| DANDOT CEMENT COMPANY LIMITED |
|
|
|
|
|
|
|
|
|
|
| Annual
Report 1997 |
|
|
|
| CONTENTS |
|
|
|
| Company
Information |
|
| Notice
of Meeting |
|
| Directors'
Report |
|
| Auditors'
Report |
|
| Balance
Sheet |
|
| Profit
and Loss Account |
|
| Statement
of Changes in Financial Position |
|
| Notes
to the Accounts |
|
| Pattern
of Shareholdings |
|
|
|
|
|
| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS: |
|
| Khawaja Mohammad Jawed |
(Chairman) |
|
| Khawaja
Mohammad Nadeem |
(Chief Executive) |
|
| Khawaja
Mohammad Kaleem |
|
| Khawaja
Mohammad Jahangir |
|
| Khawaja
Mohammad Tanveer |
|
| Khawaja
Mohammad Naveed |
|
| S.K.
Jahangir |
|
(Nominee National
Investment Trust Ltd.) |
|
|
| BANKERS: |
|
| National
Bank of Pakistan Limited |
|
| Muslim
Commercial Bank Limited |
|
| United
Bank Limited |
|
| Habib
Bank Limited |
|
|
|
| AUDITORS: |
|
| Messrs.
Rahim Iqbal Rafiq & Co. |
|
| Chartered
Accountants |
|
|
|
| CORPORATE
SECRETARY: |
|
| Muhammad
Anwar Sheikh |
|
| M.
COM., FCMA |
|
|
| REGISTERED
OFFICE: |
|
| 7-Happy
Homes, |
|
| 38-A,
Main Gulberg, Lahore. |
|
|
| WORKS: |
|
| DANDOT
R.S., Distt. Jhelum, |
|
|
|
| CORPORATE
& SHARES |
|
| DEPARTMENT: |
|
| 31
- F, Main Market Gulberg II, Lahore |
|
| Telephone:
5755774 Fax: 5755760 |
|
|
|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
|
| NOTICE
is hereby given that the 17th Annual General Meeting of the shareholders of
Dandot Cement Company |
|
| Limited
will be held on December 31, 1997 at 12:00 Noon at 7-Happy Homes, 38-A, Main
Gulberg, Lahore, to |
|
| transact
the following business:- |
|
|
| 1.
To confirm the minutes of Annual General Meeting held on March 27, 1997. |
|
|
| 2.
To receive and adopt the audited accounts together with Directors' and
Auditors' reports for the year |
|
| ended
June 30, 1997. |
|
|
| 3.
To appoint auditors and fix their remuneration. |
|
|
| 4.
To transact any other business with the permission of the Chair. |
|
|
| NOTES: |
|
|
| 1)
A member entitled to attend and vote at the meeting may appoint another
member as his/her proxy to |
|
| attend
and vote instead of him/her at the meeting. Proxies must be deposited at the
Company's Registered |
|
| Office
not less than 48 hours before the time for holding the meeting. |
|
|
| 2)
Members are requested to immediately notify the change of their address, if
any. |
|
|
| 3)
Share Transfer Books of the Company shall remain closed from December 30,
1997 to January 6, 1998 |
|
| (both
days inclusive).
. |
|
|
|
| DIRECTORS'
REPORT TO THE SHAREHOLDERS |
|
|
| Your
directors present before you the annual report alongwith the audited accounts
for the year ended June 30, 1997. |
|
|
| During
the year under review, the company suffered net loss after tax of Rs. 204.717
million after accounting for all the |
|
| charges
and taxes of Rs. 2.514 million. |
|
|
| The
sales revenue for the year amounted to Rs. 989.883 million. Out of this Rs.
320.204 million was paid for excise duty, |
|
| Rs.
'142.484 million was paid towards sales tax and rebate on sale of Rs. 24.413
million was allowed and net sales comes to |
|
| Rs.
502.781 million compared to Rs.. 391.259 million during the last year. The
cost of sales comes to RS. 646.292 million |
|
| which
leaves us a gross loss of RS. 143.511 million. Administrative expenses were
Rs. 31.445 million, selling and distribution |
|
| expenses
Rs. 6.881 million, financial charges Rs. 52.276 million. After accounting for
other income amounting to |
|
| Rs.
31.910 million, the net loss before tax comes to Rs. 202.203 million. |
|
| There
was increase in weighted average cost of sales by 3.37%, whereas, the net
average retention price per tonne decreased |
|
| by
2.29% compared with last year. The increase in cost is mainly attributable to
increased cost of inputs i.e. furnace oil, |
|
| diesel
and POL, power tariff, and stores & spares. The figures of production and
sales are as under: |
|
|
|
1996-97 |
1995-96 |
|
|
TONNES |
TONNES |
|
| Clinker
production |
|
247,730 |
176,564 |
|
| Cement
production |
|
275,339 |
213,334 |
|
| Despatches |
|
279,990 |
212,892 |
|
|
| The
production of clinker and cement was higher than last year, but less than the
capacity of the plant. The short fall in |
|
| production
was mainly due to lower demand, higher competition, non clearance of fire
bricks by Karachi Port Trust, inspire |
|
| of
clear instructions of Honourable Lahore High Court, and break down of lD Fan. |
|
|
| The
year under review was a difficult year for cement industry. It witnessed
heavy currency devaluation, exhorbitant increase |
|
| in
furnace oil prices, general inflation in consumables and increase in sales
tax from 15% to 18% and excise duty from 25% |
|
| to
35%. The increased cost of inputs, heavy taxes and lowered retention price
resulted in operating loss to the industry. |
|
|
| In
the national budget 1997-98, sales tax has been withdrawn. But the apparent
relief has almost been nullified due to |
|
| increase
in the rate of excise duty from 35% to 40% on retail price (which actually
works out to 42% of ex-factory price) and |
|
| withdrawal
of facility of sales tax adjustment on packing material, explosives and other
input items. |
|
|
| Considering
the installed capacity of the existing plants and the new ones coming on
lines and with no significant improvements |
|
| in
the economic activities, it seems difficult that continuous increase in input
cost can be passed on to the final consumer in |
|
| the
foreseeable future. In order to survive it is necessary that the taxes
imposed on the cement industry be rationalized |
|
| keeping
in view the industry's capacity' to carry this burden. |
|
|
| AUDITORS |
|
| Messrs.
Rahim Iqbal Rafiq & Co. Chartered Accountants, retire and being eligible
offer themselves for re-appointment ~s |
|
| the
auditors of the company for the year 1997-98. |
|
|
| PATTERN
OF SHAREHOLDING |
|
| The
shareholding pattern .of the company as on June 30, 1997 is included in the
annual report. |
|
|
| ACKNOWLEDGMENT |
|
| The
company places on record the support of its local and foreign shareholders,
bankers, employees and valued Customers. |
|
| The
management also appreciate the dedication and hard work put in by all the
employees of the company. It is hoped that |
|
| they
will continue their sincere efforts to bring the company out of the present
crises. |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
|
| We
have audited the annexed balance sheet of DANDOT CEMENT COMPANY LIMITED as at
June 30, 1997 |
|
| and
the related profit and loss account and statement of changes in financial
position 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 statement of changes in financial
position 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 June 30, 1997 and of the loss and the changes in financial position for
the year then ended; and |
|
|
| (d)
in our opinion, no Zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980. |
|
|
|
| BALANCE
SHEET AS ON JUNE 30, 1997 |
|
|
1997 |
1996 |
|
|
Notes |
Rupees |
Rupees |
|
| CAPITAL
AND LIABILITIES |
|
|
| SHARE
CAPITAL AND RESERVES |
|
| Authorized
Capital |
|
| 50,000,000
Ordinary Shares |
|
500,000,000 |
500,000,000 |
|
| of
Rs. 10/- each |
|
=========== |
=========== |
|
|
| Issued,
Subscribed and Paid up Capital |
|
3 |
262,500,000 |
262,500,000 |
|
| Share
deposit money |
|
4 |
47,700,540 |
47,700,540 |
|
| Unappropriated
(Loss)/Profit |
|
(151,505,617) |
53,211,015 |
|
|
---------- |
---------- |
|
|
158,694,923 |
363,411,555 |
|
|
| LONG
TERM LOANS |
|
5 |
136,336,451 |
170,420,561 |
|
|
|
|
| LIABILITIES
AGAINST ASSETS SUBJECT |
|
|
|
| TO
FINANCE LEASES |
|
6 |
69,749,142 |
76,030,829 |
|
|
|
|
| DEFERRED
LIABILITIES |
|
7 |
-- |
-- |
|
|
|
|
| CURRENT
LIABILITIES |
|
| Bank
Overdraft |
|
8 |
2,734,473 |
-- |
|
| Current
Maturity of long term liabilities |
|
9 |
223,378,618 |
194,544,873 |
|
| Due
to Directors |
|
|
455,942 |
55,174,625 |
|
| Advances
& Deposits |
|
10 |
7,123,618 |
13,154,859 |
|
| Creditors,
Accrued and Other liabilities |
|
11 |
369,753,435 |
269,482,064 |
|
| Gratuity
payable to trustees |
|
|
54,211,714 |
46,490,521 |
|
| Unclaimed
Dividend |
|
|
782,699 |
782,699 |
|
| Taxation |
|
2,513,907 |
2,791,626 |
|
|
---------- |
---------- |
|
|
660,954,406 |
582,421,267 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
12 |
-- |
-- |
|
|
---------- |
---------- |
|
|
1,025,734,922 |
1,192,284,212 |
|
|
=========== |
=========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
| PROPERTY
AND ASSETS |
|
|
| FIXED
CAPITAL EXPENDITURE |
|
| Operating
Assets |
|
13 |
515,543,714 |
575,639,593 |
|
| Capital
Work in progress |
|
14 |
971,669 |
971,669 |
|
|
|
---------- |
---------- |
|
|
|
516,515,383 |
576,611,262 |
|
|
|
|
| LONG
TERM LOANS AND DEPOSITS |
|
15 |
32,408,090 |
34,133,977 |
|
| LONG
TERM INVESTMENTS |
|
16 |
20,000,000 |
104,906,640 |
|
| DEFERRED
COST |
|
17 |
7,990,054 |
15,980,108 |
|
|
| CURRENT
ASSETS |
|
|
|
| Stores,
spares and loose tools |
|
18 |
89,350,752 |
97,386,878 |
|
| Stock
in trade |
|
19 |
9,827,125 |
41,437,545 |
|
| Trade
debtors |
|
20 |
19,834,702 |
18,344,250 |
|
| Advances,
deposits, prepayments & |
|
|
|
| other
receivables |
|
21 |
303,979,733 |
274,971,838 |
|
| Cash
and bank balances |
|
22 |
25,829,083 |
28,511,714 |
|
|
|
----------- |
----------- |
|
|
448,821,395 |
460,652,225 |
|
|
----------- |
----------- |
|
|
1,025,734,922 |
1,192,284,212 |
|
|
=========== |
=========== |
|
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30,1997. |
|
|
|
1997 |
1996 |
|
|
Notes |
Rupees |
Rupees |
|
| SALES
(NET) |
|
23 |
502,781,396 |
391,259,397 |
|
| COST
OF GOODS SOLD |
|
24 |
(646,292,386) |
475,376,563) |
|
|
|
----------- |
----------- |
|
| GROSS
(LOSS) |
|
(143,510,990) |
(84,117,166) |
|
|
| OPERATING
EXPENSES |
|
|
|
| Administration
and general |
|
25 |
31,444,744 |
36,285,757 |
|
| Selling
and distribution |
|
26 |
6,880,860 |
7,578,303 |
|
| Financial
Expenses |
|
27 |
52,276,200 |
74,149,484 |
|
| Worker's profit participation
fund |
|
-- |
-- |
|
|
----------- |
----------- |
|
|
90,601,804 |
118,013,544 |
|
|
----------- |
----------- |
|
| OPERATING
(LOSS) |
|
(234,112,794) |
(202,130,710) |
|
| OTHER
INCOME |
|
28 |
31,910,069 |
32,167,797 |
|
|
----------- |
----------- |
|
| (LOSS)
BEFORE TAXATION |
|
(202,202,725) |
(169,962,913) |
|
| TAXATION |
|
| Current |
|
2,513,907 |
2,791,626 |
|
|
----------- |
----------- |
|
| NET
(LOSS) AFTER TAXATION |
|
(204,716,632) |
(172,754,539) |
|
| UNAPPROPRIATED
PROFIT B/FORWARD |
|
53,211,015 |
225,965,554 |
|
|
----------- |
----------- |
|
| (LOSS)/PROFIT
AVAILABLE FOR APPROPRIATION |
|
(151,505,617) |
53,211,015 |
|
| APPROPRIATIONS: |
|
-- |
-- |
|
|
----------- |
----------- |
|
| (LOSS)/PROFIT
CARRIED OVER TO BALANCE SHEET |
|
(151,505,617) |
53,211,015 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) |
|
| FOR
THE YEAR ENDED JUNE 30, 1997 |
|
|
|
1997 |
1996 |
|
|
Rupees |
Rupees |
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
|
| Loss
before taxation |
|
(202,202,725) |
(169,962,913) |
|
| Adjustments: |
|
| Depreciation |
|
62,126,959 |
70,042,198 |
|
| Amortization
of deferred cost |
|
7,990,054 |
9,014,784 |
|
| Provision
for Gratuity |
|
7,721,193 |
8,565,152 |
|
| Profit
on Disposal of Fixed Assets |
|
(935,050) |
-- |
|
| Gain
on Sale of Investment |
|
(4,942,185) |
-- |
|
|
----------- |
----------- |
|
|
71,960,971 |
87,622,134 |
|
|
----------- |
----------- |
|
| Operating
(Loss) Before Working Capital Changes |
|
(130,241,754) |
(82,340,779) |
|
|
| Changes
in working capital |
|
| Decrease/(Increase)
in current assets |
|
8,841,695 |
'(22,106,329) |
|
| Increase
in current liabilities |
|
45,372,020 |
103,958,434 |
|
|
----------- |
----------- |
|
| Effect
on Cash Flows Due to Working Capital Changes |
|
54,213,715 |
81,852,105 |
|
|
----------- |
----------- |
|
| Cash
Flows From Operating Activities |
|
(76,028,039) |
(488,674) |
|
| Income
tax paid |
|
(2,791,626 |
(18,717,488) |
|
|
----------- |
----------- |
|
| Net
Cash Flows From Operating Activities |
|
(78,819,665 |
(19,206,162) |
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
|
| Fixed
capital expenditure |
|
(3,410,129) |
(2,222,743) |
|
| Security
deposit and deferred cost |
|
(150,000) |
-- |
|
| Cash
from disposal of assets |
|
2,314,099 |
-- |
|
| Cash
from sale of investment |
|
89,848,825 |
-- |
|
| Long
term loans and advances |
|
2,182,391 |
2,224,445 |
|
|
----------- |
----------- |
|
| Net
Cash Flows From Investing Activities |
|
90,785,186 |
1,702 |
|
|
| CASH
FLOWS FROM FINANCING ACTIVITIES |
|
| Share
capital |
|
-- |
10,347,680 |
|
| Repayment
of long term loan |
|
-- |
( 17,042,054) |
|
| Repayment
of lease liability |
|
(14,648,152) |
(17,714,478) |
|
|
----------- |
----------- |
|
| Net
Cash Flows From Financing Activities |
|
(14,648,152) |
(24,408,852) |
|
|
----------- |
----------- |
|
| Net
Increase/(Decrease) in Cash and Cash Equivalents |
|
(2,682,631) |
(43,613,312) |
|
| Cash
and cash equivalents at beginning of the year |
|
28,511,714 |
72,125,026 |
|
|
----------- |
----------- |
|
| Cash
and cash equivalents at end of the year |
|
25,829,083 |
28,511,714 |
|
|
=========== |
=========== |
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30,1997. |
|
|
| 1.
THE COMPANY AND ITS OPERATIONS |
|
| The
Company is incorporated in Pakistan as a public limited company by Karachi
and Lahore Stock Exchanges. |
|
| The
Company is engaged in the manufacturing and marketing of cement. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES. |
|
| 2.1
Accounting convention |
|
| These
accounts have been prepared on the basis of historical cost convention. |
|
|
| 2.2
Employees retirement benefits |
|
| a)
Gratuity |
|
| The
company operates an approved and funded gratuity scheme covering all
employees payable |
|
| on
cessation of employment subject to a minimum qualifying period of five years
service with |
|
| the
company. Annual provisions are made in accounts to cover obligations under
the scheme. |
|
|
| b)
Provision for earned leave |
|
| Leave
encashment is made to the staff/workers on actual basis exceeding prescribed
limit as and |
|
| when
claimed. |
|
|
| 2.3
Taxation |
|
|
| Current |
|
|
| Provision
for taxation is based on the taxable income and the rates of taxes applicable
after taking into |
|
| account
tax credits available, if any. However, current provision is made under
section 80D of Income |
|
| Tax
Ordinance due to the losses incurred by the company. |
|
|
| Deferred |
|
| The
company accounts for deferred taxation on all material timing differences
using the liability |
|
| method.
However, deferred tax is not provided if it can be established with
reasonable certainty that |
|
| these
timing differences will not reverse in the foreseeable future. |
|
|
| 2.4
Fixed assets |
|
| Fixed
assets are stated at cost less accumulated depreciation except freehold land
which is stated at cost. |
|
|
| Depreciation
is charged on reducing balance method at the rates specified in operating
assets note, |
|
| except
leasehold land for quarries which is amortized over a period of 15 years. |
|
|
| No
depreciation is provided on assets in the year of sale while full year's
depreciation is charged in the |
|
| year
of purchase. |
|
|
| Maintenance
and normal repairs are charged to income as and when incurred. Major renewals
and |
|
| improvements
are capitalized. Gain or loss, if any, on disposal of assets is included in
current income. |
|
|
| 2.5
Assets subject to finance lease |
|
| The
company accounts for the assets acquired under finance lease by recording the
assets and related |
|
| liability.
Financial charges are allocated to accounting period in a manner so as to
provide a constant |
|
| periodic
rate of charge on outstanding liability. Assets are amortized over the period
of their useful life |
|
| at
the rate specified in the operating assets note. |
|
|
| 2.6
Capital work in progress |
|
| Capital
work-in-progress is sated at cost and represents expenditure incurred on
fixed assets in the |
|
| course
of construction and installation. Transfers have been made to relevant fixed
assets category as |
|
| and
when assets become operative. |
|
|
| 2.7
Long term investments. |
|
| These
are stated at cost. |
|
|
| 2.8
Stores, spares and loose tools |
|
| These
are valued at lower of net realizable value or moving' average cost. Fire
bricks, grinding media |
|
| and
lining plates installed in kiln and mill are charged to cost for the year on
the basis of actual useful |
|
| life
spent. |
|
|
| 2.9
Stock in trade |
|
| These
are valued at lower of cost and net realizable value applying the following
methods: |
|
|
| Raw
material |
|
at weighted average cost. |
|
| Work
in process and |
|
at average cost covering |
|
| Finished
Goods |
|
direct material, labour
and manufacturing overhead |
|
|
| 2.10
Deferred Cost |
|
| Deferred
costs are amortized over a maximum period of 5 years. |
|
|
| 2.11
Allocation of expenses |
|
| All
expenses and income are recognized on accrual basis except bonus and leave
pay encashment to |
|
| employees
which are accounted ft)r in the accounts in the year of actual payment. |
|
|
| 2.12
Revenue recognition |
|
| Sales
are recorded on dispatch of goods. |
|
|
|
1997 |
1996 |
|
| 3.
ISSUED, SUBSCRIBED AND PAID-UP |
|
Rupees |
Rupees |
|
| 17,500,000
(1996:17,500,000) ordinary |
|
| shares
of Rs. 10 each fully paid in cash |
|
175,000,000 |
175,000,000 |
|
| 8,750,000
(1996: 8,750,000)ordinary shares |
|
| of
Rs. 10/- each issued as fully paid bonus shares |
|
87,500,000 |
87,500,000 |
|
|
----------- |
----------- |
|
|
262,500,000 |
262,500,000 |
|
|
=========== |
=========== |
|
| 4.
SHARE DEPOSIT MONEY |
|
| Opening
balance |
|
47,700,540 |
37,352,860 |
|
| Received
during the year |
|
-- |
10,347,680 |
|
|
----------- |
----------- |
|
|
47,700,540 |
47,700,540 |
|
|
=========== |
=========== |
|
| This
represents money received against 25% right shares announced during the year
ended June 30, 1995 at |
|
| Rs.
30/- per share including Rs. 20/- as share premium. The company has applied
in Honorable Lahore |
|
| High
Court for the appropriate decision whether to issue shares certificates or
refund the money received to |
|
| the
share holders. Orders of the honourable court are awaited in this regard. |
|
|
| 5. LONG TERM LOANS (SECURED) |
|
| Foreign
Currency |
|
| Economic
Affairs Division (Govt. of Pakistan) |
|
5.10 |
221,546,726 |
221,546,726 |
|
| Local
Currency |
|
5.20 |
|
| Modarabas |
|
38,515,084 |
38,515,084 |
|
| Investment
Bank |
|
15,486,484 |
15,486,484 |
|
|
----------- |
----------- |
|
|
54,001,568 |
54,001,568 |
|
|
----------- |
----------- |
|
|
275,548,294 |
275,548,294 |
|
| Less:
Current maturity |
|
| Over due |
|
| Foreign
currency |
|
51,126,165 |
17,042,055 |
|
| Local
currency |
|
54,001,568 |
40,304,062 |
|
|
----------- |
----------- |
|
|
105,127,733 |
57,346,117 |
|
| Payable
in next year |
|
| Foreign
currency |
|
34,084,110 |
34,084,110 |
|
| Local
currency |
|
-- |
13,697,506 |
|
|
----------- |
----------- |
|
|
34,084,110 |
47,781,616 |
|
|
----------- |
----------- |
|
|
139,211,843 |
10,512,773 |
|
|
----------- |
----------- |
|
|
136,336,451 |
170,420,561 |
|
|
========== |
========== |
|
|
|
|
| 5.1
Loan sanctioned |
|
Japanese Yen |
5,199,457,960 |
5,199,457,960 |
|
