Chakwal Cement Limited - Annual Reports 2003

CHAKWAL CEMENT COMPANY LIMITED
Annual Reports 2003

CONTENTS

Company Information
Notice of Meeting
Directors' Report
Statement of Compliance with the Code of Corporate Governance
Auditors' Review on Compliance of the Code of Corporate Governance
Auditors' Report
Balance Sheet
Cash Flow Statement
Statement Of Changes In Equity
Notes To The Accounts
Key Financial Data of Last Six Years
Pattern of Shareholding

Company Information

BOARD OF DIRECTORS	Khawaja Mohammad Jawed		(Chief Executive)
	Khawaja Mohammad Jahangir
	Khawaja Mohammad Tanveer
	Khawaja Mohammad Nadeem
	Khawaja Mohammad Naveed
	Mr. Mohammad Aman Farooq
	Mr. Stephen Potter
	Mr. Shamsuddin Khan		(Nominee NIT)

BOARD AUDIT COMMITTEE	Khawaja Mohammad Jahangir
	Khawaja Mohammad Nadeem
	Mr. Mohammad Aman Farooq

COMPANY SECRETARY	Mr. Muhammad Anwar Sheikh
	M. Com., FCMA

CHIEF FINANCIAL OFFICER	Mr. Khalid Mahmood Bhatti

AUDITORS	M. Hussain Chaudhury & Co.
	Chartered Accountants

BANKERS	Faysal Bank Limited
	Muslim Commercial Bank Limited
	KASB Bank Limited
	National Bank of Pakistan
	Metropolitan Bank Limited

LEGAL ADVISORS	Cornelius Lane & Mufti
	Advocates and Solicitors

REGISTERED OFFICE	7/1, E-3, Main Boulevard,
	Gulberg-III, Lahore-Pakistan.
	Tel: (042) 5757108

CORPORATE & SHARES	31-F, Near Main Market,
DEPARTMENT	Gulberg-II, Lahore-Pakistan.
	Tel: 5755774 Fax: 5755760

PLANT SITE	Karuli Near Kallar Kahar
	District Chakwal-Pakistan.

Notice of Annual General Meeting

Notice is hereby given that the 10^th Annual General Meeting of the shareholders of Chakwal Cement
Company Limited will be held on Friday, October 31, 2003 at 11:00 a.m., at
7-Happy Homes, 38-A, Main Gulberg, Lahore to transact the following business:

1. To confirm the minutes of the last Annual General Meeting held on November 07,2002.

2. To receive and adopt the audited accounts of the company for the year ended
June 30,2003 alongwith Directors' and Auditors' reports thereon.

3. To appoint Auditors for the year ending June 30,2004 and to fix their remuneration.

4. To consider any other business which may be placed before the meeting with the
permission of the Chair.

By Order of the Board

Lahore:

October 8,2003 MUHAMMAD ANWAR SHEIKH

Corporate Secretary

Notes:

*• The share transfer books of the Company shall remain closed from Wednesday, October 22, 2003 to
Friday, October 31,2003 (both days inclusive).

2. A member entitled to attend and vote at this meeting may appoint another member as his/her proxy to
attend the meeting and vote instead of him/her. Proxies in order to be effective must be received by the
Company not later than 48 hours before the meeting.

3. Any individual Beneficial Owner of CDC, entitled to attend and vote at this meeting, must bring his/her
NIC or Passport to prove his/her identity, and in case of Proxy must enclose an attested copy of his/her
NIC or Passport. Representative of corporate members should bring the usual documents required for
such purpose.

4. Shareholders are requested to promptly notify the Company of any change in their address.

Directors' Report to the shareholders

The Directors have pleasure in presenting annual report of the Company for the year ended June 30, 2003
together with the audited accounts and the Auditors' Report thereon.

The Government has accepted the plea of the Company and has allowed lifting of the consignments after
payment of 10% demurrage. The Government has also allowed deferment of custom duty and sales tax to be
recovered in five equal annual installments without any interest after going into commercial production. After
payment of port dues the plant and machinery has been lifted from Karachi port and has reached the site. The
plant & machinery that was placed in the custom bonded warehouse has been released after furnishing the
indemnity bond. The Company is however, of the opinion that the exemption available under the SRO 987(1) 99
is in addition to the concessions allowed by the Economic Co-ordination Committee and therefore exemption of
sales tax should be applicable in the case of the Company. The Company has made representation to the Central
Board of Revenue for redressal. We are hopeful that due concession will be available to the company.

The Company personnel have carried out the inspection of machinery and equipment. In addition, Messrs. F.L.
Smidth & Co. has been asked to carry out a technical inspection of machinery and equipment supplied by them
and their proposals for the additional equipment necessary to commission the complete factory according to the
specifications. Their inspection team will reach at site shortly for this purpose . The estimates of funds required
for completing the remaining work will be revised after the arrival of Messrs. F.L. Smidth engineers at site for
inspection of the machinery and will be finalized simultaneously with the completion of the inspection report by
Messrs. F.L. Smidth. The Directors look forward to active participation and financial support of all the parties in
completing the project.

The loan from Messrs. Nichimen Corporation has become overdue because of delay in the completion of the
project. The lenders have filed suit for the recovery of the loan. The suit is being defended and at the same time,
negotiations are under way with foreign lenders for rescheduling of loan and waiver of major portion of interest.

The auditors' observation regarding the ability of the Company to continue as a going concern is mitigated by
the explanation given in the notes to the accounts. The directors believe that adequate resources will be
available to complete the project and that the liabilities shall be restructured/rescheduled. Furthermore, based
on the legal opinion the directors believe that the contingencies are not likely to crystallize.

Corporate & Financial Reporting

In compliance with the provisions of the Code, the Board Members are pleased to place the following statement
on record:

* The financial statements for the year ended June 30, 2003 present fairly its state of affairs, cash flows
and changes in equity;

* Proper books of account have been maintained;

*> Appropriate accounting policies have been consistently applied in preparation of financial statements for
the year ended June 30, 2003 and accounting estimates are based on reasonable and prudent
judgment;

* International Accounting Standards (IAS) as applicable in Pakistan have been followed in preparation of
financial statements; and there has been no departure there from;

* The system of internal control is sound in design. The process of monitoring will continue and control
strengthened where ever considered necessary;

* In the light of explanations discussed in the report, the directors consider that there are no significant
doubts upon the Company's ability to continue as a going concern;

•> There has been no material departure from the best practices of corporate governance as detailed in
listing regulations;

* The key financial data of last six years is annexed;

* There are no outstanding statutory payments on account of taxes, duties, levies or charges except
those reflected in note No. 8 and 9 to the accounts;

* There have been four Board meetings during the year and the attendance of each Director is stated
below:

Name of Director		No. of Board Meetings Attended
Khawaja Mohammad Jawed		4
Khawaja Mohammad Jahangir		3
Khawaja Mohammad Tanveer		4
Khawaja Mohammad Nadeem		4
Khawaja Mohammad Naveed		4
Mr. Mohammad Aman Farooq		4
Mst. Zubaida Khatoon		2	(Resigned on 30-04-2003)
Mr. Shamsuddin Khan		1
(Nominee NIT)

Mr. Stephen Potter was co-opted as Director of the Company on April 30, 2003.

* The pattern of shareholding as on 30-06-2003 and its disclosure as required in the Code of
Corporate Governance is annexed with this report;

•> No trade in the shares of the Company was carried out during the year by its Directors, CEO, CFO,
Company Secretary and their spouses and minor children;

Auditors

As recommended by the Audit Committee, the present auditors M/s M. Hussain Chaudhury & Co., Chartered
Accountants, retire and being eligible, offer themselves for re-appointment.

Acknowledgement

The Directors would like to express their gratitude to the shareholders, foreign lenders, bankers and
Government functionaries for their continued support and co-operation.

For and on behalf of the Board

Lahore: (KHAWAJA MOHAMMAD JAWED)

October 7, 2003 Chief Executive

Statement of Compliance with the Code of Corporate Governance

This statement is being presented to comply with the Code of Corporate Governance contained in the listing
regulations of Karachi, Lahore and Islamabad Stock Exchanges for the purpose of establishing a framework
of good governance, whereby a listed company is managed in compliance with the best practices of
Corporate Governance.

The Company has applied the principles contained in the Code in the following manner:

1. The Company encourages the representation of independent non-executive directors on its Board of
Directors. At present the Board includes two independent non-executive directors

2. It is confirmed that none of the directors is serving as a director in more than ten listed companies,
including this company.

3. All the resident directors of the company are registered as taxpayers and none of them has defaulted in
payment of any loan to a banking company, a DPI or an NBFI or, being a member of stock exchange, has
been declared as a defaulter by that stock exchange.

4. A casual vacancy occurred in the Board on April 30, 2003 was filled up by the directors within 30 days
thereof.

5. The company has prepared a 'Statement of Ethics and Business Practices' which has been signed by all
the directors and employees of the company.

6. The Board has developed a vision statement, overall corporate strategy and significant policies of the
company. A complete record of particulars of significant policies alongwith the date on which they were
approved or amended has been maintained.

7. All the powers of the Board have been duly exercised and decisions on material transactions have been
taken by the Board. No remuneration was paid to the Chief Executive and any director during the year.

8. The meetings of the Board were presided over by the Chief Executive and the Board met at least once in
every quarter. Written notices of the Board meetings, alongwith agenda were circulated at least seven
days before the meetings. The minutes of the meetings were appropriately recorded and circulated.

9. All the Directors on the Board are fully conversant with their duties and responsibilities as Director of
corporate bodies. The orientation course package has been sent to the Directors during the year, which
appraised them of their duties and responsibilities and briefed them regarding amendments in the
Companies Ordinance/Corporate Laws.

10. The Board has approved appointment of Chief Financial Officer (CFO), Company Secretary and Internal
Auditor. Remuneration, terms & conditions in case of future appointments on these positions will be
approved by the Board.

11. The directors' report for the period ended June 30, 2003 has been prepared in compliance with the
requirements of the Code and fully describes the salient matters required to be disclosed.

12. The financial statements of the company were duly endorsed by CEO and CFO before approval of the
Board.

13. The Directors, CEO and Executive do not hold any interest in the shares of the company other than that
disclosed in the pattern of shareholding.

14. The Company has complied with all the corporate and financial reporting requirements of the Code.

15. The Board has formed an Audit Committee. It comprises three members, all the members are non-
executive directors including the Chairman of the Committee.

16. The meetings of the Audit Committee were held at least once every quarter prior to the approval of
interim and final results of the Company and as required by the Code. The terms of references of the
committee have been formed and advised to the committee for compliance.

17. The Board has set up an effective internal audit function.

18. The statutory auditors of the company have confirmed that they have been given satisfactory rating
under the quality control review programme of the Institute of Chartered Accountants of Pakistan, that
they or any of the partners of the firm, their spouses and minor children do not hold shares of the
Company and that the firm and all its partners are in compliance with International Federation of
Accountants (IFAC) guidelines on code of ethics as adopted by the Institute of Chartered Accountants.

19. The statutory auditors or the persons associated with them have not been appointed to provide other
services except in accordance with the listing regulations and the auditors have confirmed that they have
observed IFAC guidelines in this regard.

20. We confirm that all other material principles contained in the Code have been complied with.

Lahore: (KHAWAJA MOHAMMAD JAWED)

October 7, 2003 Chief Executive