| Japan Power Generation Limited |
|
|
|
|
|
|
| Annual
Report 1998 |
|
|
| CONTENTS |
|
|
| COMPANY
INFORMATION |
|
| NOTICE
OF THE 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 UFPAL |
|
| SHEIKH
NIZAZ ALl |
|
| SHEIKH
MAHMOOD ALl |
|
| MRS. SHAHNAZ |
|
|
| MR.
MOHAMMAD ALl |
|
| MRS.
SAMINA ZAFAR |
|
| MR.
WASIF MUSTAFA KHAN |
|
|
| COMPANY
SECRETARY |
|
| SYED
ZAFAR HAlDER |
|
|
| AUDITORS |
|
| COOPERS
& LYBRAND |
|
| CHARTERED
ACCOUNTANTS |
|
| & |
|
| JAVAID
TARIQ & CO. |
|
| CHARTERED
ACCOUNTANTS |
|
|
| LEGAL
ADVISOR |
|
| 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 4th Annual General Meeting of the members of Japan
Power Generation Limited will |
|
| be
held on Thursday the 31st December, 1998 at 11.00 A.M. at plant site located
at Khan-e-Nepal Road near Jia |
|
| Bagga
Railway Station, Raiwind Road, District Lahore to transact the following
business · |
|
|
| 1.
To confirm the minutes of last Annual General Meeting held on December 30,
1997. |
|
|
| 2.
To receive, consider and adopt the audited accounts of the Company for the
financial year ended June 30, |
|
| 1998
together with the Auditors' and Directors' Reports thereon. |
|
|
| 3.
To elect twelve Directors of the Company for a period of three years in
accordance with section 178(1) of |
|
| the
Companies Ordinance, 1984 in place of retiring directors namely: |
|
|
| MR.
ZAFAR MAHMOOD |
|
MR. FAISAL QAMMAR UPPAL |
|
| SHEIKH
NIZAZ ALl |
|
MR. HASEEB KHAN |
|
| SHEIKH
MAHMOOD ALl |
|
MR. TAKASHI KABURAGI |
|
| MRS. SHAHNAZ |
|
MR. SAITO YOSHIHIRO |
|
| MR.
MOHAMMAD ALl |
|
MR. AKHTAR ALl UPPAL |
|
| MRS.
SAMINA ZAFAR |
|
MR. ASAD ALl UPPAL |
|
|
|
|
| All
retiring directors are eligible for re-election. |
|
|
| 4.
To appoint Auditors for the financial year 1998-99 and fix their
remuneration. |
|
|
| 5.
To transact any other business that may be placed before the meeting with the
permission of the Chair. |
|
|
|
|
For and on behalf of the |
|
|
|
Board of Directors |
|
|
|
|
|
|
| Lahore |
|
|
(SYED ZAFAR HAlDER) |
|
| Date:
December 09, 1998 |
|
Company Secretary |
|
|
| Notes: |
|
|
| i)
The Share Transfer Books of the Company will remain closed from December 21,
1998 to December 31, |
|
| 1998
(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. |
|
|
|
|
| iii)
Members are requested to immediately notify the change in address, if any. |
|
|
|
| DIRECTORS'
REPORT |
|
|
| Your
Directors feel pleasure in presenting the 4th Annual Report and Audited
Accounts for the year ended June 30, |
| 1998. |
|
|
| CONSTRUCTION
PROGRESS: |
|
| Your
project is almost 95 % complete and the remaining work is being carried out
by the EPC contractor (SIEMENS). |
| The
most recent undertaking given by the EPC contractor is that the Plant will be
available for Reliability Test by the |
| end
of February 1999. |
|
|
| In
the absence of transmission line from WAPDA the internal testing could not be
carried out for the full Complex. |
| However,
each engine and generator has been tested successfully at 110 % load using
dummy load under the |
|
| supervision
of TTC/MHI. |
|
|
| REASONS
FOR DELAY IN COD: |
|
| The
Commercial Operation Date (COD) as per last year's Annual Report was January
1998 which is now expected in |
|
| March
1999. The main causes for delays in achieving COD are briefly summarised as
follows: |
|
|
| 1.
Delay in providing interconnection and transmission line facilities to which
the COD is actually linked. This |
|
| facility
has now been provided to the Company during the first week of December 1998. |
|
|
|
|
| 2.
Due to the late delivery of 4 number 132 KV 45~50 MVA power transformers, the
Grid Station at the site was |
|
| completed
later than what was originally expected. |
|
|
|
|
| 3.
Inspite of best efforts by the management the cost overruns, as explained in
previous year's report, were |
|
| arranged
later than expected. This delay occurred due to the fact that it took longer
than our expectations to |
|
| convince
the lenders under the prevailing unsatisfactory economic situation. In
addition, documentation |
|
| process
was also time consuming. |
|
|
| 4.
Uncertainty prevailing with respect to the government policy towards the
IPP's. |
|
|
| GENERAL: |
|
| 1.
The Company has been asked by the GOP to renegotiate the tariff already
signed with WAPDA. The |
|
| management
is in his process of a dialogue with the Special Committee and has offered a
reduction in non |
|
| escalable
portion of CPP which is meant for repayment of debt. The Company has been
able to offer this |
|
| reduction
due to the fact that the loan on the project is significantly on the lower
side as compared with other |
|
| projects.
Although the Committee is appreciative of the Company's project cost and the
unilateral gesture of |
|
| tariff
reduction, a formal agreement (if any) is yet to be reached with the
government. |
|
|
| 2.
The expected COD of March 1999 may be further affected due to the following
circumstances: |
|
|
| a)
exemption from WAPDA providing SCADA system for a short period. |
|
|
|
|
| b)
delay in the arrangement of working capital/other expenditure which is
estimated at |
|
| Rs. 450 M. |
|
|
|
|
|
|
| c)
any delay attributable to GOP. |
|
|
| The
management is working its best endeavours to achieve an early solution to the
above mentioned points, |
|
| and
is confident to resolve them satisfactorily at the earliest. |
|
|
| 3.
The O & M Contract with TTC/MHI is to be effectuated. |
|
|
|
|
| 4.
The Company has requested GOP to extend the Required Commercial Operation
Date, which was originally |
|
| 23.01.98,
to avoid liquidated damages claimed by WAPDA. |
|
|
| 5.
The first installment of supplier's credit including interest and fee
amounting to JY 973 M became due on |
|
| September
26, 1998. The payment is secured by a letter of credit from Allied Bank of
Pakistan Ltd. but the |
|
| remittance
could not be made, as the permission was not granted by SBP owing to the
shortage of foreign |
|
| currency. |
|
|
|
| As
the Company has not yet started generating funds, this non-funded facility
provided by the Bank's |
|
| Syndicate
will become funded after remittance by ABL. |
|
|
|
|
| The
management is trying to obtain approval for the rescheduling of atleast first
two installments, however, |
|
| till
todate no meaning-full progress has been achieved in this respect due to the
prevailing uncertainty about |
|
| the
Government Policy regarding IPP's. |
|
|
| 6.
The Company is facing liquidity problem due to delay in operation for more
than one year which also |
|
| resulted
in an increase of various carrying costs. However, proper austerity measures
are being taken to |
|
| face
this situation. |
|
|
| AUDITORS: |
|
| Retiring
Auditors M/S Coopers & Lybrand, Chartered Accountants and Javaid Tariq
& Co., Chartered Accountants |
|
| being
eligible offer themselves for reappointment. |
|
|
| PATTERN
OF SHAREHOLDING: |
|
| Statement
reflecting the pattern of shareholding is attached to the Annual Report. |
|
|
|
|
ON BEHALF OF THE BOARD |
|
|
|
|
|
|
| Lahore |
|
|
|
|
| Date:
December 07, 1998 |
|
CHIEF EXECUTIVE |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of Japan Power Generation Limited as
at June 30, 1998 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, 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, 1998 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. |
|
|
| Lahore |
|
Coopers & Lybrand |
|
Javaid Tariq & Co. |
|
| Date:
December08, 1998. |
|
Chartered Accountants |
|
Chartered Accountants |
|
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1998 |
|
|
|
|
|
1998 |
1997 |
|
|
|
Note |
Rupees |
Rupees |
|
| Fixed
capital expenditure |
|
|
| Fixed assets |
|
3 |
41,982,285 |
41,133,710 |
|
| Capital
work in progress |
|
4 |
3,916,378,017 |
3,673,051,194 |
|
| Pre-operational
cost |
|
5 |
184,804,974 |
77,600,108 |
|
|
|
|
---------- |
---------- |
|
|
|
|
4,143,165,276 |
3,791,785,012 |
|
| Deferred
cost |
|
|
64,935,957 |
64,935,957 |
|
| Current
assets |
|
|
|
|
| Stock
and stores |
|
|
20,158,387 |
- |
|
| Advances,
deposits, prepayments and |
|
|
| other
receivables |
|
6 |
4,357,794 |
10,764,229 |
|
| Cash
and bank balances |
|
7 |
90,005,173 |
152,612,026 |
|
|
|
|
---------- |
---------- |
|
|
|
|
114,521,354 |
163,376,255 |
|
|
|
|
---------- |
---------- |
|
|
|
|
4,322,622,587 |
4,020,097,224 |
|
|
|
|
========== |
========== |
|
| 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
ordinary shares of Rs. 10/- |
|
| each
fully paid in cash |
|
|
1,332,000,000 |
1,332,000,000 |
|
|
|
|
|
|
| Long
term loans |
|
8 |
2,270,718,965 |
2,641,186,730 |
|
|
|
|
|
|
| Liabilities
against assets subject to |
|
|
| finance
lease |
|
9 |
3,960,148 |
4,907,573 |
|
| Deferred
liabilities - Gratuity |
|
|
1,438,900 |
611,000 |
|
|
|
|
|
|
| Current
liabilities |
|
|
|
|
| Current
portion of long term liabilities |
10 |
500,283,500 |
812,917 |
|
| Creditors,
accrued and other liabilities |
11 |
214,221,074 |
40,579,004 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
714,504,574 |
41,391,921 |
|
| Contingencies
and commitments |
|
12 |
- |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
4,322,622,587 |
4,020,097,224 |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
DIRECTOR |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
|
|
|
1998 |
1997 |
|
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
|
|
| (Increase)/decrease
in current assets |
|
| Advances,
deposits, prepayments and other receivables |
6,406,435 |
(10,720,105) |
|
| Stock
and stores |
|
|
(20,158,387) |
- |
|
|
|
|
|
|
| Increased(decrease)
in current liabilities |
|
|
|
| Current
portion of long term liabilities |
|
499,470,583 |
812,917 |
|
| Creditors,
accrued and other liabilities |
|
173,642,070 |
39,947,493 |
|
|
|
|
---------- |
---------- |
|
|
|
|
659,360,701 |
30,040,305 |
|
|
|
|
---------- |
---------- |
|
| Fixed
capital expenditure |
|
|
(351,380,264) |
(534,591,055) |
|
| Deferred
cost |
|
|
- |
(20,348,300) |
|
|
|
|
---------- |
---------- |
|
|
|
(351,380,264) |
(554,939,355) |
|
|
|
|
---------- |
---------- |
|
| Net
cash inflow from investing activities |
A |
307,980,437 |
(524,899,050) |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
|
|
| Share
capital |
|
- |
661,870,000 |
|
| Long
term loans |
|
(370,467,765) |
- |
|
| Lease
finance |
|
(947,425) |
4,907,573 |
|
| Gratuity |
|
827,900 |
- |
|
| Share
application money |
|
- |
(450,488,200) |
|
|
|
---------- |
---------- |
|
| Net
cash outflow from financing activities |
B |
(370,587,290) |
216,289,373 |
|
|
|
|
---------- |
---------- |
|
| Net
increase/(decrease) in cash and cash equivalents (A+B) |
(62,606,853) |
(308,609,677) |
|
| Cash
and cash equivalents at the beginning of the year |
152,612,026 |
461,221,703 |
|
|
|
|
---------- |
---------- |
|
| Cash
and cash equivalents at the end of the year |
90,005,173 |
152,612,026 |
|
|
|
|
========== |
========== |
|
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
DIRECTOR |
|
|
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
| 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 electric |
|
| power
to WAPDA. |
|
|
| The
Company's original Commercial Operation Date was January 23, 1998 but due to
certain |
|
| unavoidable
circumstances it has been delayed. In the absence of any operational activity
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 income tax
under Clause |
|
| 176
of Part 1 of the Second Schedule of 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
Stock and stores |
|
| These
are valued at the lower of cost and net realizable value. Cost is determined
on average basis. |
|
|
| 2.7
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. |
|
|
| 2.8
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 five years starting from the year of commercial operations. |
|
|
| 2.9
Foreign currency translations |
|
| Foreign
currency transactions are converted into Pak Rupees at the rates prevailing
on the date of |
|
| transaction.
Assets and liabilities in foreign currencies at the year end are translated
into Pak Rupees |
|
| at
the rates of exchange prevailing at the balance sheet date. |
|
|
| Since
the Company has not yet commenced commercial operations, exchange gains and
losses on |
|
| translation
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. |
|
|
| 2.10
Accounting for leases |
|
| The
Company accounts for assets acquired under finance lease by recording the
assets and related |
|
| liabilities.
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 in a manner so as to provide a constant periodic rate of charge on the
outstanding |
|
| liabilities.
No depreciation has been charged on leased assets as the Company has not yet |
|
| commenced
its operational activities. |
|
|
|
|
|
|
|
|
|
1998 |
1997 |
|
|
|
Rupees |
Rupees |
|
|
|
|
|
|
| 3.
Fixed assets |
|
|
|
| Freehold
land |
|
16,046,645 |
16,046,645 |
|
| Furniture
and fixture |
|
2,454,459 |
1,927,884 |
|
| Office
equipment |
|
1,347,905 |
1,025,905 |
|
| Tubewell
at site |
|
1,723,760 |
1,723,760 |
|
| Railway
siding |
|
6,650,000 |
6,650,000 |
|
| Vehicles |
|
6,940,516 |
6,940,516 |
|
|
|
|
| Leasehold |
|
|
|
| Office
premises |
|
|
|
775,000 |
775,000 |
|
| Vehicles |
|
|
|
6,044,000 |
6,044,000 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
41,982,285 |
41,133,710 |
|
|
|
========== |
========== |
|
|
| 4.
Capital work in progress |
|
|
| Building |
|
|
|
|
| Civil works |
|
241,126,570 |
182,149,314 |
|
| Advances
to contractors |
|
3,013,723 |
4,526,742 |
|
| Machinery |
|
3,669,564,213 |
3,386,237,949 |
|
| Advances
to contractors |
|
1,320,586 |
34,112,776 |
|
| Letters
of credit |
|
280,425 |
65,824,413 |
|
| Advance
for land |
|
1,072,500 |
200,000 |
|
|
|
---------- |
---------- |
|
|
|
3,916,378,017 |
3,673,051,194 |
|
|
|
|
========== |
========== |
|
|
|
|
| 5.
Pre-operational cost |
|
|
|
| Directors'
remuneration |
|
|
1,140,000 |
1,140,000 |
|
| Travelling
and conveyance |
|
14,139,263 |
11,421,484 |
|
| Staff
salaries and benefits |
|
22,215,879 |
9,536,909 |
|
| Rent,
rates and taxes |
|
|
2,428,689 |
978,425 |
|
| Postage
and telegrams |
|
|
279,618 |
151,403 |
|
| Telephone
and telex |
|
|
4,038,539 |
2,600,031 |
|
| Printing
and stationery |
|
|
1,114,851 |
843,522 |
|
| Newspapers
and periodicals |
|
30,099 |
17,893 |
|
| Auditors'
remuneration |
|
(Note 5.1) |
615,700 |
370,700 |
|
| Fee
and subscription |
|
|
438,556 |
60,565 |
|
| Insurance |
|
|
1,237,271 |
569,072 |
|
| Vehicle
running |
|
|
2,356,289 |
957,322 |
|
| Entertainment |
|
|
1,206,947 |
873,423 |
|
| Charity
and donation |
|
(Note 5.2) |
182,784 |
171,784 |
|
| Legal,
professional and consultancy |
(Note 5.3) |
30,187,499 |
22,476,477 |
|
| Utilities |
|
|
|
|
765,122 |
361,466 |
|
| Repair
and maintenance |
|
|
|
991,342 |
678,778 |
|
| Publicity
and advertisement |
|
792,775 |
573,030 |
|
| Bank
charges and excise duty |
|
369,620 |
357,064 |
|
| Financial
charges |
|
|
100,399,106 |
4,210,934 |
|
| Guarantee
commission |
|
|
4,476,046 |
4,476,046 |
|
| Bank
fees and other charges |
|
72,281,673 |
68,955,630 |
|
| Lease
finance |
|
|
2,033,402 |
412,636 |
|
| Miscellaneous |
|
|
392,598 |
355,659 |
|
|
|
---------- |
---------- |
|
|
|
264,113,668 |
132,550,253 |
|
|
|
---------- |
---------- |
|
| Less: |
Interest received on
saving bank accounts |
47,731,096 |
36,248,077 |
|
|
Exchange gain |
|
27,940,917 |
17,468,241 |
|
|
Scrap sale |
|
3,636,681 |
1,233,827 |
|
|
|
|
---------- |
---------- |
|
|
|
79,308,694 |
54,950,145 |
|
|
|
---------- |
---------- |
|
|
|
184,804,974 |
77,600,108 |
|
|
|
|
========== |
========== |
|
|
| 5.1
Auditors' remuneration |
|
|
|
|
1998 |
|
1997 |
|
|
-------------------------------------------------- |
