|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Annual
Report 1996 |
|
| DG
Cement |
|
| Nishat
Group |
|
|
| COMPANY
PROFILE |
|
|
| Board
of Directors |
|
| Chief
Executive |
|
| Mian
Umer Mansha |
|
| Mst.
Akhtar Jehan Begum |
|
| Mrs.
Farhat Saleem |
|
| Mr.
Mohammad Ali Anwar |
|
| Mr.
Aftab Ahmad Khan |
|
| Mr.
Khalid Qadeer Qureshi |
|
|
| Advisor |
|
| Mian
Mohammad Mansha |
|
|
| Company
Secretary |
|
| Khalid
Mahmood Chohan |
|
|
| Bankers |
|
| ABN-AMRO
Bank N.V. |
|
| Atlas
BOT Investment Bank Limited |
|
| Bank
of America NT&SA |
|
| Crescent
Investment Bank Limited |
|
| Citibank
N.A. |
|
| Faysal
Bank Limited |
|
| Habib
Bank Limited |
|
| Mashreq
Bank psc |
|
| Muslim
Commercial Bank Limited |
|
| Schon
Bank Ltd |
|
| Union
Bank Limited |
|
| United
Bank Ltd. |
|
|
| Auditors |
|
| 1.
M/s Riaz Ahmad & Co. |
|
| Chartered
Accountants |
|
|
| 2.
M/s A F Ferguson & Co. |
|
| Chartered
Accountants ' |
|
|
| Registered
Office |
|
| Nishat
House, 53-A, Lawrence Road, Lahore- Pakistan |
|
| Phone:
92-42-6367812-20 Fax: 92-42-6367414 |
|
| Telex
47523 Nisht PK. Lahore |
|
| E.
Mail: MIS @ DGC LHR. BRAIN. COM. PK. |
|
|
| Factory |
|
| Khofli
Sattai, Distt. Dera Ghazi Khan - Pakistan |
|
| Phone:
92-641-60025-8 |
|
| Fax:
92-641-62392 |
|
| Telex:
42492 DGK CF PK. |
|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
| Notice
is hereby given that Annual General Meeting of the Shareholders of D.G. Khan
Cement Company |
|
| Limited
will be held on Tuesday the 31st December, 1996 at 10.30 a.m. at Nishat
House, 53-A, |
|
| Lawrence
Road, Lahore to transact the following business: |
|
|
| 1.
To confirm minutes of the last meeting. |
|
|
| 2.
To receive and adopt the audited accounts of the Company for the financial
year ended June 30, |
|
| 1996
together with the Directors' and Auditors' reports thereon. |
|
|
| 3.
To appoint Auditors for the year 1996-97 and fix their remunerations. The
present Auditors M/s Riaz |
|
| Ahmad
& Company, Chartered Accountants, and M/s A F Ferguson & Company,
Chartered |
|
| Accountants,
both retire and being eligible, offer themselves for re-appointment. |
|
|
| 4.
Any other matter with the permission of the Chair |
|
|
| By
order of the Board |
|
|
| (KHALID
MAHMOOD CHOHAN) |
|
| Company Secretary |
|
|
| Lahore: |
|
| December
7, 1996 |
|
|
| NOTES: |
|
| 1.
Share transfer books of the Company will remain closed from 31-12-96 to
06-01-97 (both days |
|
| inclusive).
Transfers received in order at Nishat House, 53-A, Lawrence Road, Lahore upto
the |
|
| close
of business on December 30, 1996 will be considered in time. |
|
|
| 2.
A member eligible to attend and vote at this meeting may appoint another
member his/her proxy to |
|
| attend
and vote instead of him/her. Proxies in order to be effective must reach the
Company's |
|
| Registered
office not less than 48 hours before the time for holding the meeting. |
|
|
| 3.
Shareholders are requested to immediately notify the change in address, if
any. |
|
|
| DIRECTORS'
REPORT |
|
| The
directors take pleasure in presenting their |
|
| report
alongwith audited accounts and auditors' |
|
| report
thereon for the year ended June 30, 1996. |
|
|
| During
the year under review your Company has |
|
| earned
pretax profit of Rs. 308.411 million |
|
| (1995:
Rs. 569.557 million) After accounting for all |
|
| charges
including depreciation and provision for |
|
| income
tax, net profit earned works out to |
|
| Rs.
248.411 million (1995: Rs. 386.788 million). |
|
|
| The
appropriation of available profit is |
|
| recommended
as under: |
|
|
(Rupees in thousand) |
|
|
1996 |
1995 |
|
|
| Net
profit after taxation |
|
248,411 |
386,788 |
|
| Un-appropriated
profit brought forward |
|
586 |
382 |
|
| Profit
available for appropriation |
|
248,997 |
387,170 |
|
|
| APPROPRIATIONS: |
|
| Transferred
to: |
|
| -
Dividend |
|
- |
3,877 |
|
| - Reserve for issue of bonus
shares |
|
- |
102,707 |
|
| -
General reserve |
|
248,000 |
280,000 |
|
|
| PRODUCTION
& SALES |
|
| With
the blessings of Almighty Allah and the |
|
| efforts
of officers and workers of the Company |
|
| we
have been awarded with success i.e. |
|
| achievement
of historic highest production. |
|
|
| The
production figures achieved for clinker, |
|
| cement
grinding and dispatches have not only |
|
| excelled
the budgeted targets by substantial |
|
| margin
but set new records in every sphere of |
|
| activity.
The plant was operated for 326 days |
|
| which
is also a record. |
|
|
| The
commendable performance have been |
|
| possible
through coherent team work and spirit |
|
| which
enabled well planned maintenance of plant, |
|
| efficient
operation and hectic efforts of our |
|
| marketing
team. Comparative figures of |
|
| production
and dispatches are given hereunder: |
|
|
|
1996 |
1995 |
Increase |
|
|
| Clinker |
|
(U.Tons) |
730,450 |
669,086 |
61,364 |
|
| Cement |
|
(U.Tons) |
767,363 |
685,348 |
82,015 |
|
| Dispatches |
|
(M.Tons) |
753,608 |
698,063 |
55,545 |
|
|
| 3.21%
has been registered in sales |
|
| revenue
as against the increase of vol- |
|
| ume
by 7.96%. The average sale price |
|
| has
reduced by 6.94%. |
|
|
|
|
|
|
| Contrary
to the reduction in sale price, |
|
| inputs
prices have substantially increased |
|
| which
resulted in considerable decrease |
|
| in
profit margin. Major increase in cost |
|
| has
been in Furnace Oil, Electricity, Paper |
|
| Bags
and other inputs which accounts for |
|
| more
than 70% of total cost of production. |
|
| The
average increase during the year |
|
| under
review on these inputs is 13%, 12% |
|
| and
69% respectively. Till todate the prices |
|
| 1996 of Furnace Oil, alone, have increased to |
|
| 123%
(compared with June, 1995 prices) resulting |
|
| adverse
affect on the profit margins. |
|
|
| OPERATING
RESULTS |
|
| During
the year under review the net sales |
|
| revenue
was Rs. 1,547.090 million as against |
|
| Rs.
1,498.945 million for last year. Increase of |
|
| Another
factor which directly affected the profit is |
|
| closure
of Ghazi Ghat Bridge (over River Indus) |
|
| for
heavy trucks of cement. The Company has to |
|
| bear
extra cost on this account as the heavy |
|
| trucks
had to divert to other route (i.e. via Taunsa |
|
| Barrage). |
|
|
| MARKET
REVIEW |
|
| Current
Market Conditions |
|
| At
present cement industry as a |
|
| whole
is moving towards decline in |
|
| earning
growth as competition |
|
| increases
with the advent of extra |
|
| capacity.
This means that we are |
|
| heading
towards the survival of the |
|
| fittest,
that is, the most efficient plants |
|
| will
survive in the highly competitive |
|
| environment. |
|
|
| During
the year under review there |
|
| was
oversupply of cement in the |
|
| market,
which is mainly due to |
|
| political
instability in the country and |
|
| law
and order situation in South, |
|
| resulting
in overall low economic activity. These |
|
| factors
have badly affected the growth rate. In |
|
| addition,
the industry is under tremendous |
|
| pressure
of government duties and levies, which |
|
| have
been increased to 35% and 18% on account |
|
| of
excise duty and sales tax respectively |
|
| (increase
by 10% and 3% in Excise duty & Sales |
|
| tax
respectively in the annual budget announced |
|
| in
June, 1996. The impact of this increase may |
|
| effect
the profit of the next financial year. |
|
|
| Future
Prospects |
|
| The
growth of cement industry is largely |
|
| dependent
upon the construction of houses, huge |
|
| government
infrastructure projects and industrial |
|
| development
which remained hampered during |
|
| the
previous years due to political situation in the |
|
| country.
It is hoped that with political stability and |
|
| favorable
industrial environment in the country, |
|
| development
activity will gain momentum and |
|
| boost
the demand of cement and absorb the |
|
| additional
production capacities coming on |
|
| stream
in the next year. |
|
|
| Export
of clinker/cement to the neighboring |
|
| countries
is another avenue for controlling |
|
| oversupply.
So far 34,000 tons has recently been |
|
| exported
to Bangladesh. The future export of |
|
| clinker/cement
will, however, depend upon a |
|
| workable
export policy from the Government. |
|
|
| Market
Share |
|
| Even
under the depressed market conditions, |
|
| your
Company has showed excellent results by |
|
| selling
753,608 tons of cement, a historic record |
|
| (increase
of 7.96% over last year). With our |
|
| aggressive
marketing strategy and establishment |
|
| of
our brand in the market we expect to retain our |
|
| market
share in future as well. |
|
|
| EXPANSION
PROJECT |
|
| The
pace of progress on the Expansion Project is |
|
| quite
encouraging and we expect commercial |
|
| production
in the fiscal year 1997-98. Brief on the |
|
| progress
of the project is given below: |
|
|
| Civil
Works |
|
| More
than 95% civil works have been |
|
| completed.
Some of the areas being 100% |
|
| completed
have been handed over by the |
|
| contractors. |
|
|
| Supply
of Plant & Equipment |
|
| 98%
of plant and equipment has been |
|
| received
at site both from M/s F.L. |
|
| Smidth
(imported machinery) and CPC |
|
| Pakistan
(Private) Limited (local |
|
| machinery).
The remaining supplies are |
|
| expected
to be completed upto 31st |
|
| December,
1996. |
|
|
| Erection
and start up |
|
| Contracts
for Mechanical and Electrical Erection |
|
| of
plant and equipment have been awarded. |
|
|
| Mechanical
erection started in April, 1996 and so |
|
| far
more than 50% has been completed while |
|
| Electrical
erection has been completed by 25%. |
|
|
| It
is expected that erection will be completed by |
|
| the
end of March, 1997 and commercial |
|
| production
will start in July, 1997. |
|
|
| Civil
Works |
|
| More
than 95% civil works have been |
|
| completed.
Some of the areas being 100% |
|
| completed
have been handed over by the |
|
| contractors. |
|
|
| Supply
of Plant & Equipment |
|
| 98%
of plant and equipment has been received at |
|
| site
both from M/s F.L. Smidth (imported |
|
| machinery)
and CPC Pakistan (Private) Limited |
|
| (local
machinery). The remaining supplies are |
|
| expected
to be completed upto 31st December, |
|
| 1996. |
|
|
| Erection
and start up |
|
| Contracts
for Mechanical and Electrical Erection |
|
| of
plant and equipment have been awarded. |
|
|
| Mechanical
erection started in April, 1996 and so |
|
| far
more than 50% has been completed while |
|
| Electrical
erection has been completed by 25%. |
|
|
| It
is expected that erection will be completed by |
|
| the
end of March, 1997 and commercial |
|
| production
will start in July, 1997. |
|
|
| PATTERN
OF SHAREHOLDINGS |
|
| The
pattern of Shareholding of the Company as |
|
| on
June 30, 1996 is annexed with the Annual |
|
| Report. |
|
|
| AUDITORS |
|
| Both
M/s Riaz Ahmad & Company, Chartered |
|
| Accountants
& M/s A F Ferguson & Company, |
|
| Chartered
Accountants, Lahore, the retiring |
|
| Auditors,
being eligible, offer themselves for |
|
| re-appointment. |
|
|
| LABOUR
AND MANAGEMENT RELATIONS |
|
| The
Directors place on record appreciation for the |
|
| hard
work done by the workers, staff and officers |
|
| during
the year 1995-96 with the hope that their |
|
| joint
efforts and dedication for achieving even |
|
| better
results in the coming years. |
|
|
| on
behalf of the Board |
|
| Chief
Executive |
|
|
| Lahore: |
|
| December
7, 1996 |
|
|
| FIVE
YEARS AT A GLANCE |
|
|
1996 |
1995 |
1994 |
1993 |
1992 |
|
| PRODUCTION
& SALES |
|
|
(U.Tons) |
|
| Clinker |
|
730,450 |
669,086 |
631,874 |
663,431 |
589,608 |
|
| Cement |
|
767,363 |
685,348 |
649,852 |
685,401 |
611,745 |
|
| Sales |
|
753,608 |
698,063 |
651,937 |
683,142 |
608,364 |
|
|
| FOR
THE YEAR |
|
|
(Rupees in thousand) |
|
|
| Net
Sales |
|
1,547,090 |
1,498,945 |
1,219,777 |
1,131,357 |
739,706 |
|
| Gross
Profit |
|
591,430 |
757,254 |
586,653 |
536,867 |
185,045 |
|
| Pre-tax
profit |
|
308,411 |
569,557 |
541,198 |
488,134 |
115,543 |
|
| After
tax profit |
|
248,411 |
386,788 |
362,884 |
296,134 |
82,543 |
|
|
| FINANCIAL
POSITION |
|
|
| Current
Assets |
|
1,297,610 |
1,240,604 |
674,189 |
575,237 |
510,982 |
|
| Current
Liabilities |
|
717,423 |
550,837 |
769,228 |
580,050 |
178,413 |
|
| Operating
fixed assets |
|
786,929 |
692,991 |
719,066 |
691,887 |
668,905 |
|
| Total
assets |
|
7,390,244 |
4,010,890 |
2,324,669 |
1,877,749 |
1,211,220 |
|
| Long
term liabilities |
|
2,979,307 |
429,311 |
415,897 |
405,205 |
413,279 |
|
| Shareholders'
Equity |
|
3,784,946 |
3,110,329 |
1,217,932 |
947,898 |
669,964 |
|
|
| RATIOS |
|
| Current
Ratio |
|
1.81:1 |
2.25:1 |
0.88:1 |
0.99:1 |
2.86:1 |
|
| Debt
to Equity |
|
44:56 |
12:88 |
25:75 |
30:70 |
38:62 |
|
| Net
Profit to sales (%) |
|
16.06% |
25.80% |
29.75% |
26.18% |
11.16% |
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of D.G. KAHN CEMENT COMPANY LIMITED as
at June |
|
| 30,
1996 and the related profit and loss account and the cash flow statement,
together with 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 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 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, 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, profit and loss account and the cash flow statement, together with the
notes form- |
|
| ing
part thereof, 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,
1996 and of the profit and the cash flow for the year then ended; and |
|
|
| (d)
in our opinion, Zakat deductible at source under the Zakat and Ushr
Ordinance, 1980, was |
|
| deducted
by the Company and deposited in the Central Zakat Fund established under
section 7 of |
|
| that
Ordinance. |
|
|
| A
F Ferguson & Co. |
|
Riaz Ahmad & Company |
|
| Chartered
Accountants |
|
Chartered Accountants |
|
|
| BALANCE
SHEET AS AT JUNE 30, 1996 |
|
|
(Rupees in thousand) |
|
|
Note |
1996 |
1995 |
|
| CAPITAL
AND RESERVES |
|
| Authorised
share capital |
|
| 300,000,000
ordinary shares of Rs. 10/- each |
3,000,000 |
3,000,000 |
|
|
--------- |
--------- |
|
|
| Issued,
subscribed and paid up sham capital |
|
| 108,712,925
(1995: 98,829,932) ordinary shares of Rs. 10/-
each |
3 |
1,087,129 |
988,299 |
|
| Advance
against issue of shares |
|
426,206 |
- |
|
| Reserves |
|
4 |
2,270,614 |
2,121,444 |
|
| Unappropriated
profit |
|
997 |
586 |
|
|
--------- |
--------- |
|
|
3,784,946 |
3,110,329 |
|
|
| LONG
TERM LOANS- SECURED |
|
5 |
2,774,385 |
272,560 |
|
| LIABILITIES
AGAINST ASSETS |
|
| SUBJECT
TO FINANCE LEASE |
|
6 |
56,381 |
16,185 |
|
|
|
| DEFERRED
LIABILITIES |
|
7 |
18,025 |
14,039 |
|
|
|
| LONG
TERM DEPOSITS |
|
8 |
39,084 |
46,940 |
|
|
|
|
| CURRENT
LIABILITIES |
|
| Current
portion of long term liabilities: |
|
| Long
term loans- secured |
|
50,436 |
50,436 |
|
| Liabilities
against assets subject to finance lease |
40,996 |
29,151 |
|
| Short
term running finances |
|
9 |
- |
- |
|
| Creditors,
accrued and other liabilities |
10 |
561,676 |
234,650 |
|
| Provision
for taxation |
|
63,916 |
236,129 |
|
| Dividend
payable |
|
11 |
399 |
471 |
|
|
--------- |
--------- |
|
|
717,423 |
550,837 |
|
|
| CONTINGENCIES
AND COMMITMENTS |
|
12 |
|
|
--------- |
--------- |
|
|
7,390,244 |
4,010,890 |
|
|
========= |
========= |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
(Rupees in thousand) |
|
|
Note |
1996 |
1995 |
|
| FIXED
CAPITAL EXPENDITURE |
|
| Operating
fixed assets |
|
13 |
786,929 |
692,991 |
|
| Assets
subject to finance lease |
|
14 |
65,694 |
69,483 |
|
| Capital
work in progress |
|
15 |
4,189,893 |
956,892 |
|
|
--------- |
--------- |
|
|
5,042,516 |
1,719,366 |
|
|
| LONG
TERM INVESTMENTS |
|
16 |
1,022,827 |
1,031,099 |
|
|
|
| LONG
TERM LOANS TO EMPLOYEES |
|
17 |
8,256 |
8,178 |
|
|
|
| LONG
TERM DEPOSITS |
|
| AND
DEFERRED COSTS |
|
18 |
19,035 |
11,643 |
|
|
|
| CURRENT
ASSETS |
|
| Stores,
spares and loose tools |
|
19 |
262,664 |
201,321 |
|
| Stock-in
-trade |
|
20 |
40,870 |
25,206 |
|
| Advances,
deposits, prepayments and other receivables |
21 |
272,132 |
295,558 |
|
| Cash
and bank balances |
|
22 |
721,944 |
718,519 |
|
|
--------- |
--------- |
|
|
1,297,610 |
1,240,604 |
|
|
|
--------- |
--------- |
|
|
7,390,244 |
4,010,890 |
|
|
========= |
========= |
|
| Director |
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 1996 |
|
|
(Rupees in thousand) |
|
|
Note |
1996 |
1995 |
|
|
| SALES |
|
23 |
1,547,090 |
1,498,945 |
|
| COST
OF GOODS SOLD |
|
24 |
955,660 |
741,691 |
|
|
--------- |
--------- |
|
| GROSS
PROFIT |
|
591,430 |
757,254 |
|
|
| OPERATING
EXPENSES |
|
| Administration
and general |
|
25 |
40,794 |
35,934 |
|
| Selling
and distribution |
|
26 |
202,063 |
166,092 |
|
|
--------- |
--------- |
|
|
242,857 |
202,026 |
|
|
|
|
|
--------- |
--------- |
|
| OPERATING
PROFIT |
|
348,573 |
555,228 |
|
|
|
|
|
| OTHER
INCOME |
|
27 |
105,490 |
129,959 |
|
|
--------- |
--------- |
|
|
|
454,063 |
685,187 |
|
|
|
|
|
| FINANCIAL
CHARGES |
|
28 |
47,482 |
72,580 |
|
| OTHER
CHARGES |
|
29 |
98,170 |
43,050 |
|
|
--------- |
--------- |
|
| PROFIT
BEFORE TAXATION |
|
308,411 |
569,557 |
|
| PROVISION
FOR TAXATION |
|
30 |
60,000 |
182,769 |
|
