| PAKISTAN NATIONAL SHIPPING CORPORATION |
|
|
|
|
|
|
|
| REPORT
AND ACCOUNTS |
|
| FOR
THE YEAR ENDED |
|
| 30TH JUNE, 1997 |
|
| ANNUAL
REPORT 1997 |
|
|
| CONTENTS |
|
| MANAGEMENT,
AUDITORS AND BANKERS |
|
| NOTICE
FOR MEETING |
|
| REPORT
OF THE BOARD OF DIRECTORS |
|
| AUDITORS'
REPORT |
|
| BALANCE SHEET |
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| CASH
FLOW STATEMENT |
|
| MOTES
TO THE ACCOUNTS |
|
| PATTERN
OF SHAREHOLDING |
|
| STATEMENT
UNDER SECTION 237 OF THE COMPANIES ORDINANCE 1984 |
|
|
| PAKISTAN
CO-OPERATIVE SHIP STORES (PRIVATE) LTD. |
|
| (SUBSIDIARY
COMPANY OF PAKISTAN NATIONAL SHIPPING |
|
| CORPORATION) |
|
|
| CHAIRMAN
& CHIEF EXECUTIVE REPORT |
|
| AUDITORS'
REPORT |
|
| BALANCE SHEET |
|
|
| PROFIT
& LOSS ACCOUNT |
|
| NOTES
TO THE ACCOUNTS |
|
| SHAREHOLDERS
STATISTICS |
|
| FORM OF PROXY |
|
|
| MANAGEMENT,
AUDITORS |
|
| AND
BANKERS |
|
|
| Board: |
|
Vice Admiral Abaid Ullah
Khan |
|
|
HI (M), SJ., S.Bt. |
|
|
Chairman |
|
|
|
Mr. Mohsin Manzoor |
|
|
Vice Chairman/Director
(Admin) |
|
|
|
Mr. Fazal-ur-Rehman |
|
|
Director
(Finance)/(Commercial) |
|
|
|
Maj. Gen. Mohsin Ahmed
Vahidy |
|
|
Director (Special Project
& Planning) |
|
|
|
Rear Admiral Azhar
Hussain |
|
|
S.I. (M), |
|
|
Director (Ship
Management) |
|
|
|
Mr. Jahangir Siddiqui |
|
|
Director |
|
|
|
Mr. Muhammad Khusrow
Khowaja |
|
|
Director |
|
|
| Secretary: |
|
Mr. K. Daud Shams |
|
|
| Registered
Office: |
PNSC Building, Moulvi
Tamizuddin Khan Road, |
|
|
Karachi-74000. |
|
|
| Auditors: |
|
A.F. Ferguson & Co. |
|
|
Chartered Accountants |
|
|
|
Taseer Hadi Khalid &
Co. |
|
|
Chartered Accountants |
|
|
| Bankers: |
|
National Bank of Pakistan |
|
|
Habib Bank Limited |
|
|
Muslim Commercial Bank
Limited |
|
|
United Bank Limited |
|
|
Industrial Development
Bank of Pakistan |
|
|
| NOTICE
FOR MEETING |
|
|
| Notice
is hereby given that the 19th Annual General Meeting of the shareholders of
the Pakistan |
|
| National
Shipping Corporation will be held at Pakistan Navy Fleet Club, near Lucky
Star Hotel, |
|
| Saddar,
Karachi on Wednesday the 24th December, 1997 at 12.30 Hours to transact the |
|
| following
business: |
|
|
| To
confirm the Minutes of the 18th Annual General Meeting of the Shareholders of
PNSC |
|
| held
on 26th December, 1996. |
|
|
| 2.
To consider and adopt the Balance Sheet, the Profit and Loss Account and the
Reports of |
|
| Auditors
and Directors for the year ended 30th June, 1997. |
|
|
| 3.
To appoint auditors for the year 1997-98 and to fix their remuneration. |
|
|
| 4.
To do any other business that may be placed before the meeting with
permission of the |
|
| Chairman. |
|
|
| Note: |
|
|
| 1.
A Shareholder entitled to attend and vote at this meeting is also entitled to
appoint his/her |
|
| proxy
to attend the meeting. |
|
|
| 2.
Proxy must be received at the Registered Office of the Corporation not less
than 48 hours |
|
| before
the time for holding the meeting. |
|
|
| 3.
Shareholders are requested to notify any change in their address immediately. |
|
|
| 4.
The share transfer books of the Corporation will remain closed from 19th
December to |
|
| 24th
December, 1997 (both days inclusive). |
|
|
|
|
| ANNUAL REPORT |
|
| FOR
THE YEAR ENDED 30TH JUNE, 1997 |
|
|
| The
Directors of Pakistan National Shipping Corporation are pleased to present
the |
|
| Nineteenth
Annual Report together with the Audited Accounts of the Corporation for the
year |
|
| ended
30th June, 1997. |
|
|
| The
year 1996-97 continued to remain difficult for the shipping industry in
Pakistan. |
|
| Political
instability and law & order situation prevailing during period under
reference were the |
|
| main
impediments in the attraction of foreign investments. Even the domestic
entrepreneurs |
|
| remained
on the side line. Export oriented industries specially the textile sector
were sluggish |
|
| and
sick. All these factors heavily marred the country's exports. Dearth of cargo
created fierce |
|
| competition
among the operating lines. Too many ships were chasing too little cargo. |
|
|
| The
ageing fleet of the Corporation and the continued depreciation of Pakistan
rupee |
|
| against
the major currencies of the world have resulted in the increased operational
cost and also |
|
| affected
our debt servicing. |
|
|
| Despite
the above stated adverse factors, we are pleased to announce that your
Corporation |
|
| has
earned an operating profit of Rs. 268.49.3 million and pretax profit of Rs.
71.599 million as |
|
| against
those of Rs. 59.008 million and Rs. 39.152 million respectively in the
corresponding |
|
| period
of the previous year. |
|
|
| BORROWINGS |
|
|
| The
Corporation did not contract any fresh long term loan during the period under
review. |
|
| It
has rather repaid two half yearly installments along with the accrued
interest to National Bank |
|
| of
Pakistan, Bahrain against USD 50 million loan obtained for the purchase of
three container |
|
| vessels.
The outstanding balance as on 30th June 1997 stood at USD 35 million. |
|
|
| COMMERCIAL
OPERATIONS |
|
|
| During
the year the Corporation performed a total of 489 voyages (including foreign
char- |
|
| tered
vessels) and lifted 5.982 million freight tons as against 572 voyages and
6.236 million tons |
|
| respectively
in the previous year, indicating 12% increase in the average lifting per
voyage. The |
|
| total
freight revenue generated during the year increased from Rs. 6,962 million to
Rs. 7,761 |
|
| million
in the corresponding period of the previous year, an increase of over 11%. |
|
|
| PNSC
gainfully utilized the FIRST RIGHT OF REFUSAL and maintained more or less the |
|
| same
level of lifting as that of the previous year despite the fact that the FIRST
RIGHT OF |
|
| REFUSAL
in respect of wheat and fertilizer was suspended by the ECC for six months. |
|
|
| The
sector wise cargo liftings are as under: |
|
|
| SECTOR |
|
1996-97 |
1995-96 |
|
|
FRT/TON S |
FRT/TONS |
|
|
| DRY BULK |
|
4.754 million |
4.809 million |
|
|
| ASIA |
|
0.694 " |
0.799 " |
|
| EUROPE |
|
0.367 " |
0.429 " |
|
| USA/CANADA |
|
0.167 " |
0.199 " |
|
|
| The
break-up of DRY BULK is as follows: |
|
|
| CARGO |
|
1996-97 |
1995-96 |
|
|
FRT/TON S |
FRT/TON S |
|
|
|
|
| WHEAT |
|
2.433 million |
1.723 million |
|
|
| IRON ORE |
|
1.343 " |
1.772 " |
|
| COAL |
|
0.793 " |
0.901 " |
|
| PHOSPHATE |
|
0.185 " |
0.253 " |
|
| OTHERS |
|
- |
0.16 " |
|
|
| During
the year 14,030 TEUs containers were lifted as against 21,693 TEUs in the
previ- |
|
| ous year. |
|
|
| PNSC
does not own any bulk carrier as such dry bulk cargo were handled through
foreign |
|
| chartered
vessels. The decrease in the liner cargo was due to the disposal of two old
and obsolete |
|
| vessels
viz. m.v. Kaptai & m.v. Ocean Envoy. The three container vessels acquired
in the previ- |
|
| ous
year remained deployed on time charter as they can not call Karachi without
resolving their |
|
| custom
duty issue pending with the Government of Pakistan. |
|
|
| INSURANCE
& CLAIMS |
|
|
| Due
to improved performance of PNSC Fleet we were able to negotiate better terms
with |
|
| the
underwriters for the insurance coverage. The Corporation achieved 25%
reduction in the pre- |
|
| mium,
from M/s. National Insurance Corporation, on the Hull & Machinery
coverage of its fleet. |
|
|
| The
Corporation also succeeded in obtaining a reasonable reduction in the premium
of P&I |
|
| coverage
from M/s. Mutual Underwriting Association. |
|
|
| Effective
control was exercised towards the settlement of cargo claims as per trade |
|
| practice,
without jeopardizing the confidence of the shippers and the consignees, in
the |
|
| Corporation. |
|
|
| STORES
& SUPPLIES |
|
|
| In
order to remain cost effective major and costly items of stores were either
imported |
|
| from
abroad or purchased directly from the manufacturers. |
|
|
| Self
catering scheme has been very effective and continued to accrue financial
benefits to |
|
| the
Corporation. The ship laundry expenses in the foreign ports have nearly been
eliminated and |
|
| the
alternative arrangement is working satisfactorily. |
|
|
| BUNKER
AND SPARES |
|
|
| Although
the volume of bunker procurement dropped due to reduced number of voyages |
|
| but
the increase in the bunker price in the international market and devaluation
of Pakistan |
|
| Rupee
resulted in increased expenses on bunker procurement. However, to contain the
cost |
|
| maximum
bunker was procured from the cheapest ports on the operating route of the
vessel. |
|
|
| The
ageing fleet has resulted in the increased procurement of spares to keep
vessels sea- |
|
| worthy
for reliable and maintain uninterrupted operational schedule. The
inflationary spiral has |
|
| also
increased the acquisition cost of spares. |
|
|
| MAINTENANCE
AND REPAIRS |
|
|
| Despite
the constraint of the ageing fleet, the imposition of new rules and
regulations by |
|
| the
classification societies and the ever rising inflation, all out efforts were
made for the opti- |
|
| mum
utilization of the available tonnage, keeping the expense within a reasonable
limit. |
|
|
| Expenses
on the repairs and maintenance of vessels were also curtailed by using the |
|
| indigenous
resources and the PNSC Workshop to their maximum. |
|
|
| During
the period under reference two old and obsolete conventional vessels viz.
m.v. |
|
| Kaptai
and m.v. Ocean Envoy were sold out. |
|
|
| PLANNING
AND DEVELOPMENT |
|
|
| ECC
of the Cabinet in its meeting held on 28th August 1994 approved acquisition
of 8 sec- |
|
| ondhand
vessels. Out of which 3 container vessels were acquired during the previous
financial |
|
| year.
PNSC intends to purchase one bulk carrier of 60,000 -- 70,000 DWT capacity
during the |
|
| second
half of financial year 1997-98. |
|
|
| MANAGEMENT |
|
|
| Rear
Admiral (Retd) Javaid Ali relinquished the charge of Director and Acting
Chairman |
|
| PNSC
on 29th December 1996, and Vice Admiral Abaid Uilah Khan took over as
Director and |
|
| Chairman
PNSC on the same date. |
|
|
| Major
General M.A. Vahidy assumed the charge of Director (Special Project &
Planning) |
|
| on
20th February 1997. |
|
|
| Commodore
Mirza Ashfaque Beg relinquished the charge of Director (Ship Management) |
|
| on
18th August 1997. Rear Admiral Azhar Hussain assumed the charge of Director
(Ship |
|
| Management)
on the same date. |
|
|
| ACKNOWLEDGMENT |
|
|
| The
Board wishes to place on record its appreciation of the efforts and services
rendered |
|
| by
the officers and staff of the Corporation, both ashore and afloat. |
|
|
| The
Directors also thank the agents, the bankers and the auditors for their
co-operation and |
|
| support.
Our gratitude is also due to the Director-General, Ports & Shipping,
Ministry of |
|
| Communications
and the Government of Pakistan for their guidance and support. |
|
|
|
| FLEET
AS ON JUNE 30, 1997 |
|
|
| S. No. |
Vessel Name |
Year of |
Dead |
G.R.T |
N.R.T |
|
|
Built |
Weight |
|
|
|
|
in Tons |
|
|
|
| I. |
m.v. Lalazar |
1985 |
13,346 |
10,246 |
4,664 |
|
| 2. |
m.v. Swat |
1983 |
14,355 |
10,917 |
5,758 |
|
| 3. |
m.v. Shalamar |
1983 |
14,170 |
10,544 |
5,643 |
|
| 4. |
m.v. Islamabad |
1983 |
18,257 |
12,395 |
6,747 |
|
| 5. |
m.v. Khairpur |
1981 |
16,414 |
13,402 |
7,693 |
|
| 6. |
m.v. Sibi |
1981 |
16,436 |
13,402 |
7,693 |
|
| 7. |
m.v. Kaghan . |
1981 |
18,050 |
12,030 |
6,686 |
|
| 8~ |
m.v. Ayubia |
1981 |
18,050 |
12,030 |
6,686 |
|
| 9. |
m.v. Sargodha |
1980 |
18,242 |
12,395 |
6,747 |
|
| 10. |
m.v. Malakand |
1980 |
18,224 |
12,395 |
6,747 |
|
| 1 I. |
m.v. Multan |
1980 |
18,257 |
12,395 |
6,747 |
|
| 12. |
m.v. Bolan |
1980 |
18,144 |
12,395 |
6,747 |
|
| 13. |
m.v. Hyderabad |
1980 |
18,257 |
12,395 |
6,747 |
|
| 14. |
m.v. Chitral |
1980 |
18,144 |
12,395 |
6,747 |
|
| 15. |
m.v. Makran |
1979 |
23,490 |
16,199 |
8,184 |
|
|
---------- |
---------- |
---------- |
|
|
TOTAL |
261,836 |
185,535 |
100,236 |
|
|
========== |
========== |
========== |
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed Balance Sheet of Pakistan National Shipping
Corporation |
|
| as
at June 30, 1997 and the related Profit and Loss Account and 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 neces- |
|
| sary
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 Corporation 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 purpose of the |
|
| Corporation"s
business; and |
|
|
| (iii)
the business conducted, investments made and the expenditure incurred during |
|
| the
year were in accordance with the objects of the Corporation;. |
|
|
| (c)
m 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 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 Corporation's affairs as at June 30, 1997 and
of the |
|
| profit
and 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. |
|
|
|
|
| BALANCE
SHEET AS at June 30, 1997 |
|
|
|
Note |
1997 |
1996 |
|
|
(Rupees '000) |
|
| SHARE
CAPITAL AND RESERVES |
|
|
| Authorised
Capital |
|
|
| 200,000.000
( 1996: 200,000,000) |
|
| ordinary
shares of Rs. 10 each |
|
2,000,000 |
2,000,000 |
|
| Issued,
subscribed and paid-up capital |
2 |
1,143,406 |
1,143,406 |
|
| Capital
reserve |
|
3 |
126,843 |
126,843 |
|
|
|
1,270,249 |
1,270,249 |
|
| ACCUMULATED
LOSS |
|
|
(454,888) |
(526,487) |
|
|
|
815,361 |
743,762 |
|
| LONG-TERM
LOAN |
|
4 |
1,017,570 |
1,235,871 |
|
| LONG-TERM
LIABILITY |
|
|
356 |
1,713 |
|
| DEFERRED
LIABILITY |
|
| Retirement
gratuity |
|
5 |
202,612 |
177,212 |
|
| CURRENT
LIABILITIES AND PROVISIONS |
|
| Current
portion of: |
|
| --
long-term loan |
|
4 |
407,028 |
353,106 |
|
| --
long-term liability |
|
1,619 |
1,405 |
|
| Creditors,
provisions and accruals |
7 |
1,206,575 |
830,987 |
|
| Unclaimed
dividends |
|
9,881 |
9,883 |
|
|
1,625,103 |
1,195,381 |
|
| CONTINGENCIES |
|
8 |
|
|
---------- |
---------- |
|
|
3,661,002 |
3,353,939 |
|
|
========== |
========== |
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
| FIXED
ASSETS - TANGIBLE |
|
9 |
2,081,523 |
2,163,551 |
|
| LONG-TERM
INVESTMENTS |
|
10 |
4,682 |
4,682 |
|
| LONG-TERM
LOANS |
|
11 |
54,629 |
56,166 |
|
| CURRENT
ASSETS |
|
| Stores
and spares |
|
12 |
142,077 |
138,706 |
|
| Freight
receivable |
|
13 |
538,689 |
331,316 |
|
| Agents'
and owners' balances |
14 |
80,880 |
66,209 |
|
| Other debtors |
|
15 |
117,362 |
82,195 |
|
| Loans
and advances |
|
16 |
36,088 |
35,205 |
|
| Deposits
and prepayments |
|
17 |
19,552 |
20,052 |
|
| Incomplete
voyages |
|
18 |
73,498 |
75,423 |
|
| Income
taxes refundable |
|
92,081 |
158,456 |
|
| Insurance
claims |
|
19 |
41,620 |
33,480 |
|
| Certificates
of deposit with banks |
|
| and
financial institutions |
|
107,310 |
3,000 |
|
|
|
|
| Cash
and bank balances |
|
20 |
271,011 |
185,498 |
|
|
1,520,168 |
1,129,540 |
|
|
---------- |
---------- |
|
|
3,661,002 |
3,353,939 |
|
|
========== |
========== |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| For
the year ended June 30, 1997 |
|
|
Note |
1997 |
1996 |
|
|
|
(Rupees '000) |
|
|
|
| OPERATING
REVENUES |
|
| Freight (Net) |
|
2,786,567 |
2,459,110 |
|
| Chartering
revenues |
|
21 |
4,974,951 |
4,502,894 |
|
|
7,761,518 |
6,962,004 |
|
| OPERATING
EXPENSES |
|
| Fleet
expenses - direct |
|
22 |
7,205,804 |
6,625,601 |
|
|
- indirect |
|
23 |
45,827 |
30,882 |
|
|
|
7,251,631 |
6,656,483 |
|
| Administration
and general expenses |
24 |
241,394 |
246,513 |
|
|
7,493,025 |
6,902,996 |
|
| OPERATING
PROFIT |
|
268,493 |
59,008 |
|
| INSURANCE
CLAIMS |
|
25 |
8,374 |
34,272 |
|
| OTHER INCOME |
|
26 |
159,698 |
124,310 |
|
|
|
436,565 |
217,590 |
|
| OTHER
EXPENSES |
|
27 |
249,556 |
173,514 |
|
| PROFIT
BEFORE TAXATION |
|
|
187,009 |
44,076 |
|
| TAXATION |
|
28 |
115,410 |
4,924 |
|
| PROFIT
AFTER TAXATION |
|
|
71,599 |
39,152 |
|
| ACCUMULATED
LOSS BROUGHT FORWARD |
|
(526,487) |
(565,639) |
|
|
|
---------- |
|
|
| ACCUMULATED
LOSS CARRIED FORWARD |
|
(454,888) |
(526,487) |
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
| CASH
FLOW STATEMENT |
|
| For
the year ended June 30, 1997 |
|
|
|
|
Note |
1997 |
1996 |
|
|
|
(Rupees '000) |
|
|
|
| Cash
flow from operating activities |
|
|
| Cash
generated from operations |
31 |
743,034 |
325,167 |
|
| Staff
gratuity paid |
|
|
(9,600) |
(8,314) |
|
| Interest paid |
|
|
(184,142) |
(83,441) |
|
| Taxes paid |
|
|
(49,035) |
(42,488) |
|
| Long-term
loan |
|
|
1,537 |
10,712 |
|
|
|
|
| Net
cash inflow from operating activities |
|
501,794 |
201,636 |
|
| Cash
flow from investing activities |
|
|
| Fixed
capital expenditure |
|
|
58,633) |
(1,703,693) |
|
| Sale
proceeds of fixed assets |
|
80,689 |
41,125 |
|
| Interest
received |
|
|
20,100 |
26,486 |
|
| Dividend
received |
|
|
124 |
5,155 |
|
|
| Net
cash inflow/(outflow) from investing activities |
42,280 |
(1,630,927) |
|
| Cash
flow from financing activities |
|
|
|
| Long-term
borrowing less repayment |
|
(353,106) |
1,588,977 |
|
| Repayment
of long-term liability |
|
(1,143) |
(2,110) |
|
| Dividend paid |
|
(2) |
(6) |
|
|
|
|
| Net
cash (outflow)/inflow from financing activities |
(354,251) |
1,586,861 |
|
| Net
increase in cash and cash equivalents |
|
189,823 |
157,570 |
|
| Cash
and cash equivalenti at beginning of the year |
188,498 |
30,928 |
|
|
---------- |
---------- |
|
| Cash
and cash equivalents at end of the year |
32 |
378,321 |
188,498 |
|
|
|
========== |
========== |
|
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| For
the year ended June 30, 1997 |
|
|
| INTRODUCTION |
|
|
| Pakistan
National Shipping Corporation is a Corporation established under the
provisions of |
|
| Pakistan
National Shipping Corporation Ordinance, 1979. The shares of the Corporation
are traded |
|
| on
the Karachi, Lahore and Islamabad Stock Exchanges. |
|
|
| I.
ACCOUNTING POLICIES |
|
|
| Significant
accounting policies of the Corporation are summarised below: |
|
| 1.1
Accounting convention |
|
| These
accounts have been prepared under the historical cost convention except that
part of |
|
| the
Corporation's fleet has been included at revalued amount referred to in note
1.4 and that |
|
| certain
exchange differences referred to in note 1.8 have been incorporated in the
cost of |
|
| fleet. |
|
|
| 1.2
Staff retirement and other benefits |
|
|
| The
Corporation operates: |
|
|
| - a contributory
provident fund for all employees; |
|
|
| -
an unfunded gratuity scheme for all its employees other than those who joined
the |
|
| Corporation
after October 16, 1984 and are entitled only to the contributory provident |
|
| fund
benefits. Annual provisions to cover the obligations under the scheme, based
on |
|
| management
estimates adjusted by actuarial valuation periodically, are charged to |
|
| income
currently. Actuarial valuation of the scheme is carried out once in every two |
|
| years
and the latest valuation was carried out as at June 30, 1996. The fair value
of the |
|
| Scheme's
assets and liabilities at the latest valuation date were Rs. 177 million and
Rs. |
|
| 246
million respectively. The Scheme's liabilities have been calculated on the
basis of |
|
| both
past and future services of the employees. As per the latest actuarial
valuation, |
|
| future
contribution rate of the scheme includes allowance for deficit. Aggregate |
|
| Actuarial
Cost Method, using the following significant assumptions, is used for valua- |
|
| tion
of this scheme: |
|
|
| -
Expected rate of increase in salary level 9.2 percent per a |
