| D.G Khan Electric Company Limited |
|
|
|
|
|
|
|
|
|
| Annual
Report 1998 |
|
|
|
| CONTENTS |
|
|
| COMPANY
INFORMATION |
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
| DIRECTORS
REPORT |
|
| AUDITORS
REPORT |
|
| BALANCE
SHEET |
|
| PROFIT
AND LOSS ACCOUNT |
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| NOTES
TO THE ACCOUNTS |
|
| PATTERN
OF SHAREHOLDING |
|
|
|
| COMPANY
INFORMATION |
|
|
| Registered
Office |
|
| 53-A,
Lawrence Road, Lahore |
|
| Phone:
6367812 |
|
| Fax:
6367414 |
|
|
| Board
of Directors |
|
| Mrs.
Akhtar Jehan Begum |
|
| Mrs.
Farhat Saleem |
|
| Mr.
Raza Mansha |
Chief Executive/Director |
|
| Mr.
Zaka ud Din |
|
| Mr.
Khalid Qadeer Qureshi |
|
| Mr.
Aftab Ahmad Khan |
|
| Mr.
Muhammad Azam |
|
|
| Company
Secretary |
|
| Mr.
Khalid Mahmood Chohan |
|
|
| Auditors |
|
| M/s
Riaz Ahmad & Company |
|
| Chartered
Accountants Lahore. |
|
|
| Bankers |
|
| ABN
Amro Bank |
|
| Faysal
Bank Ltd. |
|
| Gulf
Commercial Bank. |
|
| Mashreq
Bank Psc. |
|
| Muslim
Commercial Bank Ltd. |
|
| National
Bank of Pakistan |
|
| United
Bank Ltd. |
|
|
| Legal
Advisor |
|
| Mr.
Imtiaz Rasheed Siddiqui |
|
| Nawa-i-Waqt
Building, |
|
| Fatima
Jinnah Road, Lahore. |
|
|
| Power
Generation Project |
|
| KHOFLI
SATTAI |
|
| Distt.
Dera Ghazi Khan |
|
|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
|
| Notice
is hereby given that Annual General Meeting of the Shareholders of D.G. Khan
Electric Company |
|
| Limited
("the Company") will be held on Thursday the 31st December, 1998 at
2:00 p.m. at Nishat House, |
|
| 53-A,
Lawrence Road, Lahore to transact the following business: |
|
|
| 1.
To confirm the minutes of the last meeting. |
|
|
|
|
| 2.
To receive and adopt the audited accounts of the Company for the financial
year ended |
|
| June
30, 1998 together with the Directors' and Auditors' reports thereon. |
|
|
|
|
| 3.
To elect seven Directors of the Company for a period of three years in
accordance with the provisions |
|
| of
Section 178 of the Companies Ordinance, 1984 in place of the following
retiring Directors:- |
|
|
| 1.
Mian Raza Mansha |
|
2. Mst. Akhtar Jehan
Begum |
|
| 3.
Mrs. Farhat Saleem |
|
4. Mr. Khalid Qadeer
Qureshi |
|
| 5.
Mr. Muhammad Azam |
|
6. Mr. Zaka-ud-Din |
|
| 7.
Mr. Aftab Ahmad Khan |
|
|
| The
Board of Directors has fixed the number of elected Directors as seven. All
retiring Directors shall be |
|
| eligible
to offer themselves for re-election. |
|
|
| 4.
To appoint Auditors for the year 1998-99 and fix their remuneration. The
present Auditors |
|
| M/s.
Riaz Ahmed & Company, Chartered Accountants, Lahore retire and being
eligible, offer |
|
| themselves
for re-appointment. |
|
|
|
| 5.
SPECIAL BUSINESS: |
|
|
| To
consider and pass the following special resolution with or without
modification. |
|
|
| RESOLVED
that the Company be and is hereby authorised to sell the entire or any part
of the |
|
| electricity
generated to any of the buyers including D. G. Khan Cement Company Limited. |
|
|
| FURTHER
RESOLVED that the Chief Executive of the Company be and is hereby authorised
to |
|
| enter
into any agreement, negotiate and settle the terms and conditions and
granting of rebate, |
|
| if
deemed necessary, for sale of electricity to any of the buyers including D.
G. Khan Cement |
|
| Company
Limited. |
|
|
| 6.
Any other matter with the permission of the Chair. |
|
|
|
|
By order of the Board |
|
|
|
|
|
| Lahore: |
|
(KHALID MAHMOOD CHOHAN) |
|
| December
05, 1998. |
|
Company Secretary |
|
|
|
|
| STATEMENT
UNDER SECTION 160(1)(b) OF THE COMPANIES ORDINANCE 1984 |
|
|
| (a)
To overcome the under utilization of Plant capacity, the Company is planning
to offer the surplus |
|
| electricity
to other buyers. |
|
|
|
| b)
Almost all private power generation companies offer rebate / discount to
their customers, therefore, the |
|
| Company
intends to have the authority to offer suitable percentage of rebate/discount
al the rate |
|
| prevailing
in the market, if deemed necessary in negotiating other terms and conditions. |
|
|
| (c)
D.G. Khan Cement Company Limited (DGKCC)is an associated Company quoted on
all stock |
|
| exchanges
of the Country. The Authorised Capital of DGKCC is Rs. 3.000 billion divided
into |
|
| 300.000
million ordinary shares of Rs. 10/- each and Paid-up-Capital of Rs.
1,323,913,800 |
|
| divided
into 132,391,380 ordinary shares of Rs. 10/- each. Presently DGKCC is the
sole buyer of |
|
| electricity
produced by the Company. |
|
|
|
|
| The
Directors of the Company have no other interest except that some of the
Directors are common in |
|
| both
the Companies. |
|
|
|
|
|
| A
copy of Memorandum and Articles of Association of DGKCC has been kept at
registered office |
|
| which
can be inspected from 10:O0 a.m. to 11:OO a.m. on all working days upto |
|
| 30th
December, 1998. |
|
|
|
|
|
| NOTES: |
|
|
| 1.
Share transfer books of the company will remain closed from 31-12-98 to
O6-01-99 (both days |
|
| inclusive).
Transfers received in order at Nishat House, 53-A, Lawrence Road, Lahore upto
1:O0 p.m |
|
| on
December 30, 1998 will be considered in time. |
|
|
|
| 2.
A member eligible to attend and vote at this meeting may appoint another
member his/her proxy to |
|
| attend
and vote instead of him/her. Proxies in order to be effective must reach the
Company's |
|
| Registered
office not less than 48 hours before the time for holding the meeting. |
|
|
|
|
| 3.
Nominations to contest election for the office of Directors must be received
at least 14 clear days before |
|
| the
date of the Annual General Meeting at the Registered Office, during working
hours. |
|
|
| 4.
Shareholders are requested to immediately notify the change in address, if
any. |
|
|
|
| DIRECTORS'
REPORT |
|
|
| The
Directors of the Company welcome you to this 4th Annual General Meeting. They
take pleasure in |
|
| placing
before you their report alongwith audited accounts and auditors' report
thereon for the year ended |
|
| June
30, 1998. |
|
|
|
|
| 1.
OPERATING RESULTS AND APPROPRIATIONS |
|
|
| By
the grace of Almighty, the unified efforts of the management and employees,
the profit of |
|
| your
Company for year under review has increased by 195 percent. The net profit
for the year under |
|
| report
was Rs. 73.788 million as compared to Rs. 24.969 million for the previous
year. The increase |
|
| in
profit has been achieved inspite of low demand by the consuming cement
industry. We could only |
|
| utilise
47% of our installed capacity. |
|
|
|
|
|
| During
the year, the sales registered an increase of 81% i.e. from Rs 188.549
million in the last year |
|
| to
Rs 341.634 million in the year under report. Increase in sales revenue as
well as reduction in cost |
|
| of
sales as elucidated in the following table, has contributed to the increase
in net profit. |
|
|
|
|
|
|
|
|
1998 |
1997 |
|
| Cost
of sales as %age of sales |
|
|
66 |
73 |
|
| Reduction
in cost of sales %age |
|
|
7 |
- |
|
| The
available profit is appropriated as under. |
|
|
|
|
|
(Rs 000) |
|
|
|
|
1998 |
1997 |
|
|
|
|
|
|
| Profit
for year ended June 30, |
|
|
73,788 |
24,969 |
|
| Unappropriated
profit brought forward |
|
970 |
1 |
|
|
|
|
|
---------- |
---------- |
|
| Profit
available for appropriation |
|
|
74,758 |
24,970 |
|
| Transferred
to General Reserve |
|
|
74,000 |
24,000 |
|
|
|
|
|
---------- |
---------- |
|
| Unappropriated
Profit |
|
|
|
758 |
970 |
|
|
|
|
|
========== |
========== |
|
|
|
|
| 2.
GENERATION AND DISTRIBUTION |
|
|
|
| The
figures of generation and distribution |
|
|
| of
electricity are as under. |
|
|
|
|
|
|
(KWh 000) |
|
|
|
|
1998 |
1997 |
|
|
|
|
| Generation |
|
97,423 |
64,462 |
|
| Aux Load |
|
2,107 |
1,482 |
|
|
|
---------- |
---------- |
|
| Distribution |
|
95,316 |
62,980 |
|
|
|
========== |
========== |
|
|
|
|
| 3.
FUTURE OUTLOOK |
|
| In
view of the persistent crisis in the cement sector, the management is
actively looking the possibility |
|
| of
selling the surplus electricity to other buyers for better capacity
utilization which will further improve |
|
| the
profitability of the Company. |
|
|
| 4.
EARNING PER SHARE |
|
| The
earning per share is Rs 3.69 as compared to the last year's Rs 1.25 |
|
|
| 5.
SHAREHOLDING |
|
| The
pattern of holding of shares in the prescribed form is annexed to this
report. |
|
|
| 6. AUDITORS |
|
| The
retiring auditors M/s Riaz Ahmad and Company Chartered Accountants Lahore
being eligible, |
|
| have
offered for reappointment for the year 1998-99. |
|
|
| 7.
MILLENNIUM BUG |
|
| All
the computers and software in the use of
the Company are capable to meet the requirements of |
|
| Year 2000. |
|
|
| 8.
ACKNOWLEDGEMENT |
|
| The
Directors place on record their appreciation for the dedicated efforts of the
employees of the |
|
| company
in maintaining the harmony in operations and hope the continuation of the
same spirit of |
|
| devotion
in future also. |
|
|
|
|
For and on behalf of the Board |
|
|
|
|
|
| Lahore:- |
|
RAZA MANSHA |
|
| December
05, 1998 |
|
Chief Executive |
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of D.G. KHAN ELECTRIC COMPANY LIMITED
as at 30 June |
|
| 1998
and the related profit and loss account and statement of changes in financial
position, 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 |
|
| purpose
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 statement of changes in financial
position, 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 30 June 1998 and of the profit and the changes in financial position for
the year then ended; and |
|
|
|
|
| d)
in our opinion, no Zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980. |
|
|
| Lahore:-
03 December 1998 |
|
Riaz Ahmad and Company |
|
|
|
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT 30 JUNE 1998 |
|
|
|
|
1998 |
1997 |
|
|
Note |
Rupees |
Rupees |
|
|
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
|
|
|
| Authorised
Share Capital |
|
|
| 30,000,000
ordinary shares of |
|
|
| Rupees
10 each |
|
|
300,000,000 |
300,000,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid up |
|
|
| share
capital |
|
|
|
| 20,000,000
ordinary shares of |
|
|
| Rupees
10 each fully paid up in cash |
|
200,000,000 |
200,000,000 |
|
|
|
|
|
| Capital
reserve-Premium on issue of shares |
|
120,000,000 |
120,000,000 |
|
| Revenue
reserve-General |
|
3 |
106,527,000 |
32,527,000 |
|
| Unappropriated
profit |
|
|
757,985 |
970,015 |
|
|
|
|
---------- |
---------- |
|
|
|
|
427,284,985 |
353,497,015 |
|
|
|
|
|
| LIABILITIES
AGAINST ASSETS |
|
|
|
| SUBJECT
TO FINANCE LEASE |
|
4 |
112,222,216 |
147,472,278 |
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
|
|
|
|
| Current
portion of long term liabilities |
5 |
35,250,062 |
62,985,139 |
|
| Short
term finance |
|
6 |
59,945,531 |
48,069,208 |
|
| Creditors,
accrued and other Liabilities |
7 |
58,816,849 |
48,365,060 |
|
|
|
|
---------- |
---------- |
|
|
|
|
154,012,442 |
159,419,407 |
|
|
|
|
| CONTINGENCIES
AND COMMITMENTS |
|
8 |
- |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
693,519,643 |
660,388,700 |
|
|
|
|
========== |
========== |
|
|
| TANGIBLE
OPERATING |
|
|
|
| FIXED
ASSETS |
|
9 |
455,291,593 |
500,439,179 |
|
|
|
|
|
| EQUITY
INVESTMENTS |
|
10 |
90,272,350 |
90,272,350 |
|
|
|
|
|
|
| LONG
TERM DEPOSITS AND |
|
|
|
|
| DEFERRED
COSTS |
|
|
11 |
23,457,522 |
24,617,763 |
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
|
|
|
|
|
| Stores
and spares |
|
12 |
14,950,641 |
19,849,007 |
|
| Trade debt |
|
13 |
94,494,878 |
18,879,671 |
|
| Advances,
prepayments and |
|
|
|
| other
receivables |
|
14 |
10,193,243 |
5,603,211 |
|
| Cash
and bank balances |
|
15 |
4,859,416 |
727,519 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
124,498,178 |
45,059,408 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
693,519,643 |
660,388,700 |
|
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
|
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED 30 JUNE 1998 |
|
|
|
|
1998 |
1997 |
|
|
Note |
Rupees |
Rupees |
|
|
|
|
| SALES |
|
16 |
341,633,549 |
188,548,663 |
|
|
|
|
|
| COST
OF SALES |
|
17 |
226,335,591 |
137,049,340 |
|
|
|
|
|
---------- |
---------- |
|
| GROSS
PROFIT |
|
|
115,297,958 |
51,499,323 |
|
|
|
|
|
|
| ADMINISTRATIVE
AND GENERAL EXPENSES |
18 |
2,497,366 |
2,469,029 |
|
|
|
|
|
---------- |
---------- |
|
| OPERATING
PROFIT |
|
|
112,800,592 |
49,030,294 |
|
|
|
|
|
| OTHER
INCOME |
|
19 |
9,115,901 |
1,846,805 |
|
|
|
|
---------- |
---------- |
|
|
|
|
121,916,493 |
50,877,099 |
|
| FINANCIAL
AND OTHER CHARGES |
|
20 |
48,128,523 |
25,907,967 |
|
|
|
|
---------- |
---------- |
|
|
|
|
73,787,970 |
24,969,132 |
|
|
|
|
|
| PROFIT
BROUGHT FORWARD |
|
|
970,015 |
883 |
|
|
|
|
---------- |
---------- |
|
| PROFIT
AVAILABLE FOR |
|
|
| APPROPRIATION |
|
|
74,757,985 |
24,970,015 |
|
|
|
|
|
| APPROPRIATION |
|
|
|
|
|
|
| Transfer
to general reserve |
|
|
74,000,000 |
24,000,000 |
|
|
|
|
---------- |
---------- |
|
| UNAPPROPRIATED
PROFIT |
|
|
757,985 |
970,015 |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Chief Executive |
|
Director |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| FOR
THE YEAR ENDED 30 JUNE 1998 |
|
|
|
|
|
|
1998 |
1997 |
|
|
|
|
|
Rupees |
Rupees |
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
| Profit
before taxation |
|
|
|
73,787,970 |
24,969,132 |
|
| Add/(Less):
Adjustments to reconcile profit to net cash |
|
|
| provided
by operating activities |
|
|
|
|
|
|
|
|
|
|
| Depreciation
and amortization |
|
|
50,694,012 |
34,086,896 |
|
| Financial
charges |
|
|
|
43,075,869 |
23,555,407 |
|
| Zakat |
|
|
|
193 |
6,737 |
|
| Deferred
cost amortized |
|
|
1,160,241 |
1,029,441 |
|
| Gain
on sale of equity investment |
|
|
- |
(208,370) |
|
|
|
---------- |
---------- |
|
| Cash
flows from operating activities |
|
|
| before
working capital changes |
|
|
168,718,285 |
83,439,243 |
|
|
|
|
|
|
|
| (Increase)/decrease
in current assets |
|
|
|
|
|
|
|
|
|
| Stores
and spares |
|
|
|
4,898,366 |
(1,510,938) |
|
| Trade debt |
|
|
|
(75,615,207) |
(3,617,234) |
|
| Advances,
prepayments and other receivables |
|
(4,550,509) |
3,084,429 |
|
|
|
|
| Increase
in current liabilities |
|
|
|
|
|
|
| Creditors,
accrued and other liabilities |
|
11,078,030 |
37,002,099 |
|
|
|
|
|
---------- |
---------- |
|
| Effect
on cash flows due to |
|
|
|
| working
capital changes |
|
|
(64,189,320) |
34,958,356 |
|
|
|
|
|
---------- |
---------- |
|
| Cash
flows from operating activities |
|
104,528,965 |
118,397,599 |
|
| Financial
charges paid |
|
|
|
15,141,245 |
16,353,804 |
|
| Zakat paid |
|
|
|
193 |
6,737 |
|
| Tax paid |
|
|
|
39,523 |
3,063,782 |
|
|
|
---------- |
---------- |
|
|
|
|
89,348,004 |
98,973,276 |
|
|
|
========== |
========== |
|
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
| Long
term deposits |
|
|
|
- |
(20,500,000) |
|
| Tangible
fixed assets |
|
|
|
(5,546,426) |
(10,005,183) |
|
| Equity
investments |
|
|
|
- |
5,929,745 |
|
| Sale
proceeds of fixed assets |
|
|
- |
34,000 |
|
|
|
|
|
---------- |
---------- |
|
| NET
CASH FLOWS FROM INVESTING ACTIVITIES |
|
(5,546,426) |
(24,541,438) |
|
|
|
|
|
| CASH
FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
| Lease
rentals paid |
|
|
|
(58,212,671) |
(58,212,672) |
|
| Long
term morabaha finance |
|
(33,333,333) |
(16,666,667) |
|
| Short
term finances |
|
|
|
11,876,323 |
(1,930,792) |
|
|
|
|
|
---------- |
---------- |
|
| NET
CASH FLOWS FROM FINANCING ACTIVITIES |
|
(79,669,681) |
(76,810,131) |
|
|
|
|
---------- |
---------- |
|
| NET
INCREASE IN CASH AND CASH EQUIVALENTS |
|
4,131,897 |
(2,378,293) |
|
|
|
|
|
|
| CASH
AND CASH EQUIVALENTS |
|
|
|
| AT
THE BEGINNING OF THE YEAR |
|
|
727,519 |
3,105,812 |
|
|
|
|
|
|
| CASH
AND CASH EQUIVALENTS |
|
|
---------- |
---------- |
|
| AT
THE END OF THE YEAR |
|
|
|
4,859,416 |
727,519 |
|
|
|
========== |
========== |
|
|
|
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED 30 JUNE 1998 |
|
|
| 1.
STATUS AND OPERATIONS |
|
|
| The
company was incorporated in Pakistan on 26 July 1994 as a public company
limited by shares |
|
| under
Companies Ordinance, 1984. Its shares are quoted on all three stock exchanges
of Pakistan. |
|
| The
sole object of the company is to set-up and operate power generation project
for generation, sale |
|
| and
distribution of electricity to its associated undertakings. |
|
|
| 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
Overall valuation policy |
|
| These
accounts have been prepared under the historical cost convention. |
|
|
| 2.2
Tangible fixed assets |
|
| Operating
fixed assets are stated at cost less accumulated depreciation. Capital |
|
| work-in-progress
is stated at cost. |
|
|
| Cost
of tangible fixed assets consists of historical cost and directly
attributable cost of bringing |
|
| the
assets to working condition. Borrowing cost pertaining to the
construction/erection period is |
|
| capitalized
as part of historical cost. |
|
|
| Depreciation
on all operating fixed assets is charged to profit on the reducing balance
method, |
|
| so
as to write off the historical cost of an asset over its estimated useful
life at the rates referred |
|
| to
in note 9. Full year's depreciation is charged on additions, while no
depreciation is charged |
|
| on
deletions during the year. |
|
|
| Maintenance
and normal repairs are charged to income as and when incurred. Major renewals |
|
| and
improvements are capitalized and the assets so replaced, if any, are retired.
Gains or |
|
| losses
on disposal of assets are taken to profit and loss account. |
|
|
| 2.3
Assets subject to finance lease |
|
| These
are stated at lower of present value of minimum lease payments under the
lease |
|
| agreements
and the fair value of assets acquired on lease. Aggregate amount of
obligation |
|
| relating
to assets subject to finance lease is accounted for at present value of
liabilities. Assets |
|
| acquired
under a finance lease are amortized over the estimated useful life of the
assets at the |
|
| rates
mentioned in the note 9. Amortization of leased assets is charged to current
year's income. |
|
|
| 2.4
Deferred cost |
|
| These
costs are being amortized over a period of five years from the year of
incurrence. |
|
|
| 2.5
Equity investments |
|
| Lo |
