| Century Paper & Board Mills Limited |
|
|
|
|
|
|
|
| Annual
Report 1998 |
|
|
|
|
| CONTENTS |
|
| Corporate
Information |
|
| Notice
of Meeting |
|
| Quality Policy |
|
| Year
at a Glance and Graphs |
|
| Directors'
Review |
|
| Auditors'
Report to the Members |
|
| Balance Sheet |
|
| Profit
& Loss Account |
|
| Cashflow
Statement |
|
| Notes
to the Accounts |
|
| Statement
Under Section 237 (1) of the Companies Ordinance 1984 |
|
| Pattern
of Holding of Shares |
|
| Statistical
Summary |
|
| Report
and Accounts of Century Power Generation Limited a subsidiary Company |
|
|
|
| CORPORATE
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
|
| Iqbalali
Lakhani |
|
|
| Chairman |
|
|
|
|
|
|
| M.
Rafi Chawla |
Tasleemuddin Ahmed Batlay |
|
|
Chief Executive &
Managing Director |
|
|
| Zulfiqarali
Lakhani |
Aziz Ebrahim |
|
|
| Amin
Mohammed Lakhani |
Syed Shabahat
Hussain-Nominee Director(NIT) |
|
|
|
|
| ADVISOR |
|
| Sultanali
Lakhani |
|
|
| COMPANY
SECRETARY |
|
| Ramzanali
Halani |
|
|
| EXECUTIVE
COMMITTEE |
|
| M.
Rafi Chawla |
|
| Aftab Ahmad |
|
| Mir Nadir Ali |
|
| Zafar
Iqbal Sobani |
|
|
| AUDITORS |
|
| Ford,
Rhodes, Robson, Morrow |
|
| Chartered
Accountants |
|
|
| BANKERS |
|
| American
Express Bank Limited |
|
| ANZ
Grindlays Bank Limited |
|
| Credit
Agricole Indosuez |
|
| Citibank N.A. |
|
| Habib
Bank Limited |
|
| Mashreq
Bank Psc |
|
| National
Bank of Pakistan |
|
| Standard
Chartered Bank |
|
| Societe
Generale |
|
|
| HEAD
OFFICE, CORPORATE OFFICE & REGIONAL SALES OFFICE (SOUTH) |
|
| Lakson
Square, Building No. 2, |
|
| Sarwar
Shaheed Road, Karachi-74200, Pakistan. |
|
| Phones:
(021) 5689081-9 |
|
| Fax:
(021) 5681163 & (021) 5683410 |
|
| E-Mail:
cpbm @cyber.net.pk |
|
|
| REGISTERED
OFFICE & REGIONAL SALES OFFICE (NORTH) |
|
| 41-K,
Model Town, Lahore, Pakistan. |
|
| Phones:
(042) 5880697, 5880928 |
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| Fax:
(042) 5830338 |
|
|
| MILLS |
|
| Jamber
Khurd, Bhai Pheru, Tehsil Chunian, |
|
| Lahore-Multan
Road, District Kasur, Pakistan. |
|
| Phones:
(04943) 2761 & 2762, (04951) 388151 & 388200 |
|
| Fax:
(04943) 2763 |
|
|
|
| NOTICE
OF MEETING |
|
|
| NOTICE
IS HEREBY GIVEN that the 15th Annual General Meeting of CENTURY PAPER &
BOARD |
|
| MILLS
LIMITED will be held on Thursday December 03, 1998 at 10.30 a.m. at Avari
Renaissance Towers |
|
| Hotel,
Fatima Jinnah Road, Karachi to transact the following business: |
|
|
| ORDINARY
BUSINESS |
|
| 1.
To receive, consider and adopt the audited Balance Sheet and Profit and Loss
account for the year |
|
| ended
June 30, 1998 and the Directors' and Auditors' Reports thereon. |
|
|
| 2.
To declare a dividend by way of issue of bonus shares @ 10% i.e. in the
proportion of one share |
|
| for
every ten existing shares held by the members as recommended by the Board of
Directors. |
|
|
| 3.
To appoint Auditors and to fix their remuneration. |
|
|
| SPECIAL
BUSINESS |
|
| 4.
To consider, subject to declaration of dividend as above, to capitalise a sum
of Rs. 28,564,800 by |
|
| way
of issue of 2,856,480 fully paid bonus shares of Rs. 10/- each and if thought
fit to pass an |
|
| ordinary
resolution in the matter. |
|
|
|
|
| The
statement under section 160 of the Companies Ordinance, 1984 and the draft of
the ordinary |
|
| resolution
to be passed in the above matter are annexed. |
|
|
|
By Order of the Board |
|
|
|
RAMZANALI HALANI |
|
| Dated:
October 16, 1998 |
|
Company Secretary |
|
|
|
| NOTES: |
|
| 1.
The share transfer books of the Company will remain closed from November 20,
1998 to December |
|
| 03,
1998 both days inclusive. Transfers received in order by the Corporate Office
of the Company |
|
| situated
at Lakson Square Building No. 2, Sarwar Shaheed Road, Karachi upto November
19, 1998 |
|
| will
be considered in time for entitlement of bonus shares. |
|
|
| 2.
A member entitled to attend and vote at the general meeting may appoint
another member as his |
|
| proxy
to attend, speak and vote instead of him. |
|
|
|
|
| 3.
Forms of proxy to be valid must be received by the Company not later than 48
hours before the time |
|
| of
the meeting. |
|
|
| 4.
Members are requested to notify the Company promptly of any change in their
addresses. |
|
|
| 5.
Form of proxy is enclosed herewith. |
|
|
|
| STATEMENT
UNDER SECTION 160 |
|
| OF
THE COMPANIES ORDINANCE, 1984 |
|
|
| The
Board of Directors has recommended to the members of the Company to declare a
dividend @ 10% |
|
| by
way of issue of 2,856,480 fully paid bonus shares of Rs. 10/- each and
thereby capitalise a sum of Rs. |
|
| 28,564,800
which has been transferred to 'reserve for issue of bonus shares' from
capital reserve. Subject |
|
| to
approval of the Board of Directors' recommendation as above, the resolution
as under will be considered |
|
| to
be passed by the members as an ordinary resolution: |
|
|
| "RESOLVED
THAT: |
|
| i)
a sum of Rs. 28,564,800 out of the 'reserve for issue of bonus shares' be
capitalised and |
|
| applied
in making payment in full of 2,856,480 ordinary shares of Rs. 10/- each and
that the |
|
| said
shares be allotted as fully paid up bonus shares to those members of the
Company whose |
|
| names
appear in the Register of members on December 03, 1998 @ 10% i.e. in the
proportion |
|
| of
ONE share for every TEN existing shares held and that such new shares shall
rank pari |
|
| passu
as regards future dividends and in all other respects with the existing
ordinary shares |
|
| of
the Company; |
|
|
|
| ii)
in the event of any member holding less than TEN shares or a number of shares
which is not |
|
| an
exact multiple of TEN, the fractional entitlement of shares of such members
shall be |
|
| consolidated
into whole new shares and the Directors of the Company be and are hereby |
|
| authorised
to arrange sale of the shares constituted thereby in such manner as they may
think |
|
| fit
and to pay the proceeds of the sale to such of the members according to their
entitlement; |
|
|
| iii)
for the purpose of giving effect to the above matter, the Directors be and
are hereby authorised |
|
| to
give such directions as may be necessary and to settle any question or
difficulties that may |
|
| arise
in regard to the distribution of the said new shares as they think fit." |
|
|
| The
Directors are interested in this business to the extent of their entitlement
of bonus shares as |
|
| shareholders. |
|
|
|
| QUALITY
POLICY |
|
|
| OUR
MILLION-STRIVE TOGETHER FOR EXCELLENCE |
|
|
| *
Century excels in manufacturing & marketing quality |
|
| Paper
& Board for packaging. |
|
|
|
| *
Being a customer focused Company, Century is |
|
| always
ready to accept challenges for achieving its |
|
| mission. |
|
|
|
|
| *
Its professional & motivating management style |
|
| ensures
customer satisfaction through continuous |
|
| improvement
in quality & productivity. |
|
|
|
| *
Century values the social & economic well being of |
|
| its
partners and strives for a harmonious environment |
|
| conducive
to team work. |
|
|
|
| YEAR
AT A GLANCE AND GRAPHS |
|
|
|
| YEAR
AT A GLANCE |
|
|
|
|
1998 |
1997 |
|
|
|
|
(Rupees in thousands) |
|
|
|
|
|
| Sales - Net |
|
1,421,566 |
1,014,709 |
|
|
| Profit
before taxation |
|
76,819 |
61,339 |
|
|
| Profit
after taxation |
|
65,960 |
55,667 |
|
|
| Taxation |
|
10,859 |
5,672 |
|
|
| Dividend |
|
|
|
|
| Cash % |
|
|
-- |
10 |
|
|
| Bonus issue % |
|
|
10 |
|
|
|
| Earnings
per share - Rupees |
|
2.31 |
195 |
|
|
| Paid-up capital |
|
285,648 |
285,648 |
|
|
| Shareholders'
equity |
|
656,104 |
590,144 |
|
|
| Total assets |
|
1,369,981 |
1,148,172 |
|
|
| Capital
employed |
|
947,341 |
940,158 |
|
|
| Capital
expenditure |
|
39,391 |
123,358 |
|
|
| Number
of employees |
|
836 |
822 |
|
|
|
|
| DIRECTORS'
REVIEW |
|
|
| The
Directors take pleasure in presenting the annual report together with the
audited accounts |
|
| of
the Company for the year ended June 30, 1998. |
|
|
| APPROPRIATIONS |
|
| Your
Board recommends that the net profit of Rs. 65.960 million earned during the
year under |
|
| review
together with the unappropriated profit of Rs. 0.886 million brought forward
and a sum of |
|
| Rs.
28.565 million transferred from the capital reserve be appropriated as under: |
|
|
|
|
(Rupees '000) |
|
|
| Profit
before taxation |
|
76,819 |
|
| Taxation |
|
10,859 |
|
|
--------------- |
|
| Profit
after taxation |
|
65,960 |
|
| Un-appropriated
profit brought forward |
|
886 |
|
|
|
|
--------------- |
|
|
|
|
66,846 |
|
| Amount
transferred from capital reserve |
|
28,565 |
|
|
--------------- |
|
|
|
|
95,411 |
|
| Appropriations: |
|
|
| Transfer
to reserve for proposed issue of bonus shares |
|
| in
the ratio of one share for every ten shares |
|
28,565 |
|
|
|
|
| Transfer
to general reserve |
|
66,000 |
|
|
|
|
--------------- |
|
|
|
|
94,565 |
|
|
|
|
--------------- |
|
| Un-appropriated
profit carried forward |
|
846 |
|
|
|
|
========== |
|
|
|
|
|
|
| AI-Hamdolillah
during the year our PM4 project was successfully commissioned and the results |
|
| under
review include nine months production of PM4 Board Machine & Offline
Coating Plant. |
|
|
| OPERATING
RESULTS |
|
| Production
and Net Sales rose by 44% and 40% respectively compared to last year -
Company |
|
| produced
51,145 tons of Paper & board compared to 35,469 tons and net sales were
Rs. 1.422 |
|
| billion
compared to Rs. 1.015 billion in the year 1996-97.. |
|
|
| Profit
before tax for the year rose by 25% compared to last year - Rs. 76.82 million
compared |
|
| to
Rs. 61.34 million in 1996-97. Profit would have been still higher but for the
foreign exchange |
|
| impact
on input cost and suppressed market prices due to competition, leaving a
Gross Margin |
|
| of
only 11%. Higher financial charges and depreciation, due to BMR (expansion),
also reduced |
|
| the
profitability. |
|
|
| We
are pleased to report that a "Quality Policy" has been laid down by
your Company which |
|
| encompasses
Company's corporate objectives with "CUSTOMER" being our main
focus. To achieve |
|
| the
product quality the Company is in the process of implementing ISO 9002
Management System. |
|
| Presently
scope of implementation is Coating, Finishing, Despatch and support functions
such |
|
| as
Quality Control, Technical, Marketing, Procurement & Planning, pre-audit
of which has been |
|
| completed
and the final audit will be carried out in October '98 when we expect to
receive ISO |
|
| 9002
Certification. |
|
|
| MARKETING |
|
| The
domestic paper industry is going thru difficult times for the last couple of
years. This is partly |
|
| due
to already depressed economic environment which have been further aggravated
on account |
|
| of
imposition of economic sanctions causing stagnation and reduction in economic
growth of the |
|
| country.
In the case of paper industry the Government has adopted policies which are
favourable |
|
| to
'Imports', hurting the industry as well as loosing the valuable foreign
exchange which the country |
|
| needs
badly to be self reliant. |
|
|
| The
massive devaluation of currency in Far Eastern Countries has resulted in
liberal imports and |
|
| dumping
of goods from Indonesia, Korea and Taiwan. The cheaper imports from these
countries |
|
| is
badly hurting the local paper industry which is already reeling under the
effects of depressed |
|
| economic
environment in the country. |
|
|
| However,
despite the grim economic scenario and severe competition, prevailing within
the |
|
| domestic
industry, and reduction in demand growth, your Company has managed to improve
upon |
|
| its
market share. This is mainly due to high quality of our products coupled with
achieving customer |
|
| satisfaction
thru personalised service. |
|
|
| We
reiterate that the domestic paper & board industry badly needs Government
support and |
|
| incentives
for it to survive and grow. The existing policies favour Imports and offer
uneven playing |
|
| field
to the local manufacturers. The paper industry, thru its Association, has
been calling upon |
|
| the
Government for immediate remedial action to remove the anomalies in the
duties structure |
|
| for
paper and board finished products, felts and wires etc. to save the industry
from collapse. |
|
| In
this connection appeals have been made to various government bodies. Some of
the Tariff |
|
| reforms
which need Government's immediate attention are:- |
|
|
| *
Withdrawal of 5% Excise Duty on locally produced paper & board. |
|
|
|
|
| *
The Government should seriously consider levying Anti-Dumping duties to
combat cheaper |
|
| imports
from Far Eastern Countries, in the name of stock lots etc. |
|
|
|
| *
To save precious foreign exchange thru import substitution and also achieving
the goal |
|
| of
self reliance the import duty on paper & board products should be
increased to support |
|
| local industry. |
|
|
|
| In
the meantime, your dedicated and committed Management will continue to work
hard for |
|
| improving
the profitability of the Company thru strict cost control, producing quality
products thereby |
|
| providing
a reasonable return to the shareholders. |
|
|
| CONTRIBUTION
TO NATIONAL EXCHEQUER |
|
| Company's
contribution, in terms of duties and taxes, to the National Exchequer during
the year |
|
| was
Rs. 338 million compared to Rs. 362 million in the preceding year - a
decrease of 6.62% |
|
| due
to lower income tax on account of capitalisation of PM4 project. |
|
|
| FUTURE
OUTLOOK |
|
| Although,
the present economic environment has created a lot of uncertainties for the
future, we |
|
| are
optimistic that these problems will be resolved in the near future and the
country will once |
|
| again
move forward towards prosperity. We are also confident that thru commitments
and dedicated |
|
| efforts
and adopting innovative approach, your Company will be able to perform
reasonably well. |
|
|
| YEAR
2000 COMPLIANCE |
|
| Year
2000 is fast approaching and all business organisations face continuity
problems. This new |
|
| Millennium
problem is being dealt at our Group level and we are in the process of
achieving the |
|
| compliance.
However, we are pleased to announce that we would be internally Millennium
compliant |
|
| by
December 1998. |
|
|
| BOARD
OF DIRECTORS |
|
| On
the resignation of N.I.T.'s nominee director Mr. Shahid Ghaffar from the
Directorship of the |
|
| Company
Mr. Syed Shabahat Hussain was co-opted in his place for the remainder of the
present |
|
| term
of the Board. |
|
|
| The
Board places on record its appreciation of the valuable services rendered by
Mr. Shahid Ghaffar |
|
| during
his tenure and welcomes Mr. Syed Shabahat Hussain on the Board. |
|
|
| ACKNOWLEDGEMENTS |
|
| The
Board wishes to thank all its employees and management for their dedication
and valuable |
|
| contribution
made during the year. |
|
|
| The
Board also wishes to thank company's bankers, leasing companies, shareholders
and customers |
|
| for
their continued support. |
|
|
| AUDITORS |
|
| The
present Auditors, Messrs Ford, Rhodes, Robson, Morrow, retire and being
eligible, offer |
|
| themselves
for reappointment. |
|
|
| PATTERN
OF SHAREHOLDING |
|
| A
pattern of shareholding in the prescribed form is included in this report. |
|
|
|
On behalf of the Board of
Directors |
|
|
|
IQBALALI LAKHANI |
|
| Karachi:
October 12, 1998 |
|
Chairman |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of CENTURY PAPER & BOARD MILLS
LIMITED |
|
| as
at June 30, 1998 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 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 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, 1998 and of the profit and
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. |
|
|
|
|
|
|
FORD, RHODES, ROBSON,
MORROW |
|
| Karachi:
October 12, 1998 |
|
Chartered Accountants |
|
|
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1998 |
|
|
|
Note |
1998 |
1997 |
|
|
(Rupees in thousands) |
|
|
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
|
|
|
| Authorised
capital |
|
|
|
| 35,000,000
ordinary shares of Rs. 10/- each |
|
|
350,000 |
350,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up capital |
|
3 |
285,648 |
285,648 |
|
| Reserves |
|
|
4 |
370,456 |
304,496 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
656,104 |
590,144 |
|
| REDEEMABLE
CAPITAL AND DEFERRED MARK-UP |
5 |
76,869 |
158,845 |
|
| LONG-TERM
LOANS |
|
|
6 |
17,000 |
17,000 |
|
| LIABILITIES
AGAINST ASSETS SUBJECT TO |
|
|
|
| FINANCE
LEASE |
|
|
7 |
56,991 |
40,843 |
|
|
|
|
|
|
|
| DEFERRED
LIABILITIES |
|
|
8 |
55,004 |
55,004 |
|
| CURRENT
LIABILITIES |
|
|
|
|
|
| Current
portion of - redeemable capital |
|
5 |
70,758 |
59,758 |
|
|
-long-term loans |
|
6 |
-- |
4,906 |
|
|
- liabilities against |
|
|
|
|
|
assets subject to finance
lease |
|
7 |
14,615 |
13,658 |
|
|
|
|
|
|
| Shod
term running finances |
|
|
9 |
207,054 |
87,914 |
|
| Creditors,
accrued and other liabilities |
|
10 |
215,586 |
91,535 |
|
| Proposed
dividend |
|
|
|
-- |
28,565 |
|
|
|
|
|
|
--------------- |
--------------- |
|
|
|
|
508,013 |
286,336 |
|
| CONTINGENCIES
AND COMMITMENTS |
11 |
|
|
|
|
|
--------------- |
--------------- |
|
|
|
|
1,369,981 |
1,148,172 |
|
|
|
|
========= |
========= |
|
|
|
|
| FIXED
ASSETS - TANGIBLE |
|
|
|
| Operating
assets |
|
12 |
740,739 |
548,669 |
|
| Capital
work-in-progress |
|
13 |
5,698 |
230,203 |
|
|
|
--------------- |
--------------- |
|
|
|
|
746,437 |
778,872 |
|
| LONG-TERM
INVESTMENT |
|
14 |
100,000 |
100,000 |
|
| LONG-TERM
LOANS |
|
15 |
743 |
944 |
|
| LONG-TERM
DEPOSITS AND PREPAYMENT |
16 |
6,496 |
4,863 |
|
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
|
| Stores
and spares |
|
17 |
102,559 |
63,659 |
|
| Stock-in-trade |
|
18 |
238,126 |
89,415 |
|
| Trade debts |
|
19 |
95,618 |
68,042 |
|
| Loans,
advances and other receivables |
|
20 |
18,171 |
5,025 |
|
| Deposits
and prepayments |
|
21 |
5,960 |
2,857 |
|
| Taxation - net |
|
|
37,368 |
18,164 |
|
| Cash
and bank balances |
|
22 |
18,503 |
16,331 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
516,305 |
263,493 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
|
1,369,981 |
1,148,172 |
|
|
|
|
|
========== |
========== |
|
| Note:
The annexed notes form an integral part of these accounts. |
|
|
|
|
|
|
|
| PROFIT
& LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 1998 |
|
|
|
|
|
|
Note |
1998 |
1997 |
|
|
|
|
(Rupees in thousands) |
|
|
|
|
|
| Sales |
|
|
23 |
1,421,566 |
1,014,709 |
|
| Cost
of goods sold |
|
24 |
1,264,238 |
875,374 |
|
|
|
|
--------------- |
--------------- |
|
| Gross profit |
|
|
|
157,328 |
139,335 |
|
| Administrative and selling |
expenses |
|
25 |
35,822 |
32,166 |
|
|
|
|
--------------- |
--------------- |
|
| Operating
profit |
|
|
121,506 |
107,169 |
|
| Other income |
|
|
26 |
35,382 |
16,983 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
156,888 |
124,152 |
|
|
|
|
--------------- |
--------------- |
|
| Financial
charges |
|
27 |
74,604 |
58,426 |
|
| Other charges |
|
|
28 |
5,465 |
4,387 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
80,069 |
62,813 |
|
|
|
|
--------------- |
--------------- |
|
| Profit
before taxation |
|
|
76,819 |
61,339 |
|
| Taxation |
|
|
30 |
10,859 |
5,672 |
|
