| Pakistan Cables Limited |
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| ANNUAL
REPORT 1996-97 |
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| CONTENTS |
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| Company Information |
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| Notice of Meeting |
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|
| Highlights |
|
|
|
| Ten-Year Review |
|
|
| Chairman's Review |
|
|
| Report of the Directors |
|
|
| Pattern of Shareholdings |
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|
| Graphic Illustrations |
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| Auditors' Report to the Members |
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| Balance Sheet |
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|
| Profit and Loss Account |
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|
| Cash Flow Statement |
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|
| Notes to and Forming Part
of the Accounts |
|
|
| COMPANY
INFORMATION |
|
|
|
| BOARD
OF DIRECTORS |
|
|
| Amir
Sultan Chinoy (Chairman) |
|
| Mohammad
Hanif Adamjee |
|
| Mustapha
A. Chinoy |
|
| Razi-ur-Rahman
Khan |
|
| Sadruddin
I. Saleh |
|
| Haroun
Rashid |
|
| Abdul
Rauf Malik |
|
| Towfiq
H. Chinoy |
|
| Shahpur
Channah |
|
| Kamal
A. Chinoy (Chief Executive) |
|
|
| COMPANY
SECRETARY |
|
| Asian
Sadruddin |
|
|
| AUDITORS |
|
| A.F.
Ferguson & Co. |
|
| Chartered
Accountants |
|
|
| LEGAL
ADVISERS |
|
| Orr.
Dignam & Co. |
|
|
| BANKERS |
|
| ANZ
Grindlays Bank |
|
| Bank
of America N.T. & S.A. |
|
| Credit
Agricole Indosuez, The Global French Bank |
|
| Deutsche
Bank |
|
| Hongkong
and Shanghai Banking Corporation |
|
| Muslim
Commercial Bank Limited |
|
| Oman
International Bank S.A.O.G. |
|
| Societe
Generale, The French and International Bank |
|
| Standard
Chartered Bank |
|
|
| Registered
Office, Factory and Marketing Office |
|
| B/21
Sindh Industrial Trading Estates |
|
| Manghopir
Road, P.O. Box 5050 Karachi-75700 |
|
| Telephone
Nos: 2561170-5, Telex: 29132 PCL PK, Fax: 92-21-2564614 |
|
|
| Regional
Office |
|
|
| Lahore |
|
Co-operative Insurance
Building, Shahra-e-Quaid-e-Azam |
|
|
Telephone Nos: 7355783,
7120790 - 91, 353520, Fax: 7355480 |
|
| Branch
Offices |
|
| Multan |
|
Shershah Road, Telephone
No, 33132, |
|
| Rawalpindi |
|
445-A, Adamjee Street,
Telephone No, 568895, Fax: 051-512797 |
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|
|
| NOTICE OF ANNUAL GENERAL MEETING |
|
|
| NOTICE
IS HEREBY GIVEN THAT the Forty-fourth Annual General Meeting of the
shareholders |
|
| of
Pakistan Cables Limited will be held at 11.00 a.m. on Thursday the 27th
November, 1997 |
|
| at
the Council Hall of the Overseas Investors Chamber of Commerce and Industry,
Chamber |
|
| of
Commerce Building, Talpur Road, Karachi, to transact the following business: |
|
|
| Ordinary
Business |
|
| 1.
To receive and consider the Statement of Accounts for the year ended June 30, |
|
| 1997
together with the Reports of the Directors and Auditors thereon. |
|
|
| 2.
To approve the payment of Dividend as recommended by the Directors. (The
Directors |
|
| have
recommended a final dividend of 25% in addition to an interim dividend of |
|
| 10%
which has already been paid to the shareholders). |
|
|
| 3.
To appoint Auditors for the ensuing year and to fix their remuneration
(Messrs. A. |
|
| F.
Ferguson & Co. Chartered Accountants, retire, and being eligible, have
offered |
|
| themselves
for re-appointment). |
|
|
| 4.
To transact any other business which may legally be transacted at an Annual
General |
|
| Meeting. |
|
|
| NOTES: |
|
| 1.
The Shares Transfer Books of the Company will remain closed from 14th
November, |
|
| 1997
to 27th November, 1997 (Both days inclusive). No transfer will be accepted |
|
| for
registration during this period. |
|
|
| 2.
A member entitled to attend and vote at this Meeting is entitled to appoint a |
|
| proxy
to attend and vote instead of him. A proxy need not be a member of the |
|
| Company. |
|
|
| 3.
The instrument appointing the proxy and the Power of Attorney or other
authority |
|
| under
which it is signed, or a notarially certified copy thereof, must be lodged |
|
| at
the Company's Registered Office not later than 48 hours before the time of |
|
| the Meeting. |
|
|
| HIGHLIGHTS |
|
|
|
|
Eighteen |
|
|
Year |
months |
|
|
ended |
ended |
|
|
June 30, |
June 30, |
|
|
1997 |
1996 |
|
|
Rs. Million |
Rs, Million |
|
|
| Sales |
|
638.80 |
964.65 |
|
| Profit
after tax |
|
13.15 |
19.73 |
|
| Dividend |
|
10.93 |
14.83 |
|
| Net
assets employed |
|
152.47 |
159.62 |
|
| Shareholders'
fund |
|
114.27 |
112.04 |
|
| Net
earning per share |
|
Rs. 4.21 |
632 |
|
| Net earning per rupee sales |
Rs. 0.02 |
0.02 |
|
|
| TEN-YEAR
REVIEW |
|
|
|
1996.97 |
* 1995-96 |
1994 |
1993 |
1992 |
1991 |
1990 |
1989 |
1988 |
1987 |
|
Rs. |
Rs, |
Rs, |
Rs, |
Rs, |
Rs, |
Rs, |
Rs, |
Rs, |
Rs, |
|
Million |
Million |
Million |
Million |
Million |
Million |
Million |
Million |
Million |
Million |
|
|
|
| Sales |
|
638.8 |
984,652 |
438,239 |
380,362 |
302,149 |
346,808 |
360,201 |
320,656 |
197,001 |
196,389 |
| Profit
after tax |
|
13.15 |
19,733 |
9,157 |
7,868 |
4,173 |
8,331 |
16,557 |
14,197 |
9,443 |
17,073 |
| Dividend |
|
10.93 |
14,829 |
8,585 |
7,805 |
2,178 |
8,580 |
8,580 |
7,920 |
3,960 |
6,600 |
| Bonus
Issue |
|
- |
- |
- |
- |
2,178 |
2,640 |
- |
- |
- |
- |
|
|
| Capital
expenditure |
|
6.57 |
54,762 |
3,145 |
0,741 |
1,142 |
1,376 |
2,096 |
17,214 |
70,270 |
6,298 |
| Fixed
assets at cost |
|
246.532 |
244,126 |
179,055 |
175,979 |
175,420 |
180,772 |
180,383 |
179,569 |
162,583 |
94,794 |
| Current
assets less |
|
|
| current
liabilities |
|
37.36 |
27,687 |
41,609 |
48,633 |
61,234 |
55,085 |
61,849 |
54,677 |
59,393 |
50,895 |
| Current
Assets: |
|
|
| Current
Liabilities |
|
1.l:l |
1.1:1 |
1.2:1 |
1.3:1 |
1.4:1 |
1.4:1 |
1.4:1 |
1.5:1 |
1.7:1 |
1.8:1 |
|
|
| Shareholders'
funds |
|
|
| Issued
capital |
|
31.218 |
31,218 |
31,218 |
31,218 |
29,040 |
26,400 |
26,400 |
26,400 |
26,400 |
26,400 |
| Reserve
& retained |
|
|
| earnings |
|
83.05 |
80.82 |
75,919 |
75,347 |
77,462 |
78,107 |
78,356 |
70,379 |
64,102 |
58,619 |
| Total
Shareholders" fund |
|
114.27 |
112,041 |
107,137 |
106,565 |
106,502 |
104,507 |
104,756 |
96,779 |
90,502 |
85,019 |
| Long
term Loans & Liabilities |
38.20 |
47,582 |
21,708 |
37,568 |
47,105 |
55,413 |
67,563 |
76,712 |
82,006 |
21,317 |
| Net
Assets employed |
|
152.468 |
159,623 |
128,845 |
144,133 |
153,607 |
159,920 |
172,319 |
173,491 |
172,508 |
106,336 |
|
|
|
|
|
|
|
|
|
| Net
Earnings as percentage |
|
|
| of met assets employed |
% |
9 |
12 |
7 |
5 |
3 |
5 |
10 |
8 |
5 |
16 |
| Earning per rupee of sales |
Rs. |
0.02 |
0.02 |
0.02 |
0.02 |
0.01 |
0.02 |
0.05 |
0.04 |
0.05 |
0.09 |
| Earning per share |
Rs. |
4.21 |
632 |
293 |
252 |
1.44 |
316 |
627 |
538 |
358 |
647 |
| Cash Dividend per share |
Rs. |
350 |
475 |
275 |
250 |
75 |
325 |
3.25 |
300 |
150 |
250 |
| Bonus Issue |
% |
- |
- |
- |
- |
7.50 |
1,000 |
- |
- |
- |
- |
| Cash Dividend as a % of |
|
|
| shareholders funds |
% |
9.6 |
13.2 |
8.0 |
7.3 |
2.0 |
8.2 |
8.2 |
8.2 |
44 |
78 |
|
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
| Break-up value per share |
Rs. |
36.60 |
3,589 |
3,432 |
3,414 |
3,667 |
3,959 |
3,968 |
3,666 |
3,428 |
3,220 |
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
| *
Eighteen months ended June 30, 1996 |
|
|
|
| CHAIRMAN'S
REVIEW |
|
| On
behalf of your Board of Directors, I am pleased to present to you the report
for the |
|
| year
ended on 30th June, 1997. |
|
|
| BOARD
CHANGES |
|
| The
following changes took place in the Board: |
|
|
| Mr.
Razi ur Rahman, Chairman and Managing Director of National Investment Trust |
|
| Limited
(NIT) replaced Mr. Asadullah Sheikh as nominee director of NIT on your
Company's |
|
| Board
on 15th September, 1996. |
|
|
| State
Life Insurance Corporation's nominee director Syed Gulrez Yazdani was
replaced |
|
| by
Mr, Abdul Rauf Malik on October 1, 1996, |
|
|
| The
Board wishes to place on record its appreciation of the contribution made |
|
| by
the outgoing Directors and takes great pleasure in welcoming the new
Directors, |
|
|
| OPERATING
PERFORMANCE |
|
| The
year under review experienced numerous difficulties. The first nine months of |
|
| the
year saw political insecurity, followed by the dismissal of the PDF
government |
|
| and
then the imposition of an interim government. As a result there was a lack |
|
| of
positive governance, which is an invaluable factor for business and economic |
|
| confidence.
Matters were further aggravated by a depressed national economy and |
|
| depreciation
of the Rupee by around 15% over this period. As a result of high |
|
| budget
deficits, the government resorted to borrowing in the domestic market at |
|
| high
interest rates which obviously affected commercial lending rates. Apart from |
|
| all
this, the financial crisis being faced both by WAPDA and KESCO put the
electrical |
|
| sector
under pressure. |
|
|
| The
Company's performance for the year under review is not unsatisfactory,
keeping |
|
| in
view the above factors. Sales of Rs. 638.8 Million for the year ended June
30, |
|
| 1997
are marginally below the proportionate annual sale of the period ended June |
|
| 30,
1996, Gross profit of Rs. 101,9 M for the year is 15.9% of sale against 14.8% |
|
| of
sale for the 18 months period mainly due to ease of metal price in the
international |
|
| market,
favourable sales mix and also saving in material cost as a result of in- |
|
| house
production of Copper Rod. |
|
|
| Operating
profit for the year is Rs. 54,2 million against Rs. 63.9 million for the 18
months |
|
| period,
On an annual basis it shows improvement of 27% compared to proportionate
operating |
|
| profit
of the previous period mainly due to savings in administration and selling
expenses. |
|
|
| Financial
charges of Rs. 34.2 M for the year are higher mainly as a result of high
receivables |
|
| from
KESCO and WAPDA due to their financial crisis, Inspite of high financial
charges, net |
|
| profit
after tax is Rs. 13.2 M which is in line with the proportionate annual net
profit after |
|
| tax
of the previous period. |
|
|
| DIVIDEND |
|
| Your
directors recommend payment of final dividend of Rs. 2.50 per share (25%) in
addition |
|
| to
interim dividend of Re. 1.0 per share (10%) already paid, This bring the
total dividend |
|
| for
the 12 months period at Rs. 3.50 per share (35%) compared with Rs. 4.75 per
share (47.5%) |
|
| for
the 18 months ended June 30, 1996. |
|
|
| INDUSTRY
CONCERNS |
|
| The
incidence of government taxes on the front end price of the cable is still
high. Excise |
|
| duty
and sales tax together result in a loading of 24%. This encourages tax
evasion and |
|
| creates
a market for cheaper but substandard goods. The electrical cable industry is
the |
|
| only
capital goods industry which is suffering this double duty. |
|
|
| The
other area of concern is the prevalence of poor quality cable in the market.
This affects |
|
| mainly
the Housewiring segment as if is fed by low tech backyard manufacturers using
mainly |
|
| scrap
raw material. A recent laboratory test done by us showed one of the cheap but
more |
|
| popular
brand of cable to have electrical conductivity as low as 32% of the
requirement! |
|
| PSI
and other quality standards must be enforced not only at the manufacturing
stage but |
|
| also
in the market. |
|
|
| FUTURE
PROSPECTS |
|
|
| The
future has to be viewed in the light of the recessionary trend of the economy
and |
|
| the
decline in new industrial investment. The poor financial health of WAPDA and
KESCO |
|
| is
also a matter of concern, This situation has presented a challenge to the
electrical cable |
|
| industry. |
|
|
| However
your Company has a strong market image visa vis ifs competitors and this
should |
|
| be
of assistance in such market conditions. |
|
|
| It
is also hoped that government efforts towards privatisation of financial
institutions and its |
|
| moves
to lower interest rates will spur economic activity. A good cotton crop and
release |
|
| of
ESAF funds would also serve to have a positive effect in the economy. |
|
|
| STAFF |
|
| Relationship
with employees at all levels remained warm and cordial, On behalf of the
Directors |
|
| and
employees of the company, I express my gratitude to all our valued customers,
distributors |
|
| and
banks for their confidence and support. |
|
|
|
| REPORT
OF THE DIRECTORS |
|
| 1.
The Directors have pleasure in submitting their Report and Annual Audited
Accounts |
|
| for
the year ended 30th June 1997. |
|
|
|
Rs. '000 |
|
|
| The
net profit after tax amounted to |
|
13,151 |
|
| To
this is added unappropriated profit |
|
| brought
forward from last period |
|
823 |
|
|
---------- |
|
|
13,974 |
|
|
========== |
|
| The
Directors recommended: |
|
|
| Payment
of final Dividend at the rate |
|
| of
Rs. 2.50 per share (25%), |
|
7,805 |
|
|
| Interim
Dividend of Rs. 1.00 per share |
|
| (10%)
already paid |
|
3,122 |
|
|
| Transfer
to General Reserve |
|
2,500 |
|
| Leaving
unappropriated profit to be carried forward |
547 |
|
|
---------- |
|
|
13.974 |
|
|
========== |
|
| 2.
During the current year Mr. Razi ur Rahman Khan replaced Mr. Asadullah Sheikh
of NIT |
|
| on
15th September, 1996 and Mr. Abdul Rauf Malik replaced Mr. S. Gulrez Yazdani
of State |
|
| Life
Insurance Corporation of Pakistan on October 1, 1996. |
|
|
| 3.
The Chairman's Review on page 6 covers significant activities of your
Company. |
|
|
| 4. The pattern
of shareholding is provided on page 9. |
|
|
| 5.
The present Auditors M/s. A.F. Ferguson & Co, retire and offer themselves
for re-appointment. |
|
|
|
|
| PATTERN
OF SHAREHOLDING AS AT JUNE 30, 1997 |
|
|
| No.of |
|
Shareholding |
|
Total Shares held |
|
| Shareholders |
|
|
|
|
|
| 369 |
1 |
to |
100 |
14,875 |
|
| 424 |
101 |
to |
500 |
102,598 |
|
| 104 |
501 |
to |
1,000 |
76,849 |
|
| 117 |
1,001 |
to |
5,000 |
247,506 |
|
| 10 |
5,001 |
to |
10,000 |
74,230 |
|
| 7 |
10,001 |
to |
15,000 |
87,323 |
|
| 2 |
15,001 |
to |
20,000 |
34,220 |
|
| 1 |
20,001 |
to |
25,000 |
21,500 |
|
| 2 |
25,001 |
to |
30,000 |
54,212 |
|
| - |
30,001 |
to |
40,000 |
- |
|
| 1 |
40,001 |
to |
45,000 |
44,343 |
|
| 1 |
45,001 |
to |
50,000 |
47,010 |
|
| - |
50,001 |
to |
85,000 |
- |
|
| 1 |
85,001 |
to |
90,000 |
85,815 |
|
| 1 |
90,001 |
to |
95,000 |
90,552 |
|
| - |
95,001 |
to |
105,000 |
- |
|
| 1 |
105,001 |
to |
110,000 |
109,869 |
|
| - |
110,001 |
to |
135,000 |
- |
|
| 1 |
135,001 |
to |
140,000 |
135,553 |
|
| - |
140,001 |
to |
200,000 |
- |
|
| 1 |
200,001 |
to |
205,000 |
201,379 |
|
| - |
205,001 |
to |
290,000 |
- |
|
| 1 |
290,001 |
to |
295,000 |
292,230 |
|
| - |
295,001 |
to |
365,000 |
- |
|
| 1 |
365,001 |
to |
370,000 |
369,609 |
|
| 1 |
370,001 |
to |
375,000 |
373,021 |
|
| - |
375,001 |
to |
655,000 |
- |
|
| 1 |
655,001 |
to |
660,000 |
659,106 |
|
| - |
660,001 |
to |
3,121,800 |
- |
|
| ---------- |
|
|
|
---------- |
|
| 1,047 |
|
3,121,800 |
|
| ========== |
|
========== |
|
|
|
|
|
| Category
of shareholders |
|
Number |
Shares held |
Percentage |
|
| Individuals |
|
1,019 |
1,920,533 |
61.52 |
|
| Investment
Companies |
|
2 |
744,921 |
2,386 |
|
| Insurance
Companies |
|
6 |
334,610 |
1,072 |
|
| Joint
Stock Companies |
|
10 |
18,842 |
,61 |
|
| Financial
Institutions |
|
5 |
81,257 |
260 |
|
| Modaraba
Companies |
|
- |
- |
- |
|
| Others |
|
5 |
21,637 |
0.69 |
|
|
---------- |
---------- |
---------- |
|
|
1,047 |
3,121, 800 |
10,000 |
|
|
========== |
========== |
========== |
|
| OTHERS |
|
| Amina
Muslim Girls School Trust |
|
11,304 |
|
| Pakistan
Masonic Institution |
|
1,135 |
|
| The
Pakistan Memon Educational & Welfare Society |
8,460 |
|
| Government
of Pakistan, Corporate Law Authority |
1 |
|
| Administration
Abandoned Properties Organization |
737 |
|
|
---------- |
|
|
21,637 |
|
|
========== |
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of Pakistan Cables Limited as at June
30, 1997 |
|
| and
the related profit and loss account and the cash flow statement, together
with the notes |
|
| forming
part thereof, for the year then ended and we state that we have obtained all
the |
|
| information
and explanations which to the best of our knowledge and belief were necessary |
|
| for
the purposes of our audit and, after due verification thereof, we report
that: |
|
|
| a)
in our opinion, proper books of account have been kept by the company as
required by |
|
| the
Companies Ordinance, 1984; |
|
|
| b)
in our opinion: |
|
|
| i)
the balance sheet and profit and loss account together with the notes thereon |
|
| have
been drawn up in conformity with the Companies Ordinance, 1984 and are in |
|
| agreement
with the books of account and are further in accordance with accounting |
|
| policies
consistently applied; |
|
|
| ii)
the expenditure incurred during the year was for the purposes 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 cash flow statement,
together |
|
| with
the notes forming part thereof, give the information required by the
Companies |
|
| Ordinance,
1984 in the manner so required and respectively give a true and fair view of |
|
| the
state of the company's affairs as at June 30, 1997 and of the profit and the
cash |
|
| flows
for the year then ended; and |
|
|
| d)
in our opinion zakat deductible at source under the Zakat and Ushr Ordinance,
1980 was |
|
| deducted
by the company and deposited in the Central Zakat Fund established under |
|
| Section
7 of that Ordinance, |
|
|
A.F. FERGUSON & CO. |
|
| Karachi:
October, 21, 1997 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET As AT JUNE 30, 1997 |
|
|
|
|
|
|
1997 |
1996 |
|
|
Note |
Rs. '000 |
Rs. '000 |
|
|
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
|
| Authorised
share capital |
|
|
|
| 5,000,000
ordinary shares of Rs. 10 each |
|
50,000 |
50,000 |
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up share capital |
|
|
| 3,
i21,800 (1996: 3,121,800) |
|
|
|
| ordinary
shares of Rs. 10 each |
|
3 |
31,218 |
31,218 |
|
|
|
|
| Reserves |
|
4 |
82,500 |
80,000 |
|
| Unappropriated
profit |
|
|
547 |
823 |
|
|
|
---------- |
---------- |
|
|
|
114,265 |
112,041 |
|
|
|
|
| CUSTOMS
DEBENTURES |
|
5 |
1,970 |
1,970 |
|
| LONG-TERM
LOANS |
|
6 |
21,000 |
28,000 |
|
|
|
|
| DEFERRED
LIABILITY |
|
|
|
| Staff
retirement benefits |
|
|
15,233 |
17,612 |
|
|
|
|
| CURRENT
LIABILITIES AND PROVISIONS |
|
|
|
| Running
finances under mark-up |
|
|
|
| arrangements |
|
7 |
115,332 |
148,639 |
|
| Current
maturity of long-term loans |
|
6 |
7,000 |
7,000 |
|
| Creditors,
accrued expenses and other |
|
|
|
| liabilities |
|
8 |
172,807 |
199,665 |
|
| Workers'
profits participation fund |
|
9 |
1,380 |
1,875 |
|
| Workers'
welfare fund |
|
|
1,276 |
748 |
|
| Dividends |
|
10 |
9,099 |
11,282 |
|
|
|
---------- |
---------- |
|
|
|
306,894 |
369,209 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
11 |
|
|
|
---------- |
---------- |
|
|
|
459,362 |
528,832 |
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
|
| TANGIBLE
FIXED ASSETS |
|
|
|
| Operating
assets |
|
12 |
94,264 |
107,900 |
|
| Capital
work-in-progress |
|
13 |
3,751 |
- |
|
|
|
|
|
|
98,015 |
107,900 |
|
|
|
|
| INVESTMENTS |
|
14 |
14,296 |
22,444 |
|
| LONG-TERM
LOANS AND ADVANCES |
|
15 |
1,814 |
590 |
|
| LONG-TERM
SECURITY DEPOSITS |
|
|
1,284 |
1,002 |
|
| CURRENT
ASSETS |
|
|
|
|
|
|
| Stores
and spares |
|
17 |
14,358 |
13,266 |
|
