|
| c.
To appoint Auditors of the Company in place of present auditors M/S |
|
| A.F.
Ferguson & Company who retire and offer themselves for re- |
|
| appointment
and to fix their remuneration. |
|
|
|
| d.
To transact any other business with the permission of the Chair. |
|
|
|
| Date:
13th November 1996 |
|
| Place:
Rawalpindi |
|
|
|
| Brig
Bashir Hussain Tareen (Retd) |
|
| Secretary FCCL |
|
|
| NOTE: |
|
| The
Member entitled to attend and vote at the Annual General Meeting |
|
| may
appoint a person/rep as proxy to attend and vote in place of the |
|
| Member
at the Meeting. Proxies in order to be effective must be received |
|
| at
the Company's Registered Office not later than 10 A.M. on December |
|
| 10,
1996. Proxy form is attached. |
|
|
|
| REPORT
OF THE DIRECTORS |
|
| FOR
THE YEAR ENDED JUNE, 30 1996 |
|
|
|
| 1. General |
|
| The
Directors take pleasure in presenting Directors' Report together with |
|
| the
Company's Financial Statements for the year ended June 30, 1996 and |
|
| the
Auditors' Report thereon. |
|
|
|
| 2.
Year in Review |
|
| During
the year under review significant progress has been achieved by the |
|
| Company.
Notable milestones were reached as highlighted in the succeed- |
|
| ing paras. |
|
|
| Plant Site |
|
| a)
Initial Problem Areas. Great resistance was offered by the
locals for |
|
| development
of Quarry Road. There were problems in implementation |
|
| of
civil works where piling had to be re-done for some of the construc- |
|
| tions.
However through concerted efforts and timely decisions by the |
|
| management,
all these problems were effectively overcome. Problem of |
|
| land
was amicably resolved and our works gained requisite momentum.- |
|
|
|
| b.
Civil Works. All our civil works of the Plant are almost
complete. |
|
|
|
| c.
Development of Infrastructure. We have made significant
progress |
|
| in
most of the areas viz:- |
|
|
|
| (1)
Quarry Road. Over 75% of the work on the road was completed |
|
| in
October 1996. Our Quarry will start operating in February |
|
| 1997. |
|
|
|
| (2)
Power Supply. WAPDA has accelerated the work on provision of |
|
| power.
We hope to energise own grid station by the end of this |
|
| year. |
|
|
|
| (3)
Water Supply. We need about 500,000 gallons of industrial water |
|
| every
day. Procurement of water was in-fact an uphill task includ- |
|
| ing
our initial plan of obtaining it from Shahpur Dam. With our |
|
| efforts,
we have struck more than the required quantum of under- |
|
| ground
water and erection of tube wells has started. We have also |
|
| undertaken
construction of a water reservoir with a capacity of |
|
| 3,500,000
gallons which will serve as a reserve for seven days. |
|
|
|
| (4)
Completion of Internal Roads. Internal roads have been carpeted. |
|
|
| (5)
Buildings. Construction of Officers Mess and the Office build- |
|
| ings
has been completed. Offices required at the Factory Site have |
|
| since
been also shifted from Rawalpindi. |
|
|
| d.
Progress of Shipments. All the machinery required for our Plant has |
|
| arrived
from abroad. The local machinery has also been procured and |
|
| provided
at the Plant Site. |
|
|
|
| e.
Erection of Plant. Erection of Plant was concurrent with the progress |
|
| of
civil works. Wherever access could be provided, erection work was |
|
| undertaken
without much loss of time. |
|
|
| f.
Overall Progress. We are, by and large, following the schedule given |
|
| in
our Company's prospectus. The testing will start in the beginning of |
|
| year
1997 and, hopefully, we should complete most of our ongoing |
|
| works
in February-March 1997. We should accordingly go for com- |
|
| mercial
production in June-July 1997. |
|
|
| 4.
Induction and Training of Manpower |
|
| Requisite
manpower is being inducted in November 1996, which will be on |
|
| ground
to undergo training through a package with Cement Plant Consultants |
|
| MS
Denmark in January-February 1997. |
|
|
|
| 5.
Marketing Strategy |
|
| A
study and analysis of the marketing has been completed. Full marketing |
|
| plan
will be ready for implementation by the beginning of year 1997. |
|
|
|
| 6.
Corporate Matters |
|
| a.
Fauji Cement Company Limited had been registered with the Registrar |
|
| of
the companies on 23 November 1992. |
|
|
| b.
The Company obtained certificate of commencement of business from |
|
| the
Registrar of companies on 22 May 1993. |
|
|
|
|
| 7.
Shares and Listing of Company on Stock Exchanges |
|
| a.
The Company increased its authorised share capital from Rs. 10 Million |
|
| to
2500 Million divided into 250,000,000 shares of Rs. 10/- each. |
|
|
|
| b.
The Company applied for listing on all the three Stock Exchanges of |
|
| our
country and was formally listed on the following Stock Exchanges |
|
| in
October 1996:- |
|
|
| (1)
Karachi Stock Exchange (Guarantee) Ltd. |
|
|
| (2)
Islamabad Stock Exchange (Guarantee) Ltd. |
|
|
| (3)
Lahore Stock Exchange (Guarantee) Ltd. |
|
|
| c.
The Company offered its shares of Rs. 204,530,000 to the public for |
|
| subscription.
The full amount has been received and the share certifi- |
|
| cates
have accordingly been issued there against to the |
|
| subscribers/underwriters. |
|
|
|
| d.
Pattern of Share holding as on 30-6-1996. Annex 'A' |
|
|
|
| 8.
Directors |
|
| The
following changes occurred in the composition of the Board since the |
|
| last
Annual General Meeting held in December 1995:- |
|
|
| a.
On retirement of Lt. Gen Imtiaz Waraich (Retd) Lt. Gen M. Arif |
|
| Bangash
(Retd), HI(M), SBt is appointed as the new Chairman of the |
|
| Board
and as Managing Director and Chief Executive of the Company. |
|
|
| b.
Lt. Gen Nazar Hussain (Retd), HI(M), TBt has been appointed as |
|
| Additional
Managing Director. |
|
|
|
|
| c.
Nomination of Brig Sayyed Ifzal Hussain (Retd) was withdrawn by |
|
| Fauji
Foundation from the Board of Directors. |
|
|
| d.
The Board places on record its appreciation for the valuable advice and |
|
| services
rendered by the retiring Directors and welcomes the new |
|
| Directors
on the Board. |
|
|
| 9.
Auditors |
|
|
| M/s
A.F. Ferguson & Company, Chartered Accountants retire at the conclu- |
|
| sion
of the Fourth Annual General Meeting and, being eligible, have |
|
| offered
themselves for re-appointment. |
|
|
| 10.
Since the Company has not yet commenced production, it has made no |
|
| profits
and the question of recommending any amount to be paid as divi- |
|
| dends,
or any amount to be carried over to Reserve Fund, General Reserve |
|
| or
Reserve Account, does not arise. |
|
|
| 11.
Further there are no material changes affecting business or the financial
posi- |
|
| tion
of the Company, which have occurred between the end of the Financial |
|
| Period
of the Company to which Balance Sheet relates and the date of the |
|
| Report. |
|
|
| 12.
Acknowledgments |
|
| The
Directors also express their appreciation for the continued support and |
|
| contribution
by the employees, suppliers, the Government and various |
|
| other
agencies throughout the year. |
|
|
|
| For
and on behalf of the Board |
|
|
|
| Rawalpindi |
|
| November
12, 1996 |
|
|
|
|
| Lt.
Gen M. Arif Bangash, HI(M), SBt |
|
| Chairman and Chief Executive |
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| We
have audited the annexed balance sheet of Fauji Cement Company Limited as at |
|
| June
30, 1996 and cash flow statement for the year ended June 30, 1996 together |
|
| with
the notes forming part thereof, and we state that we have obtained all the
infor- |
|
| mation
and explanations which to the best of our knowledge and belief were neces- |
|
| sary
for the purposes of our audit and after due verification thereof, we report
that: |
|
|
|
| (a)
in our opinion, proper books of account have been kept by the Company |
|
| as
required by the Companies Ordinance, 1984; |
|
|
|
|
| (b)
in our opinion |
|
|
|
| (i)
the balance sheet together with the notes thereon has been drawn |
|
| up
in conformity with the Companies Ordinance, 1984, and is in |
|
| agreement
with the books of account and is further in accordance |
|
| with
the Company's 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, investments 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 and the cash flow statement, |
|
| together
with the notes forming part thereof, give the information |
|
| required
by the Companies Ordinance, 1984, in the manner so required |
|
| and
give a true and fair view of the state of the Company's affairs as at |
|
| June
30, 1996 and of cash flows for the year then ended; and |
|
|
|
| (d)
in our opinion no Zakat was deductible at source under the Zakat and |
|
| Ushr
Ordinance, 1980. |
|
|
| A F Ferguson & Co |
|
| Chartered
Accountants |
|
|
|
| Islamabad |
|
| November
12, 1996 |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1996 |
|
|
|
|
|
|
1996 |
1995 |
|
|
|
|
Note |
Rupees |
Rupees |
|
| SHAREHOLDERS
EQUITY |
|
|
|
|
| Share
capital |
|
|
|
| Authorised
capital |
|
|
|
| 250,000,000
ordinary |
|
|
|
| shares
of Rs. I0 each |
|
2,500,000,000 |
2,500,000,000 |
|
|
|
============================ |
|
| Issued,
subscribed and |
|
|
|
| paid-up
capital |
|
|
|
| 150,857,499
(1995: 92,865,244) |
|
|
|
| ordinary
shares of Rs 10 each |
|
1,508,574,990 |
928,652,440 |
|
|
| Advance
against ordinary |
|
|
|
| shares
to be issued |
|
- |
78,640,677 |
|
|
|
---------------------------- |
|
|
|
1,508,574,990 |
1,007,293,117 |
|
|
|
| LONG
TERM LOANS |
|
3 |
3,315,351,898 |
1,550,924,188 |
|
| CURRENT
LIABILITIES |
|
| Current
maturity of long term loans |
|
3 |
137,560,500 |
- |
|
|
|
|
|
| Short
term loan from an |
|
|
|
| associated
undertaking |
|
- |
83,500,000 |
|
|
|
|
|
| Short
term finance |
|
- |
124,784,400 |
|
|
| Creditors,
accrued and other liabilities |
|
4 |
263,651,497 |
130,901,282 |
|
|
|
---------------------------- |
|
|
|
401,211,997 |
339,185,682 |
|
| CONTINGENCIES
AND |
|
| COMMITMENTS |
|
5 |
|
|
|
|
|
---------------------------- |
|
|
|
5,225,138,885 |
2,897,402,987 |
|
|
============================ |
|
| The
annexed notes forman in tegral part of these accounts. |
|
|
| FIXED
CAPITAL EXPENDITURE |
|
|
|
| Fixed assets |
|
6 |
144,856,659 |
139,593,408 |
|
|
|
|
|
| Capital
work in progress |
|
7 |
3,788,045,733 |
2,054,506,827 |
|
|
|
---------------------------- |
|
|
3,932,902,392 |
2,194,100,235 |
|
| LONG
TERM SECURITY |
|
| DEPOSITS |
|
8 |
21,609,310 |
- |
|
|
|
| DEFERRED
COST |
|
9 |
8,941,421 |
2,515,450 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Advances,
prepayments and |
|
|
|
| other
receivables |
|
10 |
180,195,911 |
215,303,661 |
|
|
|
|
|
| Balance
with banks |
|
11 |
1,081,489,851 |
485,483,641 |
|
|
|
|
---------------------------- |
|
|
|
1,261,685,762 |
700,787,302 |
|
|
|
|
|
|
|
|
|
---------------------------- |
|
|
|
|
5,225,138,885 |
2,897,402,987 |
|
|
============================ |
|
|
|
| CASH
FLOW STATEMENT |
|
|
| FOR
THE YEAR ENDED JUNE 30,1996 |
|
|
|
|
1996 |
1995 |
|
|
|
Note |
Rupees |
Rupees |
|
| CASH
FLOW FROM INVESTING |
|
| ACTIVITIES |
|
|
|
|
|
|
| Fixed
capital expenditure |
|
(1,215,044,358) |
(1,152,070,167) |
|
| Long
term security deposits |
|
(21,609,310) |
- |
|
| Deferred
cost |
|
|
(6,425,971) |
- |
|
| Income
on bank deposits |
|
39,500,520 |
13,485,470 |
|
|
---------------------------- |
|
|
(1,203,579,119) |
(1,138,584,697) |
|
| CASH
FLOW FROM FINANCING |
|
|
|
| ACTIVITIES |
|
|
|
|
|
|
|
| Proceeds
from issue of shares |
|
501,281,873 |
385,631,623 |
|
| Long
term loans |
|
1,901,988,210 |
1,550,924,188 |
|
| Repayment
of short term loan/finance |
|
(208,284,400) |
(185,195,600) |
|
| Financial
charges |
|
(395,400,354) |
(193,111,846) |
|
|
|
------------------------------ |
|
|
|
1,799,585,329 |
1,558,248,365 |
|
|
|
|
|
|
|
------------------------------ |
|
| NET
INCREASE/(DECREASE) IN |
|
|
|
| CASH
AND CASH EQUIVALENTS |
|
596,006,210 |
419,663,668 |
|
|
|
|
|
| CASH
AND CASH EQUIVALENTS |
|
|
|
| AT
THE BEGINNING OF THE YEAR |
|
485,483,641 |
65,819,973 |
|
|
------------------------------ |
|
| CASH
AND CASH EQUIVALENTS |
|
|
|
| AT
THE END OF THE YEAR |
|
|
|
|
|
1,081,489,851 |
485,483,641 |
|
|
|
============================== |
|
| NOTES
THE ACCOUNTS |
|
|
|
|
| 1.
Legal Status and Operations |
|
| The
Company was incorporated in Pakistan on November 23, 1992 as a |
|
| public
limited company for the establishment and operation of a cement |
|
| plant
at Fateh Jang, District Attock, Punjab. Subsequent to the year end, |
|
| the
Company has been listed on the three stock exchanges in Pakistan. |
|
|
| 2.
Significant Accounting Policies |
|
|
| 2.1
Accounting convention |
|
| The
accounts have been prepared under the historical cost convention. |
|
|
| 2.2
Fixed capital expenditure |
|
| Fixed
assets except freehold land are stated at cost less accumulated |
|
| depreciation.
Freehold land and capital work in progress are stated at cost. |
|
|
| Depreciation
is provided on straight line method to write off the cost of an |
|
| asset
over its estimated useful life. Full year's depreciation is provided on |
|
| additions
during the first six months of the year whereas half year's depre- |
|
| ciation
is provided on additions during the last six months of the year. No |
|
| depreciation
is provided on assets deleted during the year. |
|
|
| 2.3
Deferred cost |
|
| Costs
related to Company's incorporation and issue of shares have been |
|
| deferred
to be amortised after commencement of commercial production. |
|
|
| 2.4
Foreign currency transactions |
|
| Transactions
in foreign currencies are converted into rupees at the rates of |
|
| exchange
ruling on the date of the transaction. All assets and liabilities in |
|
| foreign
currencies are translated at exchange rates prevailing at the bal- |
|
| ance
sheet date, except for foreign currency loans in respect of which |
|
| exchange
risk coverage has been obtained; such loans are translated at the |
|
| rate
of exchange ruling on the date of receipt of loan from the lender. All |
|
| exchange
differences are included in unallocated reproduction expendi- |
|
| ture. |
|
|
| 3.
Long Term Loans- Secured |
|
|
|
|
Balance outstanding |
|
Repayment terms |
|
|
|
|
|
|
|
|
1996 |
1996 |
Interest/net |
Exchange |
Half yearly |
Commencing |
|
|
|
|
|
mark up |
risk coverage |
equal |
from |
|
|
|
Rupees |
Rupees |
rate per |
fee % |
statements |
|
|
|
annum % |
(Note 3.3) |
|
|
|
|
| 1.
Commonwealth Development |
|
| Corporation
- (CDC) (Loan committed: |
|
| Pound
Sterling 13,250,000; loan |
|
| disbursed
Pound Sterling |
|
499,771,822 |
322,308,238 |
11 |
5.90 |
14 |
December 23, |
|
| 9,937,000;
1995:6,625,000) |
|
1997 |
|
|
| 2.
Nederlandse Financierings - |
|
| Maatschappijvoor
Ontwikkelingslanden |
|
| N.V.
(FMO) (Netherland Guilders |
|
288,116,250 |
134,262,750 |
11.30 |
5 |
15 |
April 15, 1998 |
|
| 15,000,000;
1995: 7,500,000) |
|
|
|
|
| 3.
International Finance Corporation |
|
| (Loan
A) (US Dollars 24,000,000; |
|
|
| 1995:
12,000,000) |
|
787,820,400 |
374,353,200 |
8.94 |
8.26 |
15 |
April 15, I998 |
|
|
|
| 4.
International Finance Corporation |
|
| (Loan
B) (US Dollars 10,000,000) |
|
329,213,500 |
- |
LIBOR + 2.50 |
8.26 |
8 |
April
15, 1998 |
|
|
|
|
|
| 5.
International Finance Corporation |
|
|
|
| (Loan
c) (US Dollars 10,000,000) |
|
329,566,000 |
- |
LIBOR + 3.00 |
9.38 |
8 |
April 15, 1998 |
|
|
|
|
| 6.
Deutsche Investigations - und |
|
|
| Entwicklungsgesellschaft
mbH (DEG) |
360,633,000 |
- |
11.75 |
8.24 |
14 |
November 30, |
|
| (DM
15,000,000) |
|
|
|
1997 |
|
|
|
| 7.
AI Faysal Investment Bank Limited |
130,000,000 |
130,000,000 |
19 |
|
10 |
December 21, |
|
|
1996 |
|
| 8.
ANZ Grindlays Bank plc |
|
150,000,000 |
150,000,000 |
Note 3.1 |
|
10 |
November 30, |
|
|
|
|
1996 |
|
| 9.
The Bank of Punjab |
|
277,791,426 |
220,000,000 |
19 |
|
6 |
April 15, 1997 |
|
|
|
|
| 10.
Askari Commercial Bank Limited |
100,000,000 |
100,000,000 |
19 |
|
10 |
June 30, 1997 |
|
|
| 11.
Faysal Bank Limited |
|
70,000,000 |
70,000,000 |
19 |
|
10 |
OCTOBER
27,1997 |
|
|
| 12.
Saudi Pak Industrial and Agricultural |
|
|
|
September 30, |
|
| Investment
Company (Private) Limited |
50,000,000 |
50,000,000 |
20 |
|
10 |
1997 |
|
|
|
| 13.
Pakistan Kuwait Investment Company |
|
| (Private)
Limited |
|
80,000,000 |
- |
Note 3.2 |
|
17 |
July 1, I997 |
|
|
--------------------------- |
|
|
3,452,912,398 |
1,550,924,188 |
|
|
| Less:
Current portion of long term loans |
(137,560,500) |
- |
|
|
|
|
--------------------------- |
|
|
|
|
3,315,351,898 |
1,550,924,188 |
|
|
--------------------------- |
|
|
|
|
|
|
| 3.1
The mark up on ANZ Grindlays Bank loan is payable at State Bank of Pakistan
Treasury Bills rate plus 4% per annum (minimum 17.5% per annum), sub- |
|
| ject
to a prompt payment bonus of Rs. 13,089,041 on repayment of the loan on due
d |
