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CIBA-GEIGY (PAKISTAN) LIMITED
ANNUAL REPORT 1997
Contents
CIBA-GEIGY (PAKISTAN) LIMITED
Corporate Information
Notice of Meeting
Report of the Directors
Managing Director's Review
Pattern of Holding of the Shares
Auditors' Report to the Members
Balance Sheet
Profit and Loss Account
Cash Flow Statement
Notes to the Accounts
Statement under Section 237 (1) (e), (f) & (g) of the
Companies Ordinance, 1984
FARM CHEMICALS (PRIVATE) LIMITED
Corporate Information
Report of the Directors
Pattern of Holding of the Shares
Auditors' Report to the Members
Balance Sheet
Profit and Loss Account
Cash Flow Statement
Notes to the Accounts
Corporate Information
CHAIRMAN &
MANAGING DIRECTOR		A. E. Dapp
DIRECTORS		K. Arnoldi (Alternate: E.A. Nomani)
		Pir Ali Gohar
		Naseem-ul-Islam
		Asadullah Khawaja
		J. Mamie (Alternate: A.M. Notta)
		Masud Zaman
SECRETARY		A.M. Notta
BANKERS		Agricultural Development Bank of Pakistan
		ABN-AMRO Bank
		ANZ Grindlays Bank
		Bank of America NT&SA
		The Bank of Tokyo-Mitsubishi, Ltd.
		Citibank N. A.
		Citicorp Investment Bank (Pakistan) Limited
		Credit Agricole Indosuez
		Deutsche Bank
		Emirates Bank International PJSC
		Habib Bank Limited
		The Hongkong & Shanghai Banking
		Corporation Limited
		Muslim Commercial Bank Limited
		National Bank of Pakistan
		Societe Generale- The French and
		International Bank
		Standard Chartered Bank
AUDITORS		A.F. Ferguson & Go.
LEGAL ADVISORS		Surridge & Beecheno
REGISTERED OFFICE &
PHARMACEUTICAL FACTORY		15, West Wharf, Karachi
		Phone	: 92-21-2313386-90
		Fax	: 92-21-2311009
AGRICULTURAL FACTORY		S-53, S.I.T.E. Karachi
		Phone	: 92-21-2564940-47
		Fax	: 92-21-2561577
Notice of Meeting
Notice is hereby given that the forty-first Annual General Meeting of CIBA-GEIGY (PAKISTAN)
LIMITED will be held on Wednesday, 17th June, 1998 at 10.00 A.M. in the Council Hall of the
Overseas Investors Chamber of Commerce & Industry Building. Talpur Road, Karachi, to transact
the following ordinary business:
1. To receive, consider and adopt the Balance Sheet and Profit & Loss Account together with
the Directors' and Auditors' Reports for the year ended 31st December, 1997.
2. To appoint auditors for the year ending 31st December, 1998 and to fix their remuneration.
NOTES:
a. The Share Transfer Books of the Company will remain closed from 10th June, 1998 to 17th
June, 1998 (both days inclusive).
b. A member entitled to attend, speak and vote at the meeting may appoint a proxy to attend,
speak and vote instead of him/her. Proxies must be deposited at the Company's Registered
Office not less than 48 hours before the time for holding the meeting. A proxy must be a
member of the Company.
Report of the Directors
The Directors of the Company submit their report together with the audited accounts for the
year ended 31st December, 1997.
					Rupees
					(000)
FINANCIAL RESLILTS
Loss before taxation					(68,820)
Taxation					12,509
					----------
Loss after taxation					(81,329)
Unappropriated profit brought forward					80,438
					----------
Loss carried forward					(891)
					==========
EARNING PER SHARE
The net earning per share is negative.
MANAGING DIRECTORS' REVIEW
The review on page 5 deals with business activities of the company during the year, future out-
look and subsequent events that have taken place between the end of the financial year and the
date of this Report. The Directors of the Company endorse the contents of the review.
DIRECTORS
Dr. A. Zuercher resigned and in his place Mr. K. Arnoldi was appointed as Director of the
Company. The members of the Board of Directors wish to place on record the valuable contri-
bution made by Dr. A. Zuercher.
The present Board of Directors was elected for a period of three years at the thirty-ninth Annual
General Meeting of the Company held on 14th May, 1996.
PATTERN OF HOLDING OF THE SHARES
The pattern of holding is provided on page 6. The Company's holding company is Novartis AG,
Basle, Switzerland, which is incorporated in Switzerland.
AUDITORS
The present Auditors M/s A.F. Ferguson & Co., retire and being eligible, offer themselves for re-
appointment.
Managing Director's Review
The year 1997 which saw a change of Government and considerable political turmoil was not an
easy one to do business in.
The economy's overall growth was lower than expected whereby our business was not an excep-
tion. The inflationary trend has continued to negatively affect our result and the same applies to
exchange rates. In spite of pharmaceutical industry's efforts, no price increases were granted to us.
On the contrary, we had to adhere to Ministry of Health instructions to lower the price of our major
product Voltaren by 10.8%.
Our Crop Protection sales exceeded the budget but fell short those of the previous year. Due to
heavy rains and attack of heliotis in the fall period, it is estimated that the cotton yield will hardly
exceed 9 million bales. The wheat sowing was delayed due to the late cotton harvest. Owing to
severe competition, we were not able to increase our prices by more than 4.5% but had to grant
additional discounts / rebates to our dealers to fight fierce competition. Substantial increase in
financial charges because of large carry-over stocks from 1996 further eroded our income. The
Generic companies - not being research-based firms - substantially increased their market share
which is now more than 1/3 rd of the total crop protection market.
The loss-making Animal Health Sect. or was closed by end 1997.
In a nutshell: nil or very low price increases, substantial inflation and very unfavourable exchange
rates and on the other hand constant rising costs at all fronts have continued to play havoc with our
bottom line, this in spite of restructuring and re-engineering as well as strictest control of our
expenses.
It is therefore rather unfortunate although not surprising that the company's result for 1997 is a loss
of Rs.81.3 mio. Therefore, the Board of Directors regrets not being able to propose the payment of a
dividend for the year under review.
As to the future: Unless price increases are granted by Government on pharmaceuticals, the out-
look in this sector will remain gloomy. A change in the distribution system to improve the reach to
customers in 1998 should further improve our brand image and should arrest price fluctuation of our
products in market in respect of our crop protection business.
It is foreseen that towards the end of 1998 the name of this company will change into Novartis
(Pakistan) Ltd. which is likewise the case with Sandoz, which will change its name to Novartis
Pharma (Pakistan) Ltd. Both companies will however for the time being continue to operate sepa-
rately.
The two-years agreement expiring end 1998 with our Collective Bargaining Agents was concluded
end of January 1998. In spite of the almost one 'year delay, the relations between Union and
Management have remained amicable.
Finally let me say that I will retire from active service after having been abroad almost 35 years
including 19 years in Pakistan. This is due to health reasons and I will have left this country when
you will be reading this report. I would like to place on record my sincere thanks to you our share-
holders, the management and staff for their many years of trust and confidence reposed in me. My
thanks go also to all our staff members for their untiring devotion to duty. I extend herewith to all of
you my best wishes. Pakistan Zindabad.
Pattern of Holding of the Shares
as at December 31, 1997
Number of		Shareholding		Total Shares
Shareholders	From		To	held
189	1	-	100	9,711
250	101	-	500	69,205
86	501	-	1000	65,059
57	1001	-	5000	138,573
4	5001	-	10000	28,603
5	10001	-	15000	66,000
3	15001	-	20000	53,631
1	20001	-	25000	24,000
3	25001	-	30000	80,875
1	30001	-	35000	31,093
1	35001	-	40000	36,000
1	90001	-	95000	93,279
1	105001	-	110000	108,400
2	110001	-	115000	223,332
1	2005001	-	2010000	2,009,769
1	4555001	-	4560000	4,556,220
----------				----------
606				7,593,750
==========				==========
Categories of			No. of	No. of	Percentage
Shareholders			Shareholders	Shares held
Individuals			581	619,387	8.15
Investment Companies			4	2,907	0.03
Insurance Companies			2	118,800	1.60
Joint Stock Companies			7	4,565,956	60.12
Financial Institutions			9	2,260,140	29.76
Modaraba Companies			1	120	0.00
Cooperative Societies			2	26,440	0.34
			----------	----------	----------
			606	7,593,750	100.00
			==========	==========	==========
Auditors' Report to the Members
We have audited the annexed Balance Sheet of Ciba-Geigy (Pakistan) Limited as at
December 31, 1997 and the related Profit and Loss Account and Cash Flow Statement,
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 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 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 respectively give a true and fair view of the state of
the company's affairs as at December 31, 1997 and of the loss and cash flows for the year
then ended; and
(d) in our opinion zakat deductible at source under the Zakat & 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.
Karachi: March 17, 1998			Chartered Accountants
Balance Sheet as at December 31, 1997
Note					1997	1996
					(Rupees in thousands)
	SHARE CAPITAL & RESERVES
	Authorised capital
	20,000,000 (1996: 20,000,000) ordinary
	shares of Rs. 10 each				200,000	200,000
					==========	==========
3	Issued, subscribed and paid-up capital				75,938	75,938
4	Capital reserves				21,174	21,174
	(Accumulated loss)/unappropriated profit				(891)	80,438
					----------	----------
					96,221	177,550
5	REDEEMABLE CAPITAL				-	200,600
	DEFERRED LIABILITY
	Staff gratuity				24,408	20,430
	CURRENT LIABILITIES AND PROVISIONS				----------	----------
6	Short-term loans				513,025	561,926
5	Current portion of redeemable capital				200,600	14,994
7	Short-term running finance utilised
	under mark-up arrangements				225,615	470,183
8	Creditors, accrued and other liabilities				300,498	871,583
	Proposed dividend				-	3,038
					----------	----------
					1,239,738	1,921,724
9	CONTINGENT LIABILITIES AND
	COMMITMENTS
					----------	----------
					1,360,367	2,320,304
					==========	==========
Note					1997	1996
					(Rupees in thousands)
	TANGIBLE FIXED ASSETS
10	Operating assets				227,048	266,375
11	Capital work-in-progress				4,099	3,695
					----------	----------
					231,147	270,070
12	LONG-TERM INVESTMENT				9,091	10,401
13	LONG-TERM LOANS				1,491	2,348
14	LONG-TERM DEPOSITS AND PREPAYMENTS				1,672	2,455
	CURRENT ASSETS
					----------	----------
15	Stock-in-trade				544,795	1,422,526
	Spares				6,151	4,240
16	Trade debts				182,014	258,651
17	Loans and advances				16,929	17,645
18	Trade deposits and short-term prepayments				3,884	5,315
	Investment - Regular Income Certificates				10,500	-
	Taxation recoverable				298,845	238,344
19	Other receivables				33,147	76,105
20	Cash and bank balances				20,701	12,204
					----------	----------
					1,116,966	2,035,030
					----------	----------
					1,360,367	2,320,304
					==========	==========
The annexed notes form an integral part of these accounts.
Profit and Loss Account
For the year ended December 31, 1997
Note					1997	1996
					(Rupees in thousands)
21	Net sales				2,556,412	2,875,169
21	Indent commission				-	9,418
					----------	----------
					2,556,412	2,884,587
21	Cost of sales				2,513,332	2,758,546
					----------	----------
	Operating profit				43,080	126,041
24	Other income				49,959	56,865
					----------	----------
					93,039	182,906
					----------	----------
25	Financial charges				157,336	119,595
26	(Other charges				4,523	9,045
					----------	----------
					161,859	128,640
					----------	----------
	(Loss)/Profit before taxation				(68,820)	54,266
28	Taxation				12,509	29,500
					----------	----------
	(Loss)/Profit after taxation				(81,329)	24,766
	Unappropriated profit brought forward				80,438	58,710
					----------	----------
					(891)	83,476
	Appropriation:
	Proposed dividend @ Rs. Nil (1996: @ Re. 1 per
	share on 3,037,530 shares held by shareholders
	other than Ciba-Geigy Limited - Basle)				-	3,038
	(Accumulated loss)/unappropriated				----------	----------
	profit carried forward				(891)	80,438
					==========	==========
The annexed notes form an integral part of these accounts.
Cash Flow Statement
for the year ended December 31, 1997
Note					1997	1996
					(Rupees in thousands)
	Cash flow from operating activities
32	Cash generated from/(used in) operations				522,903	(293,413)
	Staff gratuity paid				(2,116)	(4,150)
	Interest/mark-up paid				(109,753)	(48,710)
	Taxes paid				(73,010)	(150,274)
	Long-term loans (net)				857	(1,613)
	Long-term deposits and prepayments (net)				783	1,627
					----------	----------
	Net cash inflow/(outflow) from operating activities				339,664	(496,533)
	Cash flow from investing activities				----------	----------
	Fixed capital expenditure				(26,626)	(59,483)
	Sale proceeds from disposal of fixed assets				12,097	17,689
	Income received				5,353	9,195
	Dividend received				-	9,500
					----------	----------
	Net cash outflow from investing activities				(9,176)	(23,099)
	Cash flow from financing activities
	Repayment of long-term liability				-	(9,500)
	Redeemable capital less repayments				(14,994)	175,597
	Short-term borrowing less repayments				(48,901)	182,661
	Dividends paid				(3,028)	(15,167)
					----------	----------
	Net cash (outflow)/inflow from				(66,923)	333,591
	financing activities
					----------	----------
	Net increase/(decrease) in cash and				263,565	(186,041)
	cash equivalents
	Cash and cash equivalents at January 1				(457,979)	(271,938)
					----------	----------
33	Cash and cash equivalents at December 31				(194,414)	(457,979)
					==========	==========
	The annexed notes form an integral part of these accounts.
Notes to the Accounts
for the year ended December 31, 1997
1. NATURE OF BUSINESS
The company is incorporated in Pakistan and is listed on the Karachi, Lahore and Islamabad
Stock Exchanges. It is engaged in the manufacture of pharmaceuticals, formulation and
repacking of crop protection products. The company has closed its animal health sector
effective December 31, 1997,