| Hoechst Marion Roussel (Pakistan) Limited |
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|
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|
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| (Formerly
Hoechst Pakistan Limited) |
|
| ANNUAL
REPORT 1997 |
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|
|
| Contents |
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| Notice
of Meeting |
|
| Company Information |
|
| Ten-Year
Summary of Statistics |
|
| Directors'
Report |
|
| Auditors'
Report |
|
| Balance
Sheet |
|
| Profit
and Loss Account |
|
| Cash
Flow Statement |
|
| Notes
to the Accounts |
|
| Pattern
of Shareholding |
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|
|
|
|
|
|
| Notice
of the Meeting |
|
|
| Notice
is hereby given that the Thirtieth Annual General Meeting of the Company will
be held on |
|
| Wednesday,
1st April, 1998 at 10:00 hours in the auditorium of the Finance and Trade
Centre, |
|
| FTC
Building, Sharea-Faisal Karachi, to transact the following business: |
|
|
| 1.
To confirm the minutes of the last Annual General Meeting. |
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|
|
|
| 2.
To receive and adopt the Balance Sheet and Profit & Loss Account for the
year ended |
|
| December
31, 1997 together with the Directors' and Auditors' reports thereon. |
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|
|
| 3.
To approve the dividend for the year @ Rs. 2.00 per share, as recommended by
the |
|
| Directors. |
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|
|
|
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| 4.
To appoint Auditors for the year ending December 31, 1998 and to fix their
remuneration. |
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| The
retiring Auditors, M/s. A. F. Ferguson & Co., being eligible offer
themselves for |
|
| re-appointment. |
|
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| Notes: |
|
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| 1.
The Share Transfer Books of the Company shall remain closed from March 19,
1998 |
|
| to
April 1, 1998 (both days inclusive). |
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|
|
| 2.
A member entitled to attend and vote at the above meeting may appoint a Proxy
to attend |
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| and
vote on his behalf. No person shall be appointed as Proxy who is not a member
of the |
|
| Company
qualified to vote except that a Corporation being a member may appoint as
Proxy |
|
| a
person who is not a member. The completed Proxy Form must be deposited at the |
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| Registered
Office of the Company not less than 48 hours before the time for holding the |
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| meeting. |
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| COMPANY
INFORMATION |
|
|
| Board
of Directors |
Syed Babar Ali |
|
Chairman |
|
|
|
M. Tariq Umar |
|
Managing Director |
|
|
|
Pir Ali Gohar |
|
(Alternate Arshad Ali
Gohar) |
|
|
|
Pascal Soriot |
|
(Alternate A. R. Tahir) |
|
|
|
Philippe Rigolot |
|
|
|
Syed Hyder Ali |
|
|
|
Stephen Heitmann |
|
|
|
M. Z. Moin Mohajir |
|
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| Company
Secretary |
M.Z. Moin Mohajir |
|
| Auditors |
|
A.F. Ferguson & Co. |
|
| Legal
Advisors |
Fatehali W. Vellani &
Company |
|
|
|
Azfar & Azfar |
|
|
|
Orr. Dignam & Co. |
|
|
|
Rizvi, Isa & Co. |
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|
|
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| Bankers |
|
ABN AMRO Bank |
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|
|
American Express Bank
Ltd. |
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|
|
ANZ Grindlays Bank plc. |
|
|
|
Bank of America NT &
SA |
|
|
|
Bank of Tokyo-Mitsubishi,
Ltd. |
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|
|
Citibank N. A. |
|
|
|
Credit Agricole Indosuez |
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|
|
Deutsche Bank |
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|
|
Emirates Bank
International |
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|
Habib Bank Limited |
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|
Honkong & Shanghai
Banking Corporation Ltd. |
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|
MashreqBank |
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|
Muslim Commercial Bank
Ltd. |
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|
National Bank of Pakistan |
|
|
|
Societe Generale - The
French & International Bank |
|
|
|
Standard Chartered Bank |
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|
|
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| Registered
Office |
Hoechst House, |
|
|
|
Plot No. 23, Sector No.
22, |
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|
Korangi Industrial Area, |
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|
Karachi-74900. |
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| Postal
Address |
P.O. Box No. 4962, |
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|
Karachi-74000. |
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|
|
| Registrars
& Share |
Ferguson Associates
(Pvt.) Ltd. |
|
| Transfer
Office |
State Life Building No.
l-A, |
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|
I. I. Chundrigar Road, |
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|
Karachi-74000. |
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| TEN-YEAR
SUMMARY OF STATISTICS |
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|
(Rupees in thousands) |
|
|
|
|
1988 |
1989 |
1990 |
1991 |
1992 |
1993 |
1994 |
1995 |
1996 |
1997 |
| Operating assets |
66,352 |
97,656 |
94,603 |
116,275 |
141,409 |
157,538 |
188,010 |
355,691 |
311,715 |
284,104 |
| Capital
work-in progress |
31,955 |
3,624 |
9,492 |
29,388 |
25,888 |
45,222 |
183,058 |
36,012 |
105,163 |
1,638 |
| Net
current and other assets |
(21,104) |
721 |
18,789 |
49,564 |
48,514 |
51,015 |
253,213 |
129,657 |
(16,737) |
117,112 |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
| Total
assets employed |
|
77,203 |
102,001 |
122,884 |
195,227 |
215,811 |
253,775 |
624,281 |
521,360 |
400,141 |
402,854 |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
| Ordinary
capital |
|
57,873 |
57,873 |
57,873 |
57,873 |
69,448 |
69,448 |
69,448 |
69,448 |
69,448 |
69,448 |
| Reserves
/ (Accumulated loss) |
(6,007) |
17,569 |
38,749 |
80,631 |
98,633 |
151,775 |
201,584 |
212,125 |
204,949 |
221,752 |
| Redeemable
capital |
|
9,o00 |
9,000 |
7,200 |
31,650 |
22,350 |
13,050 |
240,000 |
136,667 |
49,333 |
62,000 |
| Long
term & deferred liabilities |
16,337 |
17,559 |
19,062 |
25,073 |
25,380 |
19,502 |
113,249 |
103,120 |
76,411 |
49,654 |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
| Total
funds employed |
|
77,203 |
102,001 |
122,884 |
195,227 |
215,811 |
253,775 |
624,281 |
521,360 |
400,141 |
402,854 |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
| Net
turnover |
|
513,183 |
736,195 |
887,468 |
1,112,096 |
1,272,943 |
1,308,682 |
1,532,542 |
1,960,288 |
1,422,957 |
1,409,552 |
| Indenting
commission |
|
11,145 |
10,771 |
12,219 |
16,196 |
15,619 |
18,800 |
18,585 |
17,919 |
18,293 |
16,135 |
| Profit
/ (loss) before taxation |
(41,477) |
40,563 |
70,859 |
77,526 |
80,898 |
82,182 |
72,063 |
40,170 |
32,743 |
61,808 |
| %
of net sales |
|
(8.1) |
5.50 |
8.00 |
7.00 |
6.40 |
6.30 |
4.70 |
2.00 |
2.30 |
4.40 |
| %
of average assets employed |
(43.8) |
45.30 |
63.00 |
48.70 |
39.40 |
35.00 |
16.40 |
7.00 |
7.10 |
15.40 |
| Profit
/ (loss) after taxation |
(41,726) |
29,363 |
32,755 |
41,882 |
43,466 |
53,142 |
63,699 |
24,431 |
(7,176) |
30,692 |
| Cash
dividend - amount |
|
- |
5,787 |
11,575 |
- |
13,889 |
- |
13,890 |
13,890 |
- |
13,889 |
| Cash
dividend - % |
|
- |
10 |
2O |
- |
2O |
- |
2O |
2O |
- |
2O |
| Bonus
issue - amount |
|
- |
- |
- |
11,575 |
- |
- |
- |
- |
- |
- |
| Bonus
issue - % |
|
- |
- |
- |
20 |
- |
- |
- |
- |
- |
- |
| Earnings
/ (losses) per share Rs. |
(7.16) |
7.00 |
12.24 |
13.39 |
11.64 |
11.80 |
10.30 |
5.78 |
4.70 |
8.90 |
| Number
of permanent |
|
|
|
| employees
at year end |
|
865 |
877 |
906 |
923 |
953 |
941 |
954 |
1,007 |
882 |
626 |
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|
|
| DIRECTORS'
REPORT |
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|
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| We
are pleased to present |
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|
|
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| the
Annual Report of your |
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|
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| company
for the year ended |
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|
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| December
31, 1997. As per the |
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|
|
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| approvals
taken in the last |
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|
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| Annual
General Meeting, the |
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|
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|
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| company
sold the assets |
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|
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| pertaining
to the Specialty |
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| Chemicals
Division to Clariant |
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| Pakistan
Limited on July 1, |
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|
|
| net
turnover for 1997 |
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|
|
|
|
| transaction are reported in the |
1997. The details of the |
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|
|
|
| notes
to the Accounts. The |
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|
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| name
of the company was also |
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|
|
|
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| changed
from the above date |
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|
|
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| and
towards the end of 1997 |
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|
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| the
major shareholder, Messrs |
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|
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| Hoechst
Aktiengesellschaft sold |
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|
|
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| its
50.1% stake in your |
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|
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|
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| company
to Hoechst Marion |
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|
|
| Roussel
Aktiengesellschaft, the |
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|
|
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| pharmaceutical
company of |
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|
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| Hoechst.
The core business of |
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|
|
|
|
| your
company is now the |
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|
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| manufacture, sale
and |
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|
|
|
| distribution
of pharmaceuticals. |
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| All
other businesses, except the |
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|
|
|
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| mainly
indent business of dyes, |
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|
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|
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| have
been discontinued. The |
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|
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| dyes
business will be phased |
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|
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| out
during the first half of 1998. |
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| The
net sales for the year were |
|
|
|
|
|
| Rs.
1.409 billion. The marginal |
|
|
|
|
|
| decrease
as compared to last |
|
|
|
|
|
| year
is due to the fact that the |
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|
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|
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| Specialty
Chemicals and other |
|
|
|
|
|
| businesses
were discontinued |
|
|
|
|
|
| with
effect from July 1, 1997, as |
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|
|
|
|
| mentioned
earlier. Several |
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|
|
|
|
| internal
and external measures |
|
|
|
|
|
| were
taken to improve |
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|
|
|
|
|
| operating
results. These |
|
|
|
|
|
| included
streamlining and cost |
|
|
|
|
|
| reduction
and a more market |
|
|
|
| oriented
approach, but the |
|
|
|
| continuing
adverse economic |
|
|
|
| conditions
specially the falling |
|
|
|
| parity
of the Pak rupee against |
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|
|
| the
major currencies and price |
|
|
|
| controls
had a negative effect |
|
|
|
| on
operational profitability. |
|
|
|
| However,
the gain on |
|
|
|
|
| extraordinary
items allow us to |
|
|
|
| report
a profit before tax of Rs. |
|
|
|
|
|
| 61.8
million as against Rs. 32.7 |
|
|
|
|
|
| million
last year. |
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|
| PHARMACEUTICALS |
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| The
net turnover for 1997 |
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|
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|
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| shows
an increase of 13% |
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|
|
|
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| over
last year despite the |
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|
|
| continuing
and ever increasing |
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| challenge
from the generic |
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| companies.
The magnitude of |
|
| the
strong competition from the |
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| generic
companies can be |
|
| gauged
from the fact that there |
|
| are
now over 60 competitors of |
|
| one
of our major products |
|
| TarividŽ
and these are being |
|
| offered
at prices which are in |
|
| some
cases less than 25% of |
|
| our
product's maximum retail |
|
| price. |
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|
|
|
|
|
|
| During
the year we successfully |
|
| launched
Ruild-DŽ, an |
|
|
| antibiotic,
and plan to launch 6 |
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| more
products in 1998. This |
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| would
be a significant addition |
|
| to
our range of products. |
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|
|
|
|
| The
government did not grant |
|
| any
price increase during the |
|
| year
despite a clear |
|
|
| understanding
in this respect |
|
| between
the government and |
|
| the
pharma Industry. The |
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| continuing
devaluation of the |
|
| Pak
rupee increased material |
|
| import
costs and other cost |
|
| factors
also went up due to |
|
| inflation.
The cost increase |
|
| combined
with the static selling |
|
| prices
resulted in an adverse |
|
| effect
on profitability. However, |
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| strong
financial support from |
|
| our
major shareholder |
|
| significantly
helped in improving |
|
| the
situation. |
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|
|
| CHEMICALS |
|
|
|
| The
net sales are 43 % |
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| below
the previous year |
|
| due
to the discontinuation of |
|
| this
business from July 1, 1997 |
|
| and
the sale of the Specialty |
|
| Chemicals
assets to Clariant |
|
| Pakistan
Limited on that date. |
|
| The
six months operations |
|
| resulted
in a loss for the |
|
| company
after accounting for |
|
| financing
and other costs. |
|
|
|
| INDENTING |
|
|
|
| Whilst
the indenting |
|
| business
of Dyes |
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| continued
throughout the year |
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| and
in fact increased by 34% |
|
| over
last year, the other |
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| indenting
business was |
|
| stopped
with effect from July 1, |
|
| 1997.
This explains the |
|
| reduction
in the indenting |
|
| commission. |
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|
|
| FINANCE
& ACCOUNTS |
|
|
|
(Rs.000) |
|
|
|
|
|
| Loss
for the year before extra- |
|
|
|
|
|
|
|
| ordinary
items and taxation |
|
(25,740) |
|
| Profit
from extra-ordinary items |
|
87,548 |
|
|
|
---------- |
|
| Profit
before taxation |
|
|
61,808 |
|
| Taxation' |
|
|
|
|
| Current
- for the year |
|
|
32,600 |
|
| Deferred-
for the year |
|
|
(1,484) |
|
|
|
---------- |
|
|
|
31,116 |
|
|
|
---------- |
|
| Profit
after taxation |
|
|
30,692 |
|
| Unappropriated
loss brought forward |
|
(6,551) |
|
|
|
---------- |
|
|
|
24,141 |
|
| Appropriations:' |
|
|
|
|
|
|
|
|
| Proposed
dividend @ 20% |
|
|
13,889 |
|
| Transfer
to General Reserve |
|
10,000 |
|
|
|
---------- |
|
|
|
23,889 |
|
|
|
---------- |
|
| Unappropriated
profit carried forward |
252 |
|
|
|
========== |
|
|
|
|
| The
taxation figure is high |
|
|
|
|
|
| due
to the application of |
|
|
|
|
|
| section
80c of the Income-tax |
|
|
|
|
|
| Ordinance
whereby withholding |
|
|
|
|
|
| taxes
on import and sale of |
|
|
|
|
|
| finished
goods are considered |
|
|
|
|
|
| as
tax liability of the company. |
|
|
|
|
|
|
|
|
|
|
|
|
| The
Directors are pleased to |
|
|
|
|
|
| recommend
a dividend of 20% |
|
|
|
|
|
| i.e.
Rs. 2/= per share. |
|
|
|
|
|
|
|
|
|
|
|
|
| The
various accounting ratios |
|
|
|
|
|
| show
a marked improvement |
|
|
|
|
|
| and
we are quite happy with |
|
|
|
|
|
| the
overall financial situation |
|
|
|
|
|
| and
hope to improve it further |
|
|
|
|
|
| due
to improved management |
|
|
|
|
|
|
|
| of
resources. |
|
|
|
|
|
|
|
|
|
|
|
| HUMAN RESOURCES |
|
|
|
|
|
|
|
|
|
|
|
|
| The
total number of |
|
|
|
|
|
| employees
at the end of |
|
|
|
|
|
| 1997
went down to 626 from |
|
|
|
|
| he
company is a subsidiary |
|
|
|
|
|
| due
to the transfer of the |
|
|
|
|
|
| Specialty
Chemicals division |
|
|
|
|
|
|
|
| employees
to Clariant Pakistan |
|
|
|
|
|
| Limited
and the retirement of |
|
|
|
|
|
| voluntary
retirement scheme of |
|
|
|
|
|
| the
company. |
|
|
|
|
|
|
|
|
|
|
|
| SAFETY
& ENVIRONMENT |
|
|
|
|
|
|
|
|
|
|
|
| Strong
emphasis on the |
|
|
|
|
|
| safety
aspects continued |
|
|
|
|
|
| to
produce positive results. |
|
|
|
|
| Whilst
no major accident was |
|
|
|
|
| reported
during the year, the |
|
|
|
|
|
| incidence
of minor accidents |
|
|
|
|
| was
also insignificant. |
|
|
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|
|
|
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|
| FUTURE
OUTLOOK |
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|
|
| The
restructured company, |
|
|
|
|
|
| focusing
only on the |
|
|
|
|
|
| pharmaceutical
business offers |
|
|
|
|
|
| exciting
prospects. The new |
|
|
|
|
|
| products
being launched in |
|
|
|
|
|
| 1998
have a lot of potential. |
|
|
|
|
|
| The
management has adopted |
|
|
|
|
|
| regular
streamlining and cost |
|
|
|
|
|
| reduction
exercises as one of |
|
|
|
|
|
| it's
major policies. |
|
|
|
|
|
|
|
|
|
|
|
| On
the other hand, the |
|
|
|
|
|
|
| pharmaceutical
industry |
|
|
|
|
|
| continues
to be dependent on |
|
|
|
| the
government in respect of |
|
|
|
| the
single biggest factor which |
|
|
|
|
|
| all
business people would like |
|
|
|
|
|
| to
decide on their own - we are |
|
|
|
|
|
| referring
to the continuing |
|
| controls
on the pharmaceutical |
|
| prices
by the government. This |
|
| means
that we are unable to |
|
| react
on our own to major |
|
| adverse
impacts like the |
|
| continued
devaluation of the |
|
| Pak
rupee, other inflationary |
|
| cost
increases etc. We are very |
|
| hopeful
that the price increase |
|
| approval
which was due in |
|
| November
1997 will be given |
|
| shortly. |
|
|
|
|
|
|
|
| DIRECTORS |
|
|
|
|
|
|
| During
the year under |
|
|
| review,
Mr. M. U. Kleinhenz |
|
| was
transferred to Clariant |
|
| International
and therefore left |
|
| the
company and consequently |
|
| resigned
from the Board and |
|
| as
Managing Director. His |
|
| position
as Managing Director |
|
| was
taken over by Mr. M. Tariq |
|
| Umar,
Board Member, who |
|
|
| was
heading the Pharma |
|
|
| Division.
Mr. K. M. Aminullah |
|
| also
resigned from the Board |
|
| after
a long and meritorious |
|
| association
with the company. |
|
|
|
|
| The
third resignation was of Mr. |
|
| A.
J. A. Broekman, who |
|
|
| resigned
due to transfer to |
|
| another
Hoechst subsidiary. |
|
| The
Board nominated Mr. |
|
|
| Philippe
Rigolot, Mr. Stephen |
|
| Heitmann and Mr. M. Z. Moin |
|
| Mohajir
to fill the vacancies |
|
| created
by the above |
|
|
| resignations.
Dr. B. Hofmann |
|
| also
resigned at the beginning |
|
| of
1998, due to a new |
|
|
| assignment
and his position |
|
| has
been taken over by Mr. |
|
| Pascal
Soriot. We wish to |
|
| place
our thanks to all the |
