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Pakistan Telephone Cables Limited
Annual Report 1998
CONTENTS
BOARD OF DIRECTORS
NOTICE OF MEETINGS
REPORT OF DIRECTORS
PATTERN OF CATEGORIES OF SHAREHOLDERS
AUDITOR'S REPORT
BALANCE SHEET
PROFIT AND LOSS ACCOUNT
CASH FLOW STATEMENT
NOTES TO THE ACCOUNTS
BOARD OF DIRECTORS MR. ABDUL AZIZ AL-RAEE (Chairman)
MR. RAZA ABDUL AZIZ AL-RAEE (Chief Executive)
MR. NISAR ABDUL AZIZ AL-RAEE
MR. RIYADH ABDUL AZIZ AL-RAEE
MR. EIJAZ ABDUL AZIZ AL-RAEE
MR. AQEEL AHMED
MRS. RABIA BARKAT ALl
SECRETARY MR. REYAZUL HODA
AUDITORS RAHIM IQBAL RAFIQ AND COMPANY
(Chartered Accountants)
REGISTERED OFFICE 18th Mile RCD Highway,
27/3/2, Mouza Bairut, Tehsil Hub,
District Lasbela,
Balochistan.
LIAISON OFFICE Room No. 107, 2nd Floor,
Elahi Centre, Preedy Street, Saddar,
Karachi-74400.
ADVISOR MUSLIM SHAMIM & CO.
10, Noorani Building,
Campbell Steet Chamber,
Karachi.
NOTICE OF MEETING
Notice is hereby given the 15th Annual General Meeting of the Shareholders of Pakistan Telephone Cables
Limited, will be held at the Registered Office, at 18th Mile RCD Highway, 27/3/2, at Mouza Bairut, Tehsil Hub,
District Lasbella, Balochistan on Saturday the 27th February, 1999 at 12.00 noon to transact the
following business:
1. To read & confirm the minutes of the 14th Annual General Meeting held on Saturday the
27th December, 1997.
2. To receive, consider and adopt the statement of accounts for the year ended 30th June, 1998, together with
the report of Director and Auditors thereon.
3. To appoint auditors for the year 1998-99 and to fix their remuneration.
Special Business:
4. To consider and, if approved, pass the following resolution as a special resolution:
Resolved that the authorised capital of the company be and is hereby increased from
Rs. 40.00 M (Rupees Forty Million) to Rs. 100.00 M (Rupees Hundred Million) and clause No. 4 of the
Articles of Association of the company be amended accordingly.
6. To transact any other business which may legally be transacted at an Annual General Meeting.
sd/-
Karachi, Dated: 05th February, 1999 REYAZU/HODA
Company Secretary
NOTICE:
1. Share Transfer Books of the Company will remains closed from 19/02/99 to 27/02/99.
(Both days inclusive).
2. Shareholders are requested to communicate to the Company change, if any, in their address.
3. The instrument of Proxy duly executed in accordance with Articles of Association of the Company should
be lodged with the Company, at least 48 hours before the time of the meeting. The Proxy must be a member
of the company.
4. Statement u/s 160(1)(b) of the Companies Ordinance, 1984:
The Authorised Capital of Pakistan Telephone Cables Ltd. is being increased from Rs. 40 million to
Rs. 100.0 Million to enable the company to expand its capital base to facilitate the issue of further capital
commensurate with the company's business as the directors may deem necessary from time to time.
REPORT OF DIRECTORS
Directors are pleased to present their Annual Report together with the Company's audited accounts for
the year ended 30th June 1998.
Financial Results are drawn as follows:
FINANCIAL RESULTS:
- Net Profit for the period ended 30th June '1998 Rs. 76,139,895/=
- Accumulated Loss for the year ended 30th June '1997 Rs. 239,1 73,497/=
- Accumulated Loss carried forwarded Rs. 163,033,602/=
The Company after adjustment of Turn-over-tax and reversal of liabilities against accrued Mark-up of
M/s. PICIC has gained a net Profit of Rs. 76,139,895/= The net sale has been lower by 22.53% as the net sale
revenue recorded for 1998 for Rs. 42.745 million against the preceding year's sale of Rs. 55.17 million.
This year the percentage of Gross Profit has decreased by 18.70% against proceeding year. The Rate of G.P. has
decreased due to reduction in sale price, high Cost of Sales and effect of devaluation of Pak Rupees by 14.046%
between 01-07-97 to 30-06-98 on the imported Raw Materials, thus lead the loss in operation to
Rs. 4,697,040/=
COMPANY'S OPERATION & PROSPECTS:
A. Marketing:
i) The situation of Orders in hand till the date of this reporting are as under:
CONTRACT GROSS VALUE NET VALUE QTY.
REF. OF CONTRACT EXCLUDING CABLE
FOR C.E.D. & S.T. KM
PERFORMANCE
1) Pur. 3-15/91PTcL Rs. 112,590,486.00 Rs. 89,004,357.00 583.80
dated 12-08-92.
(NOTE: This order is not feasible any more as the cost of the material to be supplied against a
Contracted price of 1992 has gone up by over 100% for which we are approaching PTC's
authority either to delete the supply of balance quantity or allow us price escalation).
2. Pur. 8-5/96/1074 Rs. 30,802,219.00 Rs. 24,349,585.00 261.00
dated 08-01-98.
ii) A Bid against Tender No. 1089 is under final stage of award of Contract with a tentative value of
Rs. 450 million for production and supply of 410 KM cables of big pairs. Insha' Allah we are sure to
receive the same.
iii) Further Tenders are also under issue by M/s. PTCL's authority, which evidences the further demand of
the cable.
B. Settlement With Financial Institutions:
 
1. PICIC:
The management is pleased to disclose that the settlement with M/s. PICIC has been made against the
agreed package of Rs. 65.00 million. Only an small amount of Rs. 3.20 million against CED & Mark-up
is claimed by PICIC which is also under negotiation with them.
2. Bankers Equity:
Negotiation is going on to settle balance of principal amount of Rs. 2,146,500.00 for each rest of the
three Consortium Banks M/s. NBP, HBL and UBL.
Whereas, pending suit with the Banking Tribunal since 1995 filed by BEL, the Company has also availed
the SBP's incentive Policy under circular Nos. 19 & 21 respectively, and accordingly 10% down
payment have also been made to these three Banks against Principal amount of Rs. 2,385,000.00 each.
C. Capital Injection:
Apart from the accrued Mark-up of the current year for Rs. 2.000 million the sponsor of the Company
has this year too injected additional capital of Rs. 11.863 million.
D. General:
- ISO 9002 Certification is under process, which is a condition of M/s. Pakistan Telecommunication
  Company Limited.
- Compliance in respect of YEAR 2000 is not applicable to the Project as neither the operation of Plant
is integrated to the Computer nor the accounts are Computerised in the office.
- Authorised Capital of the Company is going to raised from Rs. 40.00 million to Rs. 100.00 million and
being notified to the shareholders for seeking approval from them in the AGM.
- The Company was able to keep the over-head cost under control despited of devaluation in Pak Rupee
& its impact on the cost of sale.
- The extension of time for holding AGM by February 1999, was granted by Corporate Law
Authority, for better disclosure of Annual Reports against settled loan with M/s. PICIC and others.
E. Comments On Auditor's Report:
1) Auditors have qualified in their report that stock of work in process includes Rs. 8.00 million, which
could not be physically verified by them. In this respect the management is fully satisfied that the value
of stock of work in process accounted for in the book under report is 100% correct as the work in process
includes processed cables in short length pieces alongwith the stocks available on shop-floor in semi
process in various shapes and stages. The short length pieces pieces are now commercially salesable in
the market and these short length cables are available in 100's of drums (wooden reels) and lying in
open yard outside the shop-floor, part of which, is apparently omitted from the list of the physical stock.
However, the management is planning to appoint Auditor for a thorough physical stock taking to make
the inventory update by eliminating chances of mistake.
2. Auditors also as usual again commented that the accounts have been prepared on goin concern basis
explaining the critical status of the accounts. Management this year too giving assurance to the valuable
shareholders that even default and sick nature of project the unit is in operation and will Insha Allah
survive and all the measures are under way to maintain Cash Flow, settle gradually the long outstanding
debts of various Financial Institutions, avail all efforts in marketing of the product to the only buyer M/s.
Pakistan Telecommunication Company Limited, also explore in the local market and refrain by all means
for closer of factory as it was happened in the past in the year 1989 to 1991.
Moreover, to reduce financial cost against the finances taken on loan from associated Company the
management is planing to issue right share as well as to liquidate the long-term loan from the book to
reduce financial cost and to improve debt equity ratio of the Company.
F. Staff Relation:
Relation with staff remain co-ordial and the directors recognize the valuable contribution made by
employees at all level in the business.
G. Pattern of Shareholders:
The pattern of shareholding and categories of share in terms of number and percent are included in the
Annual Report.
H. Directors :
There are no changes in the Board of Directors during the current year under the report.
I. Auditors.
The present auditors M/s. Rahim Iqbal Rafiq & Company, Chartered Accountants, retired and offers
themselves for re-appointment.
On behalf of the Board
Dated: 29th January, 1999 RAZA ABDUL AZIZ AL-RAEE
Chief Executive
PATTERN OF SHAREHOLDINGS AS AT 30TH JUNE, 1998
NUMBER OF SHAREHOLDINGS TOTAL
SHAREHOLDERS SHARES HELD
5512 FROM 1 TO 100 551200
84 FROM 101 TO 500 29400
81 FROM 501 TO 1000 65500
126 FROM 1001 TO 5000 253500
7 FROM 5001 TO 10000 53000
1 FROM 10001 TO 15000 15000
1 FROM 15001 TO 20000 20000
1 FROM 20001 TO 25000 25000
1 FROM 25001 TO 30000 27500
1 FROM 30001 TO 35000 68000
1 FROM 40001 TO 45000 40700
1 FROM 45001 TO 50000 50000
1 FROM 50001 TO 55000 55000
5 FROM 55001 TO 60000 60000
1 FROM 65001 TO 70000 69000
1 FROM 85001 TO 90000 87900
1 FROM 95001 TO 100000 99000
1 FROM 100001 TO 125000 567500
1 FROM 125001 TO 130000 128300
1 FROM 190001 TO 195000 190600
1 FROM 250001 TO 255000 251000
1 FROM 290001 TO 295000 292900
---------- ----------
5831 3000000
========== ==========
CATEGORIES OF SHARE HOLDERS
AS AT 30TH JUNE, 1998
CATEGORIES OF NUMBER OF TOTAL PERCENTAGE
SHAREHOLDERS SHAREHOLDERS SHARES HELD (%)
Individuals 5822 1731700 57.72
Investment Companies 2 190700 636
Joint Stock Companies 3 314900 10.50
Financial Institutions 1 34000 1.13
Associated Companies 3 728700 24.29
---------- ---------- ----------
5831 3000000 100.00
========== ========== ==========
AUDITOR'S REPORT TO THE MEMBERS
We have audited the annexed Balance Sheet of Pakistan Telephone Cables Limited as at June 30,1998 and the
related Profit and Loss Account and the 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
informations 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:
1. Included in Work in process (stock-in-trade)are semi processed short lengths cables valuing
Rs.8.00 million whose physical verification and valuation was not practically possible and is
based on management's representation.
a) In our opinion, proper books of accounts have been kept by the Company as required by the
Companies Ordinance, 1984;
b) in our opinion:
i) the Balance Sheet and the 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 accounts and are further in accordance with the 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) Except for the matter in para 1 above, 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 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".
Without qualifying our report, we draw attention to the fact that the Company incurred continued operating losses
and as at June 30,1998 its accumulated loss amounted to Rs.163,033,602/- (1997: Rs. 239,173,407/-) which has
resulted in net capital deficiency and the current liabilities have exceeded current assets by Rs.121,031,973/-
(1997: Rs.154,718,208/-) and further due to liquidity constraints, optimum capacity utilization could not be
achieved. The financial statements of the company have been prepared on a going concern basis, the validity of
which is dependent on the successful outcome of the matters stated in Note 27.
Karachi, Dated: 29th January, 1999 RAHIM IQBAL RAFIQ & COMPANY
Chartered Accountants
BALANCE SHEET AS ON JUNE 30, 1998
NOTE 1998 1997
Rupees Rupees
SHARE CAPITAL
CAPITAL AND RESERVES
Authorised
4,000,000 ordinary shares 40,000,000 40,000,000
of Rs.10/- each ========== ==========
Issued subscribed and paid-up
3,000,000 ordinary shares 30,000,000 30,000,000
of Rs. 10/- each
Accumulated loss (163,033,602) (239,173,497)
---------- ----------
(133,033,602) (209,173,497)
Surplus on Revaluation of
Fixed Assets 3 34,581,267 -
REDEEMABLE CAPITAL 4 - -
LONG TERM LOANS 5 47,174,862 93,161,010
DEFERRED LIABILITY
Staff gratuity 971,653 887,036
CURRENT LIABILITIES
Short term finances 6 134,124,094 106,120,317
Current portion of long term liabilities 7 6,439,500 29,540,000
Creditors, accrued and other liabilities 8 54,450,675 106,011,893
Book overdraft 9,000,000 -
Taxation 739,323 288,050
---------- ----------
204,753,592 241,960,260
CONTINGENCIES & COMMITMENTS         9
---------- ----------
154,447,772 126,834,809
========== ==========
OPERATING FIXED ASSETS 10 70,597,853 39,464,457
LONG TERM SECURITY DEPOSITS 128,300 128,300
CURRENT ASSETS
Stores and spares 11 527,603 383,478
Stock in trade 12 70,396,569 67,749,216
Trade debts-Secured
considered good 209,004 11,682,335
Short Term Investment 13 2,000,000 2,000,000
Advances, deposits, prepayments
and other receivables 14 10,395,495 4,686,461
Cash and bank balance 15 192,948 740,562
---------- ----------
83,721,619 87,242,052
---------- ----------
154,447,772 126,834,809
========== ==========
The annexed notes form an integral part of these financial statements.
RAZA ABDUL AZIZ AL-RAEE AQEEL AHMED
CHIEF EXECUTIVE DIRECTOR
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED JUNE 30,1998
1998 1997
NOTE Rupees Rupees
Sales 16 42,745,523 55,178,569
Cost of sales 17 41,040,005 42,653,404
---------- ----------
Gross profit 1,705,518 12,525,165
Operating Expenses:
Selling and distribution 18 1,496,618 7,994,465
Administration 19 4,905,940 3,983,448
---------- ----------
(6,402,558) (11,977,913)
---------- ----------
Operating (Loss)/profit (4,697,040) 547,252
Financial charges 20 (15,717,089) (7,704,918)
---------- ----------
(20,414,129) (7,157,666)
Other income 21 1,545,570 2,495,722
---------- ----------
(18,868,559) (4,661,944)
Reversal of liabilities 22 95,747,777 -
---------- ----------
Profit/(loss) before taxation 76,879,218 (4,661,944)
Provision for taxation - minimum tax
- Current (739,000) (288,050)
- Prior (323) 47,007
---------- ----------
(739,323) (241,043)
---------- ----------
Profit/(loss) after taxation 76,139,895 (4,902,987)
Accumulated loss brought forward (239,173,497) (234,270,510)
---------- ----------
Accumulated loss carried forward (163,033,602) (239,173,497)
========== ==========
The annexed notes form an integral part of these financial statements.
RAZA ABDUL AZIZ AL-RAEE AQEEL AHMED
CHIEF EXECUTIVE DIRECTOR
STATEMENT OF CHANGES IN FINANCIAL POSITION (CASH FLOW STATEMENT)
FOR THE PERIOD ENDED JUNE 30, 1998
1998 1997
Rupees Rupees
CASH FLOWS FROM OPERATING ACTIVITIES
Profit/(loss) before taxation 76,879,218 (4,661,944)
Adjustment for:
Depreciation 3,924,111 4,385,250
Financial charges 15,717,089 7,704,918
Provision for gratuity 413,492 323,786
Reversal of loan and liabilities (95,747,777) -
(Gain)/Loss on sale of fixed assets (42,076) (63,600)
---------- ----------
(75,735,161) 12,350,354