| FFC -- JORDAN FERTILIZER COMPANY LTD |
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| Annual
Report 1997 |
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| Contents |
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| Company
Information |
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| Notice of Annual General
Meeting |
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| Report
of the Directors |
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| Auditors'
Report to the Members |
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| Balance
Sheet |
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| Cash Flow Statement |
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| Notes
to the Accounts |
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| Pattern of Shareholding |
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| Company
Information |
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| DIRECTORS |
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| Lt
Gen Khalid Latif Moghal (Retd), HI(M), S Bt |
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| Chairman
& Chief Executive |
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| Lt
Gen Zia Ullah Khan (Retd), HI(M) |
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| Mr.
Iltifat Rasul Khan |
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| Brig
Riaz Ahmed Qureshi (Retd), SI(M) |
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| Brig
Ashfaq Ahmad (Retd), SI(M) |
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| Brig
Muhammad Saeed Baig (Retd), SI(M) |
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| Mr.
Hani Abdallah Dukhgan |
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| Mr.
Irfan Siddiqui |
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| SECRETARY |
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| Col
Azhar Ali Shah (Retd), S Bt |
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| REGISTERED
OFFICE |
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| 93
Harley Street Rawalpindi, Pakistan. |
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| Tel:
562491-5 |
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| Fax:
567290 & 582851 |
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| PLANTSITE |
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| Port
Qasim Karachi, Pakistan. |
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| AUDITORS |
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| A.
E Ferguson & Co., |
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| Chartered
Accountants |
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| PIA
Building, 49 Blue Area |
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| Islamabad. |
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| LEGAL
ADVISORS |
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| Orr
Dignam & Co., |
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| Advocates |
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| 3-A,
Street 32, Sector F-8/1 |
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| Islamabad. |
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| SHARE
DEPARTMENT |
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| Plot
No. EZ/1/P-1 Eastern Zone, Port Qasim |
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| Karachi-48. |
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| Notice
of Annual General Meeting |
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| Notice
is hereby given that the 4th Annual General Meeting of the Shareholders of
FFC-Jordan Fertilizer Company |
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| Limited
will be held at Pearl Continental Hotel, The Mall, Rawalpindi, on Monday June
29, 1998 at 1300 hours to |
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| transact
the following business: |
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| Ordinary
Business |
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| 1.
To confirm the minutes of the Extraordinary General Meeting held on April 28,
1998. |
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| 2.
To receive, consider and adopt the Audited Accounts of the Company together
with the Auditors' and the |
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| Directors'
Reports for the year ended December 31, 1997. |
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| 3.
To appoint Auditors for the year 1998 and to fix their remuneration. |
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| 4.
To transact any other business with the permission of the Chairman. |
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| NOTES |
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| 1.
The share transfer books of the Company will remain closed from 23rd to 29th
June, 1998 (both days |
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| inclusive). |
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| 2.
A member of the Company entitled to attend and vote at the Annual General
Meeting may appoint a |
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| person/representative
as proxy to attend and vote in place of the member at the Meeting. Proxies in
order |
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| to
be effective must be received at the Company's Registered Office, 93 Harley
Street, Rawalpindi not later |
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| than
48 hours before the time of holding the Meeting. |
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| Report
of the Directors |
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| For
the Year ended December 31, 1997 |
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| 1.
The Directors take pleasure in presenting their 4th Annual Report together
with the Company's Financial |
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| Statements
for the year ended December 31, 1997 and the Auditors' Report thereon. |
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| 2.
Year in Review |
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| Keeping
in view the magnitude of the Project and involvement of the engineering,
procurement and con- |
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| struction
(EPC) Contractor and several other agencies, vigorous efforts were made to
minimise the impact |
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| of
co-ordination problems, materials shortages and procurement delays for
certain equipments. Unusual |
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| weather
conditions in East Canada had also brought all works in Montreal area (where
Klockner Stadler |
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| Hurter
- a subcontractor responsible for engineering and procurement from Canada and
USA is located) |
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| including
vendors to a standstill. Concerted efforts are being made jointly with the
Contractor to remove |
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| hurdles,
accelerate progress and achieve the earliest possible completion of the
Project. Progress made in |
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| various
fields of the Project by December 31, 1997 is highlighted in the following
paragraphs: |
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| 3.
Plantsite |
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| Progress up to December 31,
1997 |
% Completed |
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| *
Ammonia Plant |
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|
91 |
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| *
EPC - overall |
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|
68 |
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| *
EPC + Ammonia |
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|
74 |
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| -
Weight of material shipped up to December 31, 1997 is 1.9 million freight
tons. |
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| 4.
Financial |
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| The
status of foreign currency loans disbursements by Banque Nationale de Paris
(BNP)-France, |
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| Export
Development Corporation (EDC)-Canada, The Export Import Bank of the United
States (Exim)- |
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| USA,
Kreditanstalt fur Wiederaufbau (KfW)- Germany, CDC Holdings (CDCH)-Malaysia
and Danish |
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| Export
Credit Fund (DECF)-Denmark as at end December are shown below: |
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| The
status of local currency loans disbursements by Habib Bank Limited (HBL), ANZ
Grindlays Bank |
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| Limited
(ANZ), Muslim Commercial Bank Limited (MCBL), Pak Kuwait Investment Co.
(Pvt.) Ltd. |
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| (PKIC),
A1 Faysal Investment Bank Limited (AFIBL) and Askari Commercial Bank Limited
(ACBL) as |
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| at
end December are shown below: |
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| 5.
Induction and Training of Manpower |
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| Timely
induction of required manpower and training is of vital importance both in
the pre-commissioning |
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| and
operation phase. The sophisticated technical training facilities of Fauji
Fertilizer Co. Ltd. manned by |
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| highly
competent trainers are being utilised for FJFC's training needs. In addition
engineers have also been |
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| sent
abroad for training at vendors' facilities for some critical equipments. |
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| 6.
Land for Township |
|
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| 200
acres of land has been acquired at Bin Qasim, Karachi close to the Plantsite
for |
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| construction
of a modern township for its employees. The location of the township will
ensure availability |
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| of
critical staff on short notice in case of emergencies. |
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| 7.
Pattern of Shareholding |
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| As
of December 31, 1997, there were 40,051 individual shareholders besides
numerous institutions includ- |
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| ing
17 foreign investors as shown in the annexed pattern of shareholding. |
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| 8.
Directors |
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| On
separation of Lt Gen Syed Tanwir Husain Naqvi (Retd), Additional Managing
Director, from the |
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| Company
service, Brig Ashfaq Ahmad (Retd), has been appointed Director of the
Company. |
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| On
retirement of Brig Sayyed Ifzal Hussain (Retd) from Directorship, Brig
Muhammad Saeed Baig (Retd) |
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| has
been appointed as Director of the Company. |
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| The
Board places on record its appreciation for the valuable advice and services
rendered by the retiring |
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| Directors,
and welcome the new Directors on the Board. |
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| 9.
Auditors |
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| The
present Auditors, M/s A.F. Ferguson & Co., Chartered Accountants, retire
and being eligible have |
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| offered
themselves for re-appointment as Auditors of the Company. |
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| 10.
Acknowledgments |
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| The
Directors also express their appreciation for the continued support and
contribution by the sharehold- |
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| ers,
employees, suppliers and the Government and its agencies during the year. |
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| Auditors'
Report to the Members |
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| We
have audited the annexed balance sheet of FFC-Jordan Fertilizer Company
Limited as at December 31, 1997 and |
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| cash
flow statement for the year then ended together with the notes forming part
thereof, and we state that we have |
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| obtained
all the information and explanations which to the best of our knowledge and
belief were necessary for |
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| the
purposes of our audit and, after due verification thereof, we report that: |
|
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| (a)
in our opinion, proper books of account have been kept by the Company as
required by the Companies |
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| Ordinance, 1984; |
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| (b)
in our opinion |
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| (i)
the balance sheet together with the notes thereon has been drawn up in
conformity with the |
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| Companies
Ordinance, 1984, and is in agreement with the books of account and is further
in accor- |
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| dance
with accounting policing consistently applied; |
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| (ii)
the expenditure incurred during the year was for the purpose of the Company's
business; and |
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| (iii)
the business conducted, investments made and the expenditure incurred during
the year were in |
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| accordance with the objects of the Company; |
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| (c)
in our opinion and to the best of our information and according to the
explanations given to us, the bal- |
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| ance
sheet and the cash flow statement, together with the notes forming part
thereof give the informa- |
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| tion
required by the Companies Ordinance, 1984, in the manner so required and give
a true and fair |
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| view
of the state of the Company's affairs as at December 31, 1997 and of the cash
flows for the year |
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| then
ended; and |
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| (d)
in our opinion no Zakat was deductible at Source under the Zakat and Ushr
Ordinance, 1980. |
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| Islamabad |
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|
A.F. Ferguson & Co. |
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| April
28, 1998 |
|
Chartered Accountants |
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| Balance
Sheet as at December 31, 1997 |
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|
1997 |
1996 |
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|
Note |
(Rupees '000) |
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| SHARE
CAPITAL AND RESERVES |
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| Authorised |
|
3 |
4,000,000 |
4,000,000 |
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|
|
|
|
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| Issued,
subscribed and fully paid |
|
3 |
3,341,100 |
3,341,100 |
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|
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| Share
premium |
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|
228,350 |
228,350 |
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|
----------- |
----------- |
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|
|
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|
3,569,450 |
3,569,450 |
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| LONG
TERM LOANS |
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4 |
7,505,696 |
2,569,786 |
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| CURRENT
LIABILITIES |
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| Current
maturity of long term loans |
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4 |
257,447 |
-- |
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| Creditors,
accrued and other liabilities |
|
5 |
848,037 |
438,784 |
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|
----------- |
----------- |
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|
1,105,484 |
438,784 |
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| CONTINGENCIES
AND COMMITMENTS |
6 |
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|
----------- |
----------- |
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|
12,180,630 |
6,578,020 |
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|
========= |
========= |
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| The
annexed notes form an integral part of these accounts. |
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| FIXED
CAPITAL EXPENDITURE |
|
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| Fixed
assets |
|
7 |
235,028 |
226,465 |
|
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|
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| Capital
work in progress |
|
8 |
10,881,220 |
5,012,542 |
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|
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|
11,116,248 |
5,239,007 |
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| LONG
TERM INVESTMENTS -: |
9 |
3,000 |
3,000 |
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| LONG
TERM LOANS, PREPAYMENTS |
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| AND
DEFERRED COSTS |
|
10 |
250,783 |
251,167 |
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| CURRENT
ASSETS |
|
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| Advances,
deposits, prepayments and |
|
|
|
|
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| other
receivables |
|
11 |
174,067 |
44,399 |
|
|
|
|
|
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| Short
term investments |
|
12 |
3,000 |
215,000 |
|
|
|
|
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| Cash
and bank balances |
|
13 |
633,532 |
825,447 |
|
|
|
|
----------- |
----------- |
|
|
|
|
810,599 |
1,084,846 |
|
|
----------- |
----------- |
|
|
|
|
|
12,180,630 |
6,578,020 |
|
|
========= |
========= |
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|
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|
| Cash
Flow Statement |
|
|
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| For
the Year Ended December 31, i997 |
|
|
|
|
|
|
1997 |
1996 |
|
|
|
(Rupees '000) |
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
| Fixed
capital expenditure (inclusive of related |
|
| advances
/ payables on this account) |
|
|
(5,658,413) |
(2,353,561) |
|
| Long
term loans, prepayments and deferred costs |
|
384 |
(112,608) |
|
| Short
term investments - net encashment/(purchase) |
212,000 |
(190,000) |
|
| Income
on bank deposits |
|
|
59,693 |
81,827 |
|
| Proceeds
from disposal of fixed assets'" |
|
1,064 |
2,585 |
|
| Net
cash outflow from investing activities |
|
(5,385,272) |
(2,571,757) |
|
|
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
| Proceeds
from issue of share capital |
|
-- |
810,906 |
|
| Share
premium on issue of shares |
|
-- |
228,350 |
|
| Long
term loans |
|
|
5,193,357 |
2,452,748 |
|
| Short
term loans |
|
|
-- |
(888,761 |
|
| Net
cash inflow from financing activities |
|
5,193,357 |
2,603,243 |
|
| Effect
of exchange rate changes on cash and cash equivalents |
-- |
38,506 |
|
|
|
|
---------- |
---------- |
|
| NET (DECREASE)/INCREASE IN
CASH AND CASH |
|
|
| EQUIVALENTS |
|
|
(191,915) |
69,992 |
|
| CASH AND CASH EQUIVALENTS
AT BEGINNING OF |
|
|
| THE
YEAR |
|
|
825,447 |
755,455 |
|
| CASH AND CASH EQUIVALENTS AT
END OF THE |
---------- |
---------- |
|
| YEAR |
|
633,532 |
825,447 |
|
|
========= |
========= |
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|
|
|
|
| Notes
to the Accounts |
|
| For
the Year Ended December 31,1997 |
|
|
|
|
| 1.
LEGAL STATUS AND OPERATIONS |
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|
| The
Company is a public company incorporated in Pakistan under the Companies
Ordinance, 1984, and |
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| its
shares are listed on the stock exchanges in Pakistan. The principal objective
of the Company is manu- |
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| facturing,
purchasing and marketing of fertilizers. |
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| 2. SIGNIFICANT ACCOUNTING POLICIES |
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| 2.1 Accounting convention |
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| These
accounts have been prepared under the historical cost convention. |
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| 2.2 Retirement benefits |
|
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| The
Company has following retirement benefit plans for its employees: |
|
|
| a)
Defined contributory provident fund for all employees for which the Company's
contribu- |
|
| tion is charged to unallocated expenses
reflected under capital work in progress. |
|
|
| Defined
funded gratuity scheme operated by an associated company in respect of its |
|
| employees
who complete a qualifying service period. |
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| 2.3
Fixed capital expenditure |
|
|
| Fixed
assets are stated at cost less accumulated depreciation. Capital work in
progress is stated at |
|
| cost. |
|
|
|
| Depreciation
is provided on straight-line method to write off the cost of an asset over
its estimat- |
|
| ed
useful life without taking into account any residual value. Full year's
depreciation is charged |
|
| on
normal additions, while no depreciation is charged on items deleted during
the year. Gains and |
|
| losses
on disposal of assets, if any, are included in unallocated expenses under
capital work in |
|
| progress. |
|
|
| 2.4
Investment |
|
|
| This
is stated at cost. |
|
|
| 2.5 Deferred cost |
|
|
| Costs
related to the Company's incorporation and issue of shares have been deferred
to be amor- |
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| tised
in equal instalments over five years after commencement of commercial
production. |
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|
| 2.6
Foreign currency transactions |
|
|
| Transactions
in foreign currencies are converted into rupees at the rates of exchange
ruling on the |
|
| date
of the transaction except where exchange risk cover has been obtained or
where such funds |
|
| are
committed for a specified purpose, in which case these transactions are
converted at the con- |
|
| tracted
rate or at the rate applicable to funds committed for such transactions. All
assets and lia- |
|
| bilities
denominated in foreign currencies at the year end are translated at exchange
rate prevail- |
|
| ing
at the balance sheet date or at the contracted rate where exchange risk cover
has been obtained |
|
| or
at the rate applicable to funds so committed. |
|
|
| 3.
SHARE CAPITAL |
|
|
|
|
1997 |
1996 |
|
|
|
|
(Rupees '000) |
|
| Number
of shares |
|
|
| AUTHORISED |
|
| 400,000,000 |
Ordinary shares of Rs.10
each |
|
4,000,000 |
4,000,000 |
|
| (1966:
400,000,000) |
|
========= |
========= |
|
|
| ISSUED,
SUBSCRIBED AND |
|
| FULLY
PAID IN CASH |
|
|
| 334,110,000 |
Ordinary shares of Rs. 10
each |
|
3,341,100 |
3,341,100 |
|
| (1996:
334,110,000) |
|
========= |
========= |
|
|
| 4. LONG TERM LOANS - SECURED |
|
|
|
|
|
|
Half yearly |
|
|
Amount sanctioned Balance outstanding |
FERI |
Annual |
equal |
Date of |
|
|
Currency |
Amount |
1997 |
1996 |
Fee% |
interest/ |
installments |
final |
|
|
|
('000) |
(Rupees '000) |
per |
mark up |
outstanding |
repayment |
|
|
|
annum |
% |
|
|
|
|
|
| (a)
Banque Nationale deParis |
FRF |
266,696 |
1,332,674 |
489,452 |
8.60 |
7.35 |
20 |
May 2008 |
|
| (b)
Export Development Corporation |
USS |
30,000 |
763,885 |
169,922 |
9.38 |
7.35 |
20 |
May 2008 |
|
| (c)
Export Import Bank of the USA |
USS |
37,513 |
1,453,954 |
718,915 |
9.36 |
7.35 |
20 |
May 2008 |
|
| (d)
Kreditanstalt fur Wiederaufbau |
DM |
78,520 |
1,498,429 |
-- |
8.83 |
7.35 |
20 |
June 2008 |
|
| (e)
CDC Holdings |
|
UKZ |
20,000 |
1,191,497 |
1,191,497 |
8.15 |
11.00 |
14 |
November 2005 |
| (f)
Danish Export Credit Fund |
DM |
6,750 |
7,597 |
-- |
-- |
5.99 |
10 |
December 2003 |
| (g)
Habib Bank Limited |
|
RS |
700,000 |
700,000 |
-- |
-- |
19.71 |
20 |
March 2010 |
| (h)
ANZ Grindlays Bank Limited |
RS |
300,000 |
300,000 |
-- |
-- |
STFB+3%* |
8 |
April 2003 |
|
| (i)
Muslim Commercial Bank |
RS |
400,000 |
220,000 |
-- |
-- |
18.75 |
12 |
March 2005 |
| (j)
Pak Kuwait Investment Company |
RS |
320,000 |
185,107 |
-- |
-- |
19.70 |
16 |
November 2007 |
| (k)
Askari Commercial Bank Limited |
RS |
200,000 |
60,000 |
-- |
-- |
STFB+3%* |
10 |
June 2005 |
|
| (1)
A1-Faysal Investment Bank |
RS |
300,000 |
50,000 |
-- |
-- |
SBP discount |
10 |
December 2003 |
|
|
|
|
----------- |
----------- |
|
|
|
|
|
|
|
7,763,143 |
2,569,786 |
|
rate + 1% ** |
|
| Less:
Amount payable within twelve months |
|
| shown
as current maturity. |
|
257,447 |
-- |
|
|
|
----------- |
----------- |
|
|
|
7,505,696 |
2,569,786 |
|
|
========= |
========= |
|
|
|
|
| Loans
(a) to (d) represent buyers' credit facilities, secured by a guarantee issued
by a bank on behalf of a syndicate of banks and |
|
| financial
institutions. The bank guarantee is secured by first equitable mortgage
created on all immovable properties of the compa- |
|
| ny
and by way of hypothecation on movable properties of the company. The charge
ranks pari passu with the charges to be created |
|
| in
favour of other foreign and local lenders. |
|
|
| Loans
(e) and (g) to (1) are secured by first equitable mortgage created on all
immovable properties of the company and by way of |
|
| hypothecation
on movable properties of the company. The charge ranks pari passu with the
charges already created or to be creat- |
|
| ed
in favour of other foreign and local lenders. |
|
|
| Loan
(f) is secured by way of guarantee from Fauji Foundation. |
|
|
| In
respect of loans (a) to (e) Foreign Exchange Risk Insurance (FERI) cover has
been arranged from National Bank of |
|
| Pakistan. |
|
|
| *
Subject to minimum markup @ 18% per annum |
|
| **
Subject to minimum markup @ 18.25% per annum |
|
|
| 5.
CREDITORS, ACCRUED AND OTHER LIABILITIES |
|
|
|
|
1997 |
1996 |
|
|
|
(Rupees '000) |
|
| Creditors |
|
|
|
109,862 |
153,784 |
|
| Accrued
expenses |
|
|
524,487 |
220,028 |
|
| Interest
payable |
|
|
129,360 |
35,056 |
|
| Due
to associated company |
|
80,840 |
25,383 |
|
| Retention
money |
|
|
2,323 |
3,602 |
|
| Other
payables |
|
|
1,165 |
931 |
|
|
|
|
----------- |
----------- |
|
|
|
|
848,037 |
438,784 |
|
|
========= |
========= |
|
| 6.
CONTINGENCIES AND COMMITMENTS |
|
|
| a)
Contingencies: |
|
|
| i)
Indemnity bonds and undertakings given to |
|
| customs
authorities for the machinery imported |
|
| by
the Company for installation at Plantsite |
|
2,487,205 |
112,924 |
|
|
| ii)
The income tax authorities have raised income tax demands aggregating Rs
26.922 million on income |
|
| on
local currency bank deposits/unrealised exchange gain. Since the Company has
filed an appeal |
|
| against
these demands and is confident of a favourable outcome, no provision has been
made in the |
|
| accounts. |
|
|
| b)
Commitments in respect of: |
|
|
|
1997 |
1996 |
|
|
|
(Rupees '000) |
|
|
| i) Capital expenditure |
|
1,872,660 |
7,401,918 |
|
|
|
|
Year |
|
| ii)
Leased vehicles |
|
1998 |
2,076 |
-- |
|
|
|
1999 |
2,130 |
-- |
|
|
|
2000 |
1,993 |
-- |
|
|
|
2001 |
356 |
-- |
|
|
|
2002 |
344 |
-- |
|
|
|
2003 |
42 |
-- |
|
|
| 7.
FIXED ASSETS |
|
|
| 7.1
The following is a statement of operating assets |
|
|
|
|
|
C O S T |
|
D E P R E C I A T I O N |
Written down |
Annual rate |
|
|
As at |
Additions/ |
As at |
As at |
For the year/ |
As at |
value as at |
of |
|
|
|
January 1, |
(disposals) |
December 31, |
January 1, |
(on disposals) |
December 31, |
December 31, |
depreciation |
|
|
|
|
1997 |
|
1997 |
1997 |
|
1997 |
1997 |
% on cost |
|
|
|
|
|
(Rupees '000) |
|
|
| Leasehold
land |
203,028 |
10,211 |
213,239 |
12,791 |
4,635 |
17,426 |
195,813 |
2 to 4 |
|
|
|
|
|
|
| Vehicles |
|
20,705 |
6,879 |
26,786 |
5,799 |
5,357 |
10,997 |
15,789 |
20 |
|
|
|
|
(798) |
|
(159) |
|
|
|
| Furniture,
fixtures and |
|
|
|
| equipment |
|
25,917 |
5,895 |
31,573 |
6,152 |
4,546 |
10,649 |
20,924 |
10 to 15 |
|
|
|
|
(239) |
|
(49) |
|
|
|
| Computer
and ancillary |
|
|
|
| equipments |
|
3,182 |
2,489 |
5,671 |
1,685 |
1,643 |
3,328 |
2,343 |
33 |
