| JAPAN POWER GENERATION LIMITED |
|
|
|
|
|
|
| ANNUAL
REPORT 1997 |
|
|
|
| CONTENTS |
|
|
| COMPANY
INFORMATION |
|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
| DIRECTORS'
REPORT |
|
|
| AUDITORS'
REPORT |
|
|
| BALANCE
SHEET |
|
|
| CASH
FLOW STATEMENT |
|
|
| NOTES
TO THE ACCOUNTS |
|
| PATTERN
OF SHAREHOLDING |
|
|
|
| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
|
| MR.
ZAFAR MAHMOOD |
|
(Chief
Executive) |
|
| MR.
HASEEB KHAN |
|
| MR.
TAKASHI KABURAGI |
|
| MR.
SAITO YOSHIHIRO |
|
| MR.
AKHTAR ALl UPPAL |
|
| MR.
ASAD ALl UPPAL |
|
| MR.
FAISAL QAMMAR UPPAL |
|
| SHEIKH
NIZAR ALl |
|
| SHEIKH
NIZAZ ALl |
|
| SHEIKH
MAHMOOD ALl |
|
| MOHAMMAD
ALl |
|
| MS.
SAMINA ZAFAR |
|
|
| COMPANY
SECRETARY |
|
| SYED
ZAFAR HAlDER |
|
|
| AUDITORS |
|
| COOPERS
& LYBRAND |
|
| CHARTERED
ACCOUNTANTS |
|
| & |
|
| JAVAID
TARIQ & CO. |
|
| CHARTERED
ACCOUNTANTS |
|
|
| LEGAL
ADVISORS |
|
| WALKER
MARTINEAU & SALEEM SAHGAL |
|
| SYED
RASHID RAHIM |
|
|
| BANKERS |
|
| PRIME
COMMERCIAL BANK LTD. |
|
| ASKARI
COMMERCIAL BANK LTD. |
|
| ALLIED
BANK OF PAKISTAN LTD. |
|
| FAYSAL
BANK LTD. |
|
|
| REGISTERED
OFFICE |
|
| 26,
PESHAWAR BLOCK, |
|
| FORTRESS
STADIUM, |
|
| LAHORE
- CANTT. |
|
|
| PLANT
LOCATION |
|
| JIA
BAGGA RAILWAY STATION, |
|
| RAIWIND
ROAD, DISTRICT LAHORE. |
|
|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
|
| Notice
is hereby given that the 3rd Annual General Meeting of the members of Japan
Power Generation Limited will |
| be
held on Tuesday the 30th December 1997 at 11.00 A.M. at plant site located at
Khan-e-Nepal Road near Jia |
|
| Bagga
Railway Station, District Lahore to transact the following business: |
|
|
| 1.
To confirm the minutes of last Annual General Meeting held on December 30,
1996. |
|
|
|
|
| 2.
To receive, consider and adopt the audited accounts of the Company for the
financial year ended June 30, |
|
| 1997
together with the Auditors' and Directors' Reports thereon. |
|
|
|
|
| 3.
To appoint Auditors for the financial year, 1997-98 and fix their
remuneration. |
|
|
|
|
| 4.
To transact any other business that may be placed before the meeting with the
permission of the Chair. |
|
|
|
| Notes: |
|
|
| i)
The Share Transfer Books of the Company will remain closed from December 22,
1997 to December 30, 1997 |
|
| (both
days inclusive) |
|
|
|
|
| ii)
A member entitled to attend and vote at the above meeting may appoint another
person as proxy. Proxies, in |
|
| order
to be effective, must be received at 26-Peshawar Block, Fortress Stadium
Lahore Cantt., the registered |
|
| office
of the Company not later than forty-eight hours before the time of the
meeting and must be duly stamped, |
| signed
and witnessed |
|
|
| iiii)
Members are requested to immediately notify the change in address, if any. |
|
|
|
| DIRECTORS'
REPORT |
|
|
| Your
Directors feel immense pleasure in presenting the 3rd Annual Report and the
Audited Accounts for the year |
|
| ended
June 30, 1997. |
|
|
| CONSTRUCTION
PROGRESS |
|
|
| The
cumulative completion of the project is 85% at present the break up of which
is as under; |
|
|
| The
civil works of the power plant have been completed about 95%. The remaining
works comprising predominantly |
|
| plant
inside roads, drains and finishing are scheduled to be completed latest by
December 31,1997. |
|
|
| 85%
of the plant mechanical works have been completed. The mechanical erection
works remain to be completed |
|
| until
December 31, 1997 are Fire Fighting, 'lank Lorry Decanting, Tank Wagon
Decanting and Sludge Treatment |
|
| Facilities. |
|
|
| The
flushing work is in operation and trial run of generating sets is expected to
commence from January 15, 1998 in |
| four
steps each comprising 6 units of bank A, B, C & D respectively. |
|
|
| About
60% of electrical works have been completed. The remaining works like
Illumination, Wiring of Electrical |
|
| Room-2,
Control Room, Operator Interface Station and partially that of Grid Station
are scheduled to be completed |
| by
the end of December 1997. |
|
|
| REASONS
OF DELAYED COD |
|
|
| The
original Commercial Operation Date (COD) as per prospectus was October
31,1997. However the plant is now |
|
| scheduled
to be commissioned in January 1998. The main causes of delays in achieving
COD are briefly |
|
| summarized
as follows: |
|
|
| 1.
Delay in according the approval of Independent Engineer, in providing
Interconnection & Transmission Line |
|
| Facilities
as well as approving the Telecommunication Equipment by WPPO/WAPDA, to which
the COD is |
|
| actually
linked. |
|
|
| 2.
Delay in manufacturing and delivery of 4 number 132 KV 45/50 MVA power
transformers by Elprom |
|
| Bulgaria.
The EPC contractor Siemens placed order on the transformer supplier and L/C
was opened as far |
|
| back
as in October 1996. Due to unprecedented political and economic crisis in
Bulgaria, the transformer |
|
| supplier
could not maintain the committed delivery time of 7 to 9 months. First two of
the ordered 4 |
|
| transformers
are under custom clearance and expected to reach site around 10th of December
1997. The |
|
| remaining
two transformers have been manufactured and tested and are expected to be
shipped by |
|
| December
10, 1997. |
|
|
| 3.
The cost over-runs incurred on account of devaluation twice during the
currency of the project, increase in |
|
| EPC
contract price, predominantly in civil work and local procurement, demurrage
at Karachi port on |
|
| account
of incomplete and incorrect documentation by SGS and Cotecna and by Custom
authorities for |
|
| want
of exemption certificates from CBR in piecemeal although Implementation
Agreement signed between |
|
| JPGL
and GOP provides blanket coverage of exemption from custom duties and other
taxes for entire plant. |
|
|
|
|
| 4.
The unprecedented rains from 18th to 21st August 1996 and again in 1997 from
26th to 28th August in and |
|
| around
the vicinity of plant in Lahore, suspended the construction activities at
site for many days. |
|
|
| The
required Commercial Operation Date (COD) as per Power Purchase Agreement is
January 23, 1998. |
|
|
| STAFF |
|
|
| A
team of professionals has been formed for the successful and timely
implementation of the project. The team shall |
| further
strengthen itself by inducting more professionals at an appropriate time. |
|
|
| AUDITORS |
|
|
| Retiring
Auditors M/s Coopers & Lybrand, Chartered Accountants and Javaid Tariq
& Co., Chartered Accountants, |
|
| being
eligible offer themselves for re-appointment. |
|
|
| PATTERN
OF SHARE HOLDING |
|
|
| Statement
reflecting the pattern of share holding is attached to the Annual Report. |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of Japan Power Generation Limited as
at June 30, 1997 and the |
|
| related
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 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
and the cash flow statement, together with the notes forming 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 the cash flows for the year
then ended; and |
|
|
| d)
In our opinion, no Zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980, |
|
|
|
|
|
Coopers & Lybrand |
Javed Tariq & Co. |
|
|
Chartered Accountants |
Chartered Accountants |
|
| Lahore:
Dec 8, 1997 |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1997 |
|
|
|
|
|
1997 |
1996 |
|
|
|
Note |
Rupees |
Rupees |
|
| Fixed
capital expenditure |
|
|
| Fixed
assets |
|
3 |
41,133,710 |
22,627,520 |
|
| Capital
work in progress |
|
4 |
3,670,228,956 |
510,431,243 |
|
| Pre-operational
cost |
|
5 |
80,222,346 |
82,137,464 |
|
|
|
|
---------- |
---------- |
|
|
|
|
3,791,585,012 |
615,196,227 |
|
| Deferred
cost |
|
6 |
64,935,957 |
44,557,657 |
|
|
|
|
| Current
assets |
|
|
---------- |
---------- |
|
| Advances,
deposits, prepayments and other receivables
7 |
10,964,229 |
244,124 |
|
| Cash
and bank balances |
|
8 |
152,612,026 |
461,221,703 |
|
|
|
|
---------- |
---------- |
|
|
|
|
163,576,255 |
461,465,827 |
|
|
|
|
---------- |
---------- |
|
|
|
|
4,020,097,224 |
1,121,249,711 |
|
|
|
|
========== |
========== |
|
| Share
Capital |
|
|
|
| Authorized |
|
|
|
| 150,000,000
ordinary shares of Rs.10/- each |
|
1,500,000,000 |
1,500,000,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up |
|
|
|
| 133,200,000
(1996- 67,013,000) ordinary shares |
|
|
| of
Rs.10/- each fully paid in cash |
|
1,332,000,000 |
670,130,000 |
|
| Share
application money |
|
|
- |
450,488,200 |
|
| Long
term loan |
|
|
|
| Supplier's
credit |
|
9 |
2,641,186,730 |
- |
|
| Liabilities
against assets subject to finance lease |
10 |
4,907,573 |
- |
|
| Deferred
liabilities - Gratuity |
|
|
611,000 |
- |
|
|
|
|
| Current
liabilities |
|
|
|
---------- |
---------- |
|
| Current
portion of long term liabilities |
11 |
812,917 |
- |
|
| Creditors,
accrued and other liabilities |
12 |
40,579,004 |
631,511 |
|
|
|
|
---------- |
---------- |
|
|
|
|
41,391,921 |
631,511 |
|
| Contingencies
and commitments |
|
13 |
---------- |
---------- |
|
|
|
|
4,020,097,224 |
1,121,249,711 |
|
|
|
========== |
========== |
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30, 1997 |
|
|
|
|
|
1997 |
1996 |
|
|
|
Note |
Rupees |
Rupees |
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
| (Increase)/decrease
in current assets |
|
| Advances,
deposits, prepayments |
|
|
| and
other receivables |
|
(10,720,105) |
(231,201,502) |
|
|
|
|
| Increase/(decrease)
in current liabilities |
|
---------- |
---------- |
|
| Current
portion of long term liabilities |
|
812,917 |
- |
|
| Creditors,
accrued and other liabilities |
|
39,947,493 |
(564,296) |
|
|
|
|
---------- |
---------- |
|
|
|
30,040,305 |
(231,765,798) |
|
|
|
---------- |
---------- |
|
| Fixed
capital expenditure |
|
(534,591,055) |
(31,724,518) |
|
| Deferred
cost |
|
(20,348,300) |
(44,551,477) |
|
|
|
---------- |
---------- |
|
|
|
(554,939,355) |
(76,275,995) |
|
|
|
---------- |
---------- |
|
| Net
cash outflow from investing activities |
A |
(524,899,050) |
(308,041,793) |
|
|
|
|
---------- |
---------- |
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
|
|
---------- |
---------- |
|
| Share
capital |
|
661,870,000 |
669,130,000 |
|
| Short
term borrowings |
|
- |
(15,295,643) |
|
| Lease
finance liability |
|
4,907,573 |
- |
|
| Share
application money |
|
(450,488,200) |
68,787,148 |
|
|
|
|
---------- |
---------- |
|
| Net
cash inflow from financing activities |
B |
216,289,373 |
722,621,505 |
|
|
|
|
---------- |
---------- |
|
| Net
increase/(decrease) in cash and cash equivalents (A+B) |
(308,609,677) |
414,579,712 |
|
| Cash
and cash equivalents at the beginning of the year |
461,221,703 |
46,641,991 |
|
|
|
|
---------- |
---------- |
|
| Cash
and cash equivalents at the end of the year |
152,612,026 |
461,221,703 |
|
|
|
|
========== |
========== |
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 1997 |
|
|
| 1.
STATUS AND ACTIVITIES |
|
|
|
|
| Japan
Power Generation Limited is a Public Company, limited by shares, incorporated
on September 29, |
|
| 1994
under the Companies Ordinance, 1984 and its shares are quoted on Lahore and
Karachi Stock |
|
| Exchanges.
The principal business of the Company is to generate and supply of electric
power to WAPDA. |
|
| The
Company has not yet commenced its business operations, therefore, no profit
and loss account has |
|
| been
prepared. |
|
|
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
Accounting convention |
|
| These
accounts have been prepared under the historical cost convention. |
|
|
| 2.2
Staff retirement benefits |
|
|
| The
Company operates an unfunded gratuity scheme covering all its permanent
employees. |
|
| Provision
is made annually to cover the liability under the scheme. |
|
|
| 2.3
Taxation |
|
|
|
|
| The
Company's profit and gains from Power Generation are exempted from tax under
clause 176 |
|
| of
Part 1 of the Second Schedule to the Income Tax Ordinance, 1979. The Company
is also |
|
| exempt
from minimum tax on turnover under clause 20 of Part IV of the Second
Schedule of the |
|
| Income
Tax Ordinance, 1979. |
|
|
| 2.4
Fixed assets |
|
|
|
|
| All
fixed assets are stated at cost and no depreciation has been charged as yet.
Depreciation will |
|
| be
provided on commencement of the Company's commercial operations. |
|
|
| 2.5
Capital work in progress |
|
|
|
|
| All
costs/expenditure related to specific assets incurred during the project
implementation period |
|
| are
carried under this head including foreign exchange rate variances. These
costs will be |
|
| transferred
to specific assets as and when these assets are available for use. |
|
|
| 2.6
Pre-operational cost |
|
|
| All
costs/expenditure not directly related to specific assets incurred before the
commencement of |
|
| operational
activities are charged under this head. These will be allocated to building
and plant |
|
| and
machinery at the time of commencement of commercial operations. |
|
|
| 2.7
Deferred cost |
|
|
|
|
| Deferred
cost consists of expenses incurred in connection with the Company's formation
and public |
|
| issue
of shares including brokerage and commission etc. These will be amortized
over a period of ~ |
| maximum
five years starting from the year of commercial operations. |
|
|
| 2.8
Foreign currency translations |
|
|
| Foreign
currency transactions are converted into Pak Rupees at the rates prevailing
on the date of |
|
| transaction.
,Since the Company has not yet commenced commercial operations, exchange
gains |
|
| and
losses on conversion are accounted for in pre-operational cost. Exchange
differences on |
|
| translation
of foreign currency loan utilised for the acquisition of fixed assets are
capitalised and |
|
| incorporated
in the cost of such assets. |
|
|
| 2.9
Accounting for leases |
|
|
| The
Company accounts for assets acquired under finance lease by recording the
assets and |
|
| related
liability. The amounts are determined on the basis of discounted value of
total minimum |
|
| lease
payments and residual value of the assets at the end of the lease period in a
manner so as |
|
| to
provide a constant periodic charge on the outstanding liabilities. Financial
charges are allocated |
|
| to
Pre-operational costs on a manner so as to provide a constant periodic rate
of charge on the |
|
| outstanding
liability No depreciation has been charged on leased assets as the Company
has not |
|
| yet
commenced its operational activities |
|
|
|
|
1997 |
1996 |
|
| 3.
FIXER ASSETS |
|
Rupees |
Rupees |
|
|
|
|
|
|
| Freehold
land |
|
16,046,645 |
16,046,645 |
|
| Furniture
& fixture |
|
1,927,884 |
387,360 |
|
| Office
equipment |
|
1,025,905 |
96,900 |
|
| Tubewell
at site |
|
723,760 |
- |
|
| Railway
sidings |
|
6,650,000 |
- |
|
| Motor
vehicles |
|
6,940,516 |
5,321,615 |
|
|
|
|
| Leasehold |
|
|
|
|
| Office
premises |
|
775,000 |
775,000 |
|
| Vehicles |
|
6,044,000 |
- |
|
|
|
---------- |
---------- |
|
|
|
41,133,710 |
22,627,520 |
|
|
|
========== |
========== |
|
| 4.
CAPITAL WORK IN PROGRESS |
|
|
|
|
|
|
| Building |
|
|
|
| Civil
works |
|
|
|
179,527,076 |
15,868,000 |
|
| Advances
to contractors |
|
|
4,526,742 |
33.710,000 |
|
| Machinery |
|
|
|
3,386,237,949 |
- |
|
| Advances
to suppliers |
|
|
- |
400,696,498 |
|
| Advances
to contractors |
|
|
34,112,776 |
- |
|
| Letters
of credit |
|
|
|
65,824,413 |
60,156,745 |
|
|
|
---------- |
---------- |
|
|
|
|
3,670,228,956 |
510,431,243 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
1997 |
1996 |
|
| 5.
PRE-OPERATIONAL COSTS |
|
|
Rupees |
Rupees |
|
|
|
|
|
|
|
|
| Directors'
remuneration |
|
|
1,140,000 |
1,140,000 |
|
| Travellin9
and conveyance |
|
|
11,421,484 |
6,698,075 |
|
| Staff
salaries and benefits |
|
|
9,536,909 |
777,116 |
|
| Rent,
rates and taxes |
|
|
978,425 |
48,925 |
|
| Posta9e
and tele9rams |
|
|
151,403 |
36,649 |
|
| Telephone
and telex |
|
|
|
2,600,031 |
912,528 |
|
| Printing
and stationery |
|
|
843,522 |
392,491 |
|
| Newspapers
and periodicals |
|
|
17,893 |
6,515 |
|
| Legal,
professional and consultancy |
|
25,098,715 |
14,252,178 |
|
| Auditors'
remuneration |
|
(Note 5.1) |
370,700 |
245,700 |
|
| Pee
and subscription |
|
|
|
60,565 |
37,745 |
|
| insurance |
|
|
|
|
569,072 |
51,595 |
|
| Vehicle
running |
|
|
|
957,322 |
184,618 |
|
| Entertainment |
|
|
|
873,423 |
377 501 |
|
| Charity
and donation |
|
|
(Note 5.2) |
171,784 |
151,086 |
|
| Electricity
and utilities |
|
|
361,466 |
89,677 |
|
| Repair
and maintenance |
|
|
678,778 |
23,482 |
|
| Publicity
and advedisement |
|
|
573,030 |
335,990 |
|
| Bank
charges and excise duty |
|
|
357,064 |
331,256 |
|
| financial
charges |
|
|
|
4,210,934 |
4,210,934 |
|
| Guarantee
commission |
|
|
|
4,476,046 |
2,465,124 |
|
| Bank
fees and other charges |
|
|
68,955,630 |
61,987,660 |
|
| Lease
finance |
|
|
|
412,636 |
- |
|
| Miscellaneous |
|
|
|
355,659 |
248,617 |
|
|
|
|
---------- |
---------- |
|
|
|
|
135,172,491 |
95,005,462 |
|
|
|
|
---------- |
---------- |
|
| Less:
Interest received on saving bank accounts |
36,248,077 |
3,033,367 |
|
| Exchange
gain |
|
|
17,468,241 |
9,834,631 |
|
| Scrap
sale |
|
|
1,233,827 |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
54,950,145 |
12,867,998 |
|
|
|
|
---------- |
---------- |
|
|
|
|
80,222,346 |
82,137,464 |
|
|
|
|
========== |
========== |
|
| 5.1
Auditors' remuneration |
|
|
|
1997 |
|
1996 |
|
|
|
|
|
|
|
Coopers |
Javaid Tariq |
Coopers |
Javaid total |
|
|
|
& Lybrand |
& Co. |
& Lybrand |
& Co. |
|
|
|
Rupees |
Rupees |
Rupees |
Rupees |
|
|
|
|
| Audit fee |
|
75,000 |
50,000 |
110,000 |
79,200 |
|
| Out
of pocket expenses |
- |
- |
1,500 |
- |
|
|
|
---------- |
---------- |
---------- |
---------- |
|
|
75,000 |
50,000 |
111,500 |
79,200 |
|
|
========== |
========== |
========== |
========== |
|
|
|
| 5.2
None of the directors or their spouses have any interest in the donations
paid. |
|
|
|
|
1997 |
1996 |
|
| 6.
DEFERRED COST |
|
Rupees |
Rupees |
|
|
|
|
| Preliminary
expenses |
|
|
|
2,285,540 |
2,285,540 |
|
| Commission
& other charges on Int'l. placement |
41,483,329 |
33,361,891 |
|
| Public
issue expenses |
|
|
12,012,320 |
4,075,699 |
|
| Underwriting
commission |
|
|
9,154,768 |
4,864,527 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
64,935,957 |
44,587,657 |
|
|
|
========== |
========== |
|
| 7.
ADVANCES, DEPOSITS, PREPAYMENTS |
|
|
| AND
OTHER RECEIVABLES |
|
|
|
|
|
|
| Advances: |
|
|
|
| Suppliers |
|
3,598,994 |
- |
|
| Pakistan
Railways |
|
- |
154,226 |
|
| Employees |
|
3,615,069 |
14,000 |
|
| Others |
|
315,000 |
- |
|
|
|
|
|
| Deposits: |
|
855,632 |
31,356 |
|
| Prepayments: |
|
|
|
| Insurance |
|
277,754 |
41,542 |
|
| Other
receivables: |
|
|
|
| Octroi
refundable |
|
2,060,346 |
- |
|
| Income
tax |
|
241,434 |
3,000 |
|
|
|
---------- |
---------- |
|
|
|
10,964,229 |
244,124 |
|
|
|
========== |
========== |
|
|
|
|
