| Pakland Cement Limited |
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| ANNUAL
REPORT 1997 |
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| Contents |
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| Company
Information |
|
| Notice
of Meeting |
|
| Report
of the Directors |
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| Auditors'
Report to the Members |
|
| Balance
Sheet |
|
| Profit
and Loss Account |
|
| Cash
Flow Statement |
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| Notes
to the Accounts |
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| Pattern
of Holding of Shares |
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| Company
Information |
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|
| BOARD
OF DIRECTORS |
|
Tariq Mohsin Siddiqui |
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|
(Chairman & Chief
Executive) |
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Shamim Mushtaq Siddiqui |
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Muhammad Salim Arif |
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Muhammad Aqueel Abbasi |
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Jameel Ahmed Siddiqui |
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|
Sadaf Khan |
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|
Syed Ghulam Abbas
(Nominee - NDFC) |
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|
Razi-ur-Rahman Khan
(Nominee - NIT) |
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| REGISTERED
OFFICE |
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Trade Centre, A-14 |
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Block 7/8, KCHS |
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Shahra-e-Faisal |
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Karachi-75350 |
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| FACTORY |
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Deh Dhando, Dhabeji |
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| BANKERS |
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Al Faysal Investment Bank
Limited |
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Allied Bank of Pakistan
Limited |
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ANZ Grindlays Bank |
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Askari Commercial Bank
Limited |
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Citibank N.A. |
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Crescent Investment Bank
Limited |
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Faysal Bank Limited |
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Habib Bank Limited |
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National Bank of Pakistan |
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National Development
Finance Corporation |
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Standard Chartered Bank |
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Union Bank Limited |
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| AUDITORS |
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Ford, Rhodes, Robson,
Morrow |
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Chartered Accountants |
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Finlay House |
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I. I. Chundrigar Road |
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Karachi |
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Khan H.R. & Co. |
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Chartered Accountants |
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328, Muhammadi House |
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I. I. Chundrigar Road |
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Karachi |
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| Notice
of Meeting |
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| Notice
is hereby given that the 18th Annual General Meeting of Pakland Cement
Limited will be |
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| held
at Factory, Deh Dhando, Dhabeji, on Thursday, 23rd April 1998 at 3:00 p.m. to
transact the |
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| following
business: |
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| 1.
To confirm the minutes of the 17~h Annual General Meeting held on 29~h
January 1997. |
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| 2.
To receive and consider the Audited Accounts for the year ended 30t~ June
1997 and the |
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| report
of the directors and auditors thereon. |
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| 3.
To appoint auditors and to fix their remuneration. |
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| 4.
To transact any other business with the permission of the chair. |
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| By
Order of the Board |
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| Notes: |
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| 1.
Share Transfer Books of the company will remain closed from 19th April 1998
to 25th April |
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| 1998,
both days inclusive. |
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|
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| 2.
Any member of the company entitled to attend and vote may appoint another
member as |
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| his/her
proxy to attend and vote instead of him/her. |
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| 3.
Proxies must be received at the Registered Office of the company not less
than 48 hours |
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| before
the time of holding the meeting. |
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| 4.
Members are requested to promptly notify the company of any change in their
addresses. |
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| REPORT
OF THE DIRECTORS |
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| FOR
THE YEAR ENDED 30th JUNE 1997 |
|
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| The
Directors of the company are pleased to present you, their report together
with the audited |
|
| accounts
of the company for the year ended June 30, 1997. |
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|
| Overview |
|
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| During
the year 1996-97 the cement industry has witnessed addition of new production
capacities, |
|
| tough
competition and rising input costs and taxes. |
|
|
| Most
cement manufacturing concerns during the year experienced negative financial
results which |
|
| is
mainly attributable to increased cost of production such as furnace oil,
electricity, papersack |
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| and
taxation which increased two to three times in the last three to four years
These cost heads |
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| constitute
over 90% of the total input cost including government levies. Such increases
could not |
|
| be
compensated by a corresponding rise in the retention price as the sale price
of cement |
|
| remained
nearly stagnant during these three to four years due to the dampening effect
of |
|
| competition. |
|
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| The
Directors are pleased to inform you'{hat the company by the grace of ALLAH
has been able |
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| to
implement strong management controls and reduce the overhead expenses.
Through efficient |
|
| operation
of plant, escalation in variable cost has been contained to the minimum
despite rapidly |
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| increasing
fuel and energy prices. On the other hand stringent quality control standards
and a |
|
| strong
marketing support has resulted in a premium sales price of Pakland's
products. |
|
|
| All
these measures have contributed to enable the company to maintain positive
financial results. |
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|
| Appropriation
of Profit |
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| The
appropriation of the available profit is recommended as under: |
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|
|
|
(Rs.'000') |
|
|
| Net
profit for the year |
|
21,162 |
|
| Unappropriated
profit brought forward |
|
4,935 |
|
|
|
|
---------- |
|
|
|
|
26,097 |
|
| Transfer
to general reserve |
|
25,000 |
|
|
|
|
---------- |
|
| Unappropriated
profit carried forward |
|
1,097 |
|
|
|
|
========== |
|
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| Production
& Sales |
|
|
| Production
of clinker for the year ended 30th June 1997 was 471,245 tons, corresponding
to a |
|
| production
figure of 501,101 tons for the year ended 30th June 1996. |
|
|
| The
decrease in production during the current year as compared to the
corresponding figure of |
|
| previous
year was mainly due to the planned shut down for implementation of our
balancing and |
|
| modernization
plans for our existing Line-I to enhance the capacity. |
|
|
| Your
company's brand, commands a premium price in the market and is one of the
best |
|
| established
brands in Pakistan. We are pleased to inform you that throughout the year the |
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| demand
for Pakland's cement was even more than the attainable production. |
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| Optimization
and Expansion Projects |
|
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| Pakland
Cement's expansion has been undertaken to further improve the financial
results of the |
|
| company
by balancing and optimization of present plant and addition of a new line to
take |
|
| maximum
advantage of proximity of our location to port and the main cement consuming
centre. |
|
|
| Your
management is pleased to inform you that Pakland Cement's expansion project
is making |
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| expeditious
progress. The civil works of the new production line is nearing completion.
Most of |
|
| the
imported equipment has already arrived despite the various difficulties
encountered due to |
|
| change
in customs duty regime and as a consequence hold up in clearance of equipment
from the |
|
| port. |
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|
| Export
Potentials |
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| Pakland
Cement enjoys ideal location close to Port Qasim, for capitalizing the large
potentials of |
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| exports
to nearby countries. |
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| With
the opening up of export opportunities and the government allowing some duty
rebates on |
|
| exports,
the over supply in excess of local demand is expected to be absorbed in the
neighboring |
|
| countries,
which cumulatively have an annual requirement of over 20 million tons of
cement. |
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| Some
of these markets are long-term importers of cement, like Bangladesh which has
virtually no |
|
| limestone
and, therefore, relies exclusively on import of clinker and cement. A
substantial freight |
|
| advantage
also exists as Bangladesh at a short
distance from Pakistan. |
|
|
| Similarly,
Sri Lanka offers another good opportunity. it has only one cement plant based
on |
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| limestone
resources which are fast depleting. The country presently imports 1.85
million tons of |
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| cement
and clinker annually. Other net importing countries like Myanmar (Burma) and
the |
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| Eastern
and Southern African Zone where Pakistan has a freight advantage due to its
location |
|
| also
provide ample markets for export. |
|
|
| Investment
in Saadi Cement Limited |
|
|
| Your
company has invested an amount of Rs.800 million in the equity of Saadi
Cement Limited |
|
| which
is a green field project comprising of two cement manufacturing lines. The
project is at an |
|
| advanced
stage of implementation. The civil work for process and ancillary building is
almost |
|
| complete
and the erection and installation of equipment for Line-I is nearing
completion. |
|
|
| Saadi
Cement Limited during the year got listed on the Karachi and Islamabad Stock
Exchanges |
|
| and
its shares are now being quoted on these stock exchanges. |
|
|
| Social
Responsibilities |
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| By
the grace of ALLAH, your company continues to honour its social
responsibilities towards the |
|
| community.
Pakland Cement Limited over the last few years has pioneered the concept of |
|
| sponsoring
various individuals from all walks of life for Haj. This sponsorship is
normally awarded |
|
| to
individuals who do not have the financial resources to perform Haj
themselves. This |
|
| sponsorship
has been continued in the current year. The company also continues to make |
|
| contributions,
towards various social and charitable causes. |
|
|
| Personnel |
|
|
| As
in previous years, the members of the Pakland family worked in complete
harmony and mutual |
|
| cooperation.
The company continues its drive to recruit quality personnel, as it considers
its |
|
| people
to be the back bone of the organization. |
|
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| The
Board would like to place on record its appreciation for the efforts of all
its employees. |
|
|
| Auditor |
|
|
| Messrs.
Ford, Rhodes, Robson, Morrow, Chartered Accountants and Messrs. Khan H.R.
& Co. |
|
| Chartered
Accountants, retire and offer themselves for reappointment. |
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| Future
outlook |
|
|
| The
research activities carried out by us confirm that there is a large export
market available for |
|
| cement
industry which coupled with certain duty rebates announced by the government
in the |
|
| recent
past, make export potential a very viable choice for quality brands of
cement. |
|
|
| We
are confident that the help of AI-mighty ALLAH and our efforts to maintain
and improve the |
|
| excellent
quality of our product would give us a large share in the International
export market. |
|
|
| Acknowledgments |
|
|
| The
directors have pleasure to record their appreciation for those employees of
the company |
|
| have
made dedicated efforts and shown loyalty inspite of serious difficulties
faced by the |
|
| company.
Similarly high respect is acknowledged for those contractors and suppliers
who |
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| cooperated
inspite of hurdles, towards expeditious completion of the project. |
|
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| We
would specially like to express our sincere thanks to those financial
institutions who have |
|
| continued
their support and cooperation in this difficult time. |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of Pakland Cement Limited as at 30th
June 1997, |
|
| and
the related profit and loss account and statement of changes in financial
position (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 notes thereon,
have |
|
| been
drawn up in conformity with Companies Ordinance, 1984, and are in agreement |
|
| with
the books of account and are further in accordance with the 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 (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 30th |
|
| June
1997, and of the profit and the changes in financial position for the year
then ended; |
|
|
| (d)
in our opinion no Zakat was deductible at source under the Zakat and Ushr
Ordinance, |
|
| 1980; and |
|
|
| (e)
without qualifying our opinion, we draw attention to the following matters: |
|
|
| (i)
certain liabilities have been treated as long term loans on the basis of the
reasons |
|
| given
in note 3 to the accounts; |
|
|
| (ii)
short-term investment in the associated company has been classified as
long-term on |
|
| the
basis of reasons given in note 18.1 to the accounts. |
|
|
|
Khan H.R. & Co. |
Ford, Rhodes, Robson,
Morrow |
|
| Karachi:
28th March 1998 |
Chartered Accountants |
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT 30th JUNE 1997 |
|
|
|
30th June |
30th June |
|
|
|
1997 |
1996 |
|
|
Note |
Rs.'000' |
Rs.'000' |
|
|
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
|
|
|
| Authorized
capital |
|
|
|
| 150,000,000
ordinary shares of Rs.10/- each |
|
1,500,000 |
1,500,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up capital |
4 |
825,000 |
825,000 |
|
| Reserves |
|
5 |
396,097 |
374,935 |
|
|
|
|
---------- |
---------- |
|
|
|
|
1,221,097 |
1,199,935 |
|
|
|
|
| REDEEMABLE
CAPITAL |
|
6 |
56,770 |
45,996 |
|
|
|
|
|
| LONG-TERM
LOANS |
|
7 |
1,077,534 |
571,294 |
|
|
|
|
|
| LONG-TERM
DEPOSITS |
|
8 |
17,235 |
17,185 |
|
|
|
|
|
| OBLIGATIONS
AND ADVANCES |
|
|
|
| UNDER
FINANCE LEASES |
|
9 |
865,146 |
641,276 |
|
|
|
|
|
| DEFERRED
INCOME |
|
10 |
969 |
1,615 |
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Short-term
loans |
|
11 |
29,946 |
85,404 |
|
| Short-term
finances |
|
12 |
327,605 |
360,304 |
|
| Current
portion of long-term liabilities |
13 |
453,913 |
319,222 |
|
| Creditors,
accrued and other liabilities |
14 |
689,321 |
941,322 |
|
| Provision
for taxation |
|
|
26,268 |
58,339 |
|
|
|
|
---------- |
---------- |
|
|
|
|
1,527,053 |
1,764,591 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
15 |
|
|
|
|
|
---------- |
---------- |
|
|
|
4,765,804 |
4,241,892 |
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
| TANGIBLE
FIXED ASSETS |
|
|
| Operating
fixed assets |
|
16 |
679,623 |
745,995 |
|
| Capital
work-in-progress |
|
17 |
2,212,109 |
1,676,845 |
|
|
|
|
---------- |
---------- |
|
|
|
|
2,891,732 |
2,422,840 |
|
| LONG-TERM
INVESTMENT |
|
18 |
800,000 |
- |
|
|
|
|
| LONG-TERM
LOANS |
|
19 |
2,482 |
2,600 |
|
|
|
|
| LONG-TERM
DEPOSITS |
|
20 |
113,068 |
101,572 |
|
|
|
|
| DEFERRED
COSTS |
|
21 |
1,672 |
2,230 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
|
|
|
| Stores
and spares |
|
22 |
173,975 |
165,668 |
|
| Stock-in-trade |
|
23 |
213,280 |
138,438 |
|
| Trade debts |
|
24 |
90,236 |
40,977 |
|
| Loans
and advances |
|
25 |
358,847 |
415,093 |
|
|
|
|
| Deposits,
prepayments and |
|
|
| other
receivables |
|
26 |
69,404 |
61,829 |
|
| Short-term
investments |
|
27 |
4,878 |
806,393 |
|
| Cash
and bank balances |
|
28 |
46,230 |
84,252 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
956,850 |
1,712,650 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
4,765,804 |
4,241,892 |
|
|
|
|
========== |
========== |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED 30th JUNE 1997 |
|
|
|
|
30th June |
30th June |
|
|
|
1997 |
1996 |
|
|
Note |
Rs.'000' |
Rs.'000' |
|
|
|
|
| NET SALES |
|
29 |
844,190 |
965,989 |
|
| COST
OF GOODS SOLD |
|
30 |
710,754 |
738,922 |
|
|
|
|
---------- |
---------- |
|
| GROSS
PROFIT |
|
|
133,436 |
227,067 |
|
|
|
|
|
| OPERATING
EXPENSES |
|
|
|
| General
and administrative |
|
31 |
51,617 |
74,919 |
|
| Selling
and distribution |
|
32 |
7,630 |
14,147 |
|
|
|
|
---------- |
---------- |
|
|
|
59,247 |
89,066 |
|
|
|
---------- |
---------- |
|
| OPERATING
PROFIT |
|
74,189 |
138,001 |
|
| OTHER
INCOME |
|
33 |
64,863 |
63,087 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
139,052 |
201,088 |
|
| FINANCIAL
CHARGES |
|
34 |
120,336 |
142,149 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
18,716 |
58,939 |
|
| OTHER
CHARGES |
|
35 |
4,268 |
13,093 |
|
|
|
|
|
---------- |
---------- |
|
| PROFIT
BEFORE TAXATION |
|
14,448 |
45,846 |
|
|
|
|
|
| TAXATION
- Current |
|
38 |
(4,221) |
- |
|
| - Prior |
|
10,935 |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
6,714 |
- |
|
|
|
|
---------- |
---------- |
|
| PROFIT
AFTER TAXATION |
|
|
21,162 |
45,846 |
|
| UNAPPROPRIATED
PROFIT BROUGHT FORWARD |
|
4,935 |
4,089 |
|
|
|
|
---------- |
---------- |
|
| PROFIT
AVAILABLE FOR APPROPRIATIONS |
|
26,097 |
49,935 |
|
| APPROPRIATIONS |
|
|
| Transfer
to general reserve |
|
|
25,000 |
45,000 |
|
|
|
|
---------- |
---------- |
|
| UNAPPROPRIATED
PROFIT CARRIED FORWARD |
|
1,097 |
4,935 |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) |
|
| FOR
THE YEAR ENDED 30th JUNE 1997 |
|
|
|
|
|
30th June |
30th June |
|
|
|
|
1997 |
1996 |
|
|
|
|
Rs.'000' |
Rs.'000' |
|
|
|
|
| Cash
Flow from Operating Activities |
|
|
| Net
profit before tax |
|
|
|
14,448 |
45,846 |
|
|
|
|
| Adjustments
for items not involving |
|
|
| movement
of funds |
|
|
|
|
| Depreciation |
|
70,650 |
78,420 |
|
| Net
profit on disposal of operating fixed assets |
|
- |
(1,109) |
|
| Profit
on sale and lease back |
|
(646) |
(646) |
|
| Provision
for diminution in value of investment |
|
1,515 |
3,359 |
|
|
|
---------- |
---------- |
|
|
|
71,519 |
80,024 |
|
|
|
---------- |
---------- |
|
| Operating
profit before working capital changes |
|
85,967 |
125,870 |
|
|
|
|
| Working
capital changes |
|
|
|
| (Increase)/decrease
in current assets |
|
|
| Stores
and spares |
|
|
|
(8,307) |
8,675 |
|
| Stock
in trade |
|
|
|
(74,842) |
2,080 |
|
| Trade debts |
|
|
|
(49,259) |
7,290 |
|
| Loans
and advances |
|
|
|
56,246 |
45,551 |
|
| Deposits,
prepayments and other receivables |
|
(7,575) |
36,828 |
|
| Short-term
investments |
|
|
|
- |
(800,000) |
|
|
|
---------- |
---------- |
|
|
|
|
|
(83,737) |
(699,576) |
|
|
|
|
| Increase/(decrease)
in current liabilities |
|
|
| Short-term
borrowings |
|
|
|
(88,157) |
62,253 |
|
| Creditors,
accrued and other liabilities |
|
(252,001) |
391,252 |
|
|
|
---------- |
---------- |
|
|
|
|
|
(340,158) |
453,505 |
|
|
|
|
|
---------- |
---------- |
|
| Cash
generated from operation |
|
|
(337,928) |
(120,201) |
|
| Income
tax paid/Adjusted |
|
|
(25,357) |
(43,343) |
|
|
|
|
|
---------- |
---------- |
|
| Net
cash generated from operating activities |
|
(363,285) |
(163,544) |
|
|
|
========== |
========== |
|
|
|
|
|
|
30th June |
30th June |
|
|
|
|
1997 |
1996 |
|
|
|
|
Rs.'000' |
Rs.'000' |
|
|
|
|
| Cash
Flow from Investing Activities |
|
|
| Capital
expenditures |
|
|
|
(539,542) |
(1,115,786) |
|
| Sale
proceeds of fixed assets |
|
|
-- |
2,660 |
|
| Long-term
loans |
|
|
118 |
(1,772) |
|
| Long-term
deposits |
|
|
(11,496) |
(30,975) |
|
| Deferred
cost |
|
|
558 |
(2,230) |
|
|
|
---------- |
---------- |
|
