| Pakland Cement Limited |
|
|
|
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|
|
| Annual
Report 1998 |
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| CONTENTS |
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| Company
Information |
|
| Notice of Meeting |
|
| Report
of the Directors |
|
| Auditors'
Report to the Members |
|
| Balance Sheet |
|
|
| Profit
and Loss Account |
|
| Cash
Flow Statement |
|
| Notes
to the Accounts |
|
| Pattern
of Holding of Shares |
|
|
|
| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
Tariq Mohsin Siddiqui |
|
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|
(Chairman & Chief
Executive) |
|
|
|
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 |
|
|
|
Razi-ur-Rahman Khan
(Nominee - NIT) |
|
|
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| COMPANY
SECRETARY |
|
Mohammad Adil |
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| REGISTERED
OFFICE |
|
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 |
|
Deh Dhando, Dhabeji |
|
|
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| BANKERS |
|
AI Faysal Investment Bank
Limited |
|
|
Allied Bank of Pakistan
Limited |
|
|
ANZ Grindlays Bank |
|
|
Askari Commercial Bank
Limited |
|
|
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 |
|
Ford, Rhodes, Robson,
Morrow |
|
|
Chartered Accountants |
|
|
Finlay House |
|
|
I. I. Chundrigar Road |
|
|
Karachi |
|
|
|
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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|
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| NOTICE
OF MEETING |
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| Notice
is hereby given that the 19th Annual General Meeting of Pakland Cement
Limited will be |
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| held
at Kohinoor Hall, Regent Plaza, Hotel and Convention Centre, Shahra-e-Faisal,
Karachi on |
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| Saturday,
15th May 1999 at 2:00 p.m. to transact the following business: |
|
|
| 1.
To confirm the minutes of the 18th Annual General Meeting held on April 23,
1998. |
|
|
| 2.
To receive and consider the Audited Accounts for the year ended June 30, 1998
and the |
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| report
of the directors and auditors thereon. |
|
|
| 3.
To appoint auditors and to fix their remuneration. |
|
|
| 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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| Karachi: |
|
Shamim Mushtaq Siddiqui |
|
| April 23, 1999 |
|
Director |
|
|
| Notes: |
|
|
| 1.
Share Transfer Books of the company will remain closed from 8th May 1999 to
15th May |
|
| 1999,
both days inclusive. |
|
|
| 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. |
|
|
| 3.
Proxies must be received at the Registered Office of the company at Trade
Centre, A-14, |
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| Block
7/8, K.C.H.S., Karachi, not less than 48 hours before the time of holding the |
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| meeting. |
|
|
| 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 JUNE 30, 1998 |
|
|
| The
directors of your company take pleasure in presenting their report, together
with the audited |
|
| accounts
of the company, for the year ended June 30, 1998. |
|
|
| Overview
of the Cement Industry |
|
|
| The
new cement projects and expansions which were planned 3 to 4 years ago, have
come in |
|
| production
during the year under review. On the other hand, in the last three years the
economy, |
|
| in
general, has remained suppressed because of which the projected growth rate
has eluded the |
|
| cement
industry. As such there exists a temporary over capacity situation, which
will level out |
|
| either
when the local demand catches up with the new capacities or when exports
grows to a level |
|
| where
the extra production beyond the domestic demand is exported. It is expected
that a |
|
| combination
of both factors would strike a balance within the next 2/3 years because a
substantial |
|
| increase
is expected in exports on account of the increased duty draw back allowed by
the |
|
| Government
of Pakistan recently and a revival of the local demand which is now expected
to grow |
|
| at
a higher rate in the coming years due to the deeper distribution penetration
and uninterrupted |
|
| regular
supplies of product. |
|
|
| Sales
& Production |
|
|
| In
a highly competitive market, by the grace of God, your company has managed to
market and |
|
| position
its products in a manner that the net sales revenue has increased by 9.25%
over last |
|
| year.
This has been achieved, due to the fact that 481,1 94.11 tons of cement was
sold at a better |
|
| average
net retention price compared to the 454,378 tons of cement sold last year. |
|
|
| For
better inventory management, the production was closely monitored and
regulated according |
|
| to
sales and inventory levels to ensure that finished goods inventory is kept at
the right levels only. |
|
| The
production of cement and clinker in the year under review was 480,407 and
420,209 tons |
|
| compared
to 457,390 and 471,245 tons last year. The prudent measures have enabled the |
|
| company
to minimize the losses if compared with the industry average. |
|
|
| Appropriation
of Profit |
|
|
| The
appropriation of the available profit is recommended as under: |
|
|
|
(Rs.'000') |
|
|
| Net
loss for the year |
|
(38,053) |
|
| Unappropriated
profit brought forward |
|
1,097 |
|
|
------------------ |
|
|
(36,956) |
|
| Transfer
to general reserve |
|
-- |
|
|
------------------ |
|
| Accumulated
loss carried forward |
|
(36,956) |
|
|
========== |
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|
|
| Future Outlook |
|
|
| Even
on a slight improvement in the economic health of the country the suppressed
demand for |
|
| housing
and infrastructure will spring to create a healthy upsurge in consumption
levels in the |
|
| local
construction and housing sector. As a result, the country's current market
will expand at an |
|
| accelerated rate. |
|
|
| The
export market has also opened to Pakistani cement due to the increase in duty
drawback to |
|
| Rs.900/-
per ton for cement and Rs.800/- per ton for clinker and your company is
presently |
|
| negotiating
export contracts. Your company is well poised to benefit from the large
export market |
|
| because
of the superior product quality, the plant's location being in proximity to
Port Mohammad |
|
| Bin
Qasim, the spade work already completed in the various export markets and
because of the |
|
| upcoming
export based new production line. |
|
|
| Expansion
Project |
|
|
| Much
progress has been achieved towards completion of the export based expansion
project, the |
|
| following
has been achieved: |
|
|
| Civil Works |
|
|
| More
than 85% of civil works have been achieved. In certain areas 100% of the
civil works |
|
| have
been completed. |
|
|
| Plant
and Equipment |
|
|
| 93%
of imported plant and machinery has arrived in Pakistan. This machinery was
held-up |
|
| at
the Karachi Port Trust due to accumulation of storage charges resulting from
unilateral |
|
| change
in duty regime. You would be pleased to know that a majority of the
consignments |
|
| held-up
at the Port have been shifted to plant site pursuant to decision of the
Economic |
|
| Coordination
Committee of the Cabinet to allow clearance on concessionery rate of |
|
| demurrage. |
|
|
| 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 and the industry at large. |
|
|
| The
Directors would like to place on record their appreciation for the efforts of
all the employees, |
|
| and
welcome the new members of the team. |
|
|
| Investment
in Saadi Cement Limited |
|
|
| Your
company has invested Rs.800 million in the equity of Saadi Cement Limited,
which is a |
|
| green
field project comprising of two cement manufacturing lines. It is situated at
Hattar and |
|
| ideally
located to service the high cement consuming areas of the North, including
Islamabad, |
|
| Lahore,
Peshawar and other Northern areas. It is also well positioned for exports to
Afghanistan |
|
| and
the C.I.S. countries as soon as normalcy prevails in that region. |
|
|
| The
project is in its final stages of completion and expected to be commissioned
by middle 1999. |
|
|
| Social
Responsibilities |
|
|
| By
the grace of ALLAH, your company continues to honour its social
responsibilities towards the |
|
| community.
The company has made contributions, towards various social and charitable
causes. |
|
|
| Year
2000 Problem |
|
|
| The
management of your company is aware of the Year 2000 problem, which can
affect the |
|
| working
of computers and PLC systems, if not addressed. Therefore, a task force of
professionals |
|
| has
been constituted, who have identified the measures to be taken to make the
financial |
|
| applications
and related computer hardwares and softwares Year 2000 Compliant. |
|
|
| Similarly
they have also completed the preliminary investigations with respect to the
computers, |
|
| softwares
and PLC's to be used in the production process, as well, and are in the final
stage of |
|
| implementing
the corrective measures where required. |
|
|
| Auditor |
|
|
| Messrs.
Ford, Rhodes, Robson, Morrow, Chartered Accountants and Messrs. Khan H.R.
& Co., |
|
| Chartered
Accountants, retire and offer themselves for reappointment. |
|
|
| Acknowledgments |
|
|
| The
board of directors would like to place on record their appreciation for the
help and support |
|
| from
the vendors and contractors because of their prompt service we have made good
progress |
|
| on
our projects. We would like to thank our dealers and our customers for their
support as they |
|
| form
an important and integral part of the company. |
|
|
| We
specially thank the financial institutions who have stood by us and extended
their support and |
|
| cooperation
in difficult times. |
|
|
| We
are confident of a long-term and mutually beneficial business relationship
with all our |
|
| associates. |
|
|
|
By Order of the Board |
|
|
|
|
| Karachi: |
|
Tariq Mohsin Siddiqui |
|
| April 23, 1999 |
|
Chairman |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of Pakland Cement
Limited as at June 30, |
|
| 1998,
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 |
|
| accountin9
policies consistently applied, except for the change in policy as stated |
|
| in
note 3 of the financial statements with which we concur; |
|
|
| (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 June
30, |
|
| 1998
and of the loss and the changes in financial position (cash flow statement)
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 4 to the accounts; |
|
|
| (ii)
the ultimate outcome of the contingencies disclosed in 18.1 (b) and (h) to
the |
|
| financial
statements, cannot presently be determined and therefore no provision |
|
| thereof
has been made in these financial statements. |
|
|
| (iii)
amounts receivable in respect of octroi refundable Rs.1.381 million, excise
duty |
|
| recoverable
Rs.8.995 million and sales tax Rs.12 million as shown in note 29 to the |
|
| financial
statements are subject to the successful outcome of the efforts being |
|
| made
by the company to recover the same. Pending the outcome of these efforts |
|
| no
provision for the same has been made in these accounts. |
|
|
| Karachi: |
|
Khan H.R. & Co. |
|
Ford, Rhodes, Robson,
Morrow |
|
| April 23, 1999 |
|
Chartered Accountants |
|
Chartered Accountants |
|
|
|
|
|
ACCOUNTS |
|
|
|
| PAKLAND
CEMENT LIMITED |
|
| BALANCE
SHEET AS AT JUNE 30, 1998 |
|
|
|
|
|
June 30, |
June 30, |
|
|
|
1998 |
1997 |
|
|
Note |
Rs.'000' |
Rs.'000' |
|
|
| SHARE
CAPITAL AND RESERVE |
|
|
| Authorized
capital |
|
| 150,000,000
(1997: 150,000,000) |
|
| ordinary
shares of Rs.10/- each |
|
1,500,000 |
1,500,000 |
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up capital |
|
5 |
825,000 |
825,000 |
|
| Revenue reserve |
|
6 |
358,044 |
396,097 |
|
|
|
------------------ |
------------------ |
|
|
|
1,183,044 |
1,221,097 |
|
| LOANS
FROM DIRECTOR AND OTHERS |
|
7 |
221,004 |
-- |
|
| REDEEMABLE
CAPITAL |
|
8 |
62,416 |
56,770 |
|
| LONG-TERM
LOANS |
|
9 |
1,006,870 |
1,077,534 |
|
| LONG-TERM
DEPOSITS |
|
10 |
36,150 |
35,762 |
|
| OBLIGATIONS
AND ADVANCES |
|
|
|
| UNDER
FINANCE LEASES |
|
11 |
863,324 |
865,146 |
|
| DEFERRED
INCOME |
|
12 |
323 |
969 |
|
| IMPORT
BILLS PAYABLE |
|
13 |
42,964 |
-- |
|
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Shod-term loans |
|
14 |
52,000 |
29,946 |
|
| Shod-term
finances |
|
15 |
408,199 |
327,605 |
|
| Current
portion of long-term liabilities |
|
16 |
907,936 |
453,913 |
|
| Creditors,
accrued and other liabilities |
|
17 |
470,324 |
670,794 |
|
| Taxation |
|
|
17,617 |
26,268 |
|
|
|
------------------ |
------------------ |
|
|
|
1,856,076 |
1,508,526 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
18 |
|
|
|
|
------------------ |
------------------ |
|
|
5,272,171 |
4,765,804 |
|
|
========== |
========== |
|
|
| The
annexed notes form an integral pad of these accounts. |
|
|
|
|
|
June 30, |
June 30, |
|
|
|
1998 |
1997 |
|
|
Note |
Rs.'000' |
Rs.'000' |
|
|
| TANGIBLE
FIXED ASSETS |
|
|
|
|
| Operating
fixed assets |
|
19 |
641,879 |
679,623 |
|
| Capital
work-in-progress |
|
20 |
2,892,481 |
2,212,109 |
|
|
|
------------------ |
------------------ |
|
|
|
3,534,360 |
2,891,732 |
|
|
|
|
| LONG-TERM
INVESTMENT |
|
21 |
800,000 |
800,000 |
|
|
|
|
|
| LONG-TERM
LOANS |
|
22 |
406 |
2,482 |
|
| LONG-TERM
DEPOSITS |
|
23 |
104,189 |
113,068 |
|
|
|
|
|
| DEFERRED
COSTS |
|
24 |
1,114 |
1,672 |
|
|
| CURRENT
ASSETS |
|
|
|
| Stores
and spares |
|
25 |
171,564 |
173,975 |
|
| Stock-in-trade |
|
26 |
167,326 |
213,280 |
|
| Trade debts |
|
27 |
45,970 |
90,236 |
|
| Loans
and advances |
|
28 |
252,767 |
358,847 |
|
| Deposits,
prepayments and |
|
|
|
| other
receivables |
|
29 |
142,814 |
69,404 |
|
| Short-term
investments |
|
30 |
1,205 |
4,878 |
|
| Cash
and bank balances |
|
31 |
50,456 |
46,230 |
|
|
------------------ |
------------------ |
|
|
832,102 |
956,850 |
|
|
------------------ |
------------------ |
|
|
5,272,171 |
4,765,804 |
|
|
========== |
========== |
|
|
|
Tariq Mohsin Siddiqui |
|
|
Shamira Mushtaq Siddiqui |
|
|
Chairman & Chief Executive |
|
|
Director |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
|
June 30, |
June 30, |
|
|
|
1998. |
1997 |
|
|
Note |
Rs.'000' |
Rs.'000' |
|
|
|
|
| NET SALES |
|
32 |
922,291 |
844,190 |
|
| COST
OF GOODS SOLD |
|
33 |
849,793 |
710,754 |
|
|
|
|
------------------ |
------------------ |
|
| GROSS
PROFIT |
|
|
72,498 |
133,436 |
|
|
|
|
|
|
| OPERATING
EXPENSES |
|
|
|
| General
and administrative |
|
34 |
41,010 |
51,617 |
|
| Selling
and distribution |
|
35 |
5,914 |
7,630 |
|
|
|
------------------ |
------------------ |
|
|
|
46,924 |
59,247 |
|
|
|
------------------ |
------------------ |
|
| OPERATING
PROFIT |
|
|
25,574 |
74,189 |
|
| OTHER
INCOME |
|
36 |
24,350 |
64,863 |
|
|
|
|
------------------ |
------------------ |
|
|
|
49,924 |
139,052 |
|
| FINANCIAL
CHARGES |
|
71,166 |
120,336 |
|
|
|
------------------ |
------------------ |
|
|
|
|
(21,242) |
18,716 |
|
| OTHER
CHARGES |
|
38 |
3,965 |
4,268 |
|
|
|
------------------ |
------------------ |
|
| (LOSS)/PROFIT
BEFORE TAXATION |
|
|
(25,207) |
14,448 |
|
|
|
|
|
| TAXATION
- Current |
|
39 |
(4,611) |
(4,221) |
|
|
- Prior |
|
|
(8,235) |
10,935 |
|
|
------------------ |
------------------ |
|
|
|
|
(12,846) |
6,714 |
|
|
|
|
|
|
|
| (LOSS)/PROFIT
AFTER TAXATION |
|
(38,053) |
21,162 |
|
| UNAPPROPRIATED
PROFIT BROUGHT FORWARD |
|
1,097 |
4,935 |
|
|
|
------------------ |
------------------ |
|
| (LOSS)/PROFIT
AVAILABLE |
|
|
|
| FOR
APPROPRIATIONS |
|
(36,956) |
26,097 |
|
|
|
| APPROPRIATIONS |
|
| Transfer
to general reserve |
|
-- |
25,000 |
|
|
------------------ |
------------------ |
|
| (ACCUMULATED
LOSS)/UNAPPROPRIATED |
|
| PROFIT
CARRIED FORWARD |
|
(36,956) |
1,097 |
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Tariq Mohsin Siddiqui |
|
Shamim Mushtaq Siddiqui |
|
|
Chairman & Chief Executive |
|
Director |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
June 30, |
June 30, |
|
|
1998 |
1997 |
|
|
Rs.'000' |
Rs.'000' |
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Net
(loss)/profit before taxation |
|
(25,207) |
14,448 |
|
| Adjustments
for: |
|
|
|
| Depreciation |
|
64,292 |
70,650 |
|
| Profit
on sale and lease back |
|
(646) |
(646) |
|
| Provision
for diminution in value of investments |
|
989 |
1,515 |
|
| Profit
on sale of investments |
|
(106) |
|
|
| Financial
charges |
|
71,166 |
120,336 |
|
| Amortization
of deferred cost |
|
558 |
558 |
|
|
------------------ |
------------------ |
|
|
136,253 |
192,413 |
|
|
------------------ |
------------------ |
|
| Operating
profit before working capital changes |
|
111,046 |
206,861 |
|
|
|
|
|
| Working
capital changes |
|
|
|
| (Increase)/decrease
in current assets |
|
| Stores
and spares |
|
2,411 |
(8,307) |
|
| Stock-in-trade |
|
45,954 |
(74,842) |
|
| Trade debts |
|
44,266 |
(49,259) |
|
| Loans
and advances |
|
(5,866) |
(8,460) |
|
| Deposits,
prepayments and other receivables |
|
(52,534) |
(6,415) |
|
|
------------------ |
------------------ |
|
|
34,231 |
(147,283) |
|
|
|
| Increase/(decrease)
in current liabilities |
|
