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OUTSUKA PAKISTAN LIMITED

Annual Reports 2003

CONTENTS

COMPANY INFORMATION

BOARD OF DIRECTORS

Minoru Okamoto (Chairman)

Abid Hussain (Chief Executive)

Meguru Kajiwara (Alternate: Mohammad Aslam)

Mehtabuddin Feroz

Bambang Koestoyo (Alternate: Hanif Sattar)

Mohammad Abdullah Feroz

Shuichi Takagi

Nazimuddin Feroz

COMPANY SECRETARY

Hanif Sattar

AUDIT SUB COMMITTEE

Minoru Okamoto (Chairman)

OF THE BOARD

Mehtabuddin Feroz (Member)

Abid Hussain (Member)

AUDITORS

A.F. Ferguson & Co.

Chartered Accountants

LEGAL ADVISORS

Hassan & Humayun Associates

BANKERS

The Bank of Tokyo - Mitsubishi Limited

Habib Bank Limited

Allied Bank of Pakistan Limited

Muslim Commercial Bank Limited

Bank AJFalah Limited

REGISTERED OFFICE

30-B, Sindhi Muslim Co-operative

Housing Society, Karachi-74400

Tel: 4528651 - 4 Fax: 4549857

E-mail: oplfin@khi. paknet.com. pk

FACTORY

No. F/4-9

Hub Industrial Trading Estate,

Distt. Lasbella (Balochistan)

Tel: (0202) 32262, (0202) 33218

Fax No. (0202)33219

SHARE REGISTRAR

Noble Computer Services (Pvt) Ltd.

14, Banglore Town Housing Society,

Shahrah-e-Faisal, Karachi.

Tel: 4546978 -45201 21

Fax: 431 4962

NOTICE OF MEETING

Notice is hereby given that the Fifteenth Annual General Meeting of Otsuka Pakistan Limited will be

held on Friday, October 17, 2003 at 10.00 a.m. at Beach Luxury Hotel, Karachi to transact the following

business:-

1. To receive and adopt the Audited Accounts for the year ended June 30, 2003, together with

the Directors' and Auditors' reports thereon.

2. To declare a cash dividend @ 17.5% for the year ended June 30, 2003, as recommended by

the Directors.

3. To appoint auditors and fix their remuneration.

4. To elect seven directors in accordance with the provisions of Section 178 of the Companies

Ordinance, 1984 for a period of three years commencing from February 25, 2004, in place of

present directors, namely Mr. Meguru Kajiwara, Mr. Minoru Okamoto, Mr.Shuichi Takagi, Mr.

Bambang Koestoyo, Mr. Mehtabuddin Feroz, Mr. Nazimuddin Feroz and Mr. Mohammad

Abdullah Feroz who will retire on February 24, 2004. The directors have fixed the number of

elected directors at seven.

5. To transact any other business with the permission of the Chair.

By order of the Board

Hanif Sattar

Karachi: September 13, 2003 Company Secretary

Notes:-

1. The Share Transfer Books of the Company will remain closed from October 10, 2003 to October

17, 2003, (both days inclusive).

2. A member entitled to attend and vote at the Annual General Meeting may appoint a proxy to

attend and vote on his / her behalf. A proxy need not be a member of the company.

3. Instrument of appointing proxy and the power of attorney or other authority under which it is

signed or a notarially certified copy of the power of authority must be deposited at the Registered

Office of the Company at least 48 hours before the time of the Meeting.

4. Shareholders are requested to promptly notify Company's Shares Registrar M/s. Noble Computer

Services (Pvt) Ltd. 14, Bangalore Town Housing Society, Shahrah-e-Faisal, Karachi. Tel:

(4546978 - 4520121) of any change in their addresses.

5. In terms of Section 178(3) of the Companies Ordinance, 1984, any candidate who seeks to

contest the election shall file with the Company at the Registered Office, not later than 14 days

before the date of the Meeting, a notice of his/her intention to offer himself / herself for election

as a Director. The consent should accompany with the following declarations as required under

the "Code of Corporate Governance":

(i) I am aware of my duties and powers under the relevant laws and the Company's

Memorandum and Articles of Association and the Listing Regulations of Stock Exchanges

in Pakistan.

(ii) I am not serving as a director of ten other listed companies,

(iii) My name is borne on the register of National Tax Payers and my NT. No. is________/

I am non-resident,

(iv) I have not been convicted by a court of competent jurisdiction as a defaulter in payment

of any loan to a banking company, a Development Financial Institution or a Non-Banking

Financial Institution,

(v) I am not a member of any Stock Exchange or if I am member of any Stock Exchange, I

have not been declared as a defaulter by any such Stock Exchange,

(vi) I and / or my spouse are not engaged in the busines of stock brokerage.

DIRECTORS' REPORT

The Directors are pleased to present the Annual Report of the Company for the year ended June 30,

2003

Business Review

The year under review witnessed significant improvement in the overall performance of your company.

Improving economy, higher spending by the Government on health sector, increasing exports and

launch of new products all contributed towards this improvement.

Net sales for the year increased by 26% to Rs. 428.5 m. This increase is well above the overall

increase in the pharma market and reflects the confidence of the medical profession in the superior

quality of your company's products.

Pretax profit increased from Rs. 27.3 m to Rs. 37.2 m. The increase has been as a result of higher

capacity utilization, favourable exchange rates and strict control on expenditures.

Financial Results

(Rs. 000)

Profit before taxation

56,469

Provision for taxation

19,253

Profit after taxation

37,216

Un-appropriated profit brought forward

37,279

Appropriation:

Proposed dividend

17,500

Transfer to general reserves

17,500

Total

35,000

Un-appropriated profit carried forward

2,279

Earning Per Share

The earning per share for the year ended June 30, 2003 works to Rs.3.72 per share.

Future Outlook

Central Asia and Afghanistan provide ample opportunities for growth to your company. Our products

are being regularly exported to Turkmenistan and all efforts are underway to expand in other CIS

countries. Some progress has also been made in Afghanistan. Our efforts to develop these markets

will continue.

Aminoleban injections for treatment of hepatic encephalopathy launched in May 2002 has become

the first choice for the medical profession in a very short span of time. Pletaal tablets for the treatment

of intermittent claudication was launched in May 2003. This novel product has been much acclaimed

by the doctors and initial results are very encouraging. The company will continue to launch more

products, subject to the approval of Ministry of Health.

Keeping in view the increasing sales volumes, your company has decided to increase its current

production capacity from 15.5 m bottles to 20.0 m bottles per annum. Orders for the machinery have

been placed and the increased capacity will be available by December 2003.

The Board therefore, sees a reasonable future for your company. We are confident that the current

business friendly policies of the government will continue and more efforts will be made towards de-

controlling the pharmaceutical industry.

Corporate Governance

As required under Corporate Governance, the Directors are pleased to confirm the following:

a. That the financial statements, being presented, present fairly its state of affairs, the result of

its operating cash flows and changes in equity.

b. That proper books of account of the company have been maintained.

c. That appropriate accounting policies have been consistently applied in preparation of financial

statements, accounting estimates are based on reasonable and prudent judgment.

d. That International Accounting Standards, as applicable in Pakistan, have been followed in

preparation of financial statements.

e. That the system of internal control is sound in design and has been effectively implemented

and monitored.

f. That there are no significant doubts upon the company's ability to continue as a going concern.

g. That there has been no material departure from the best practices of corporate governance,

as detailed in the listing regulations.

Key Operating and Financial data

Key operating and financial data of last ten years is annexed with this annual report.

Value of investments of provident and gratuity funds

The following is the value of investments based on respective audited accounts:

Provident Fund

Rs. 19,397,024

Gratuity Fund

Rs. 4,278,670

Directors and Chairman

On November 2, 2002, Mr. Yoshio Tanabe, Director and Chairman of the company resigned due to

his other international assignments and Mr. Minoru Okamoto was appointed Director and Chairman.

On the same date, Mr. Junichiro Otsubo also resigned as Director of the company and Mr. Shuichi

Takagi was appointed as Director in his place.

The Board highly appreciate the outgoing Directors specially the Chairman for their contribution,

guidance and assistance provided by them during their tenure.

Further the Board of Directors welcome the new Directors and is confident of receiving their valuable

contribution.

Board Meetings

During the year, six meetings of Board of Directors were held. Attendance by each Director is as

follows:

Name of Director

No. of Meetings attended

Mr. Abid Hussain

Mr. Mehtabuddin Feroz

Mr. Mohammad Abdullah Feroz

Mr. Nazimuddin Feroz

Mr. Mohammad Aslam (Alternative Director)

Mr. Hanif Sattar (Alternative Director)

Mr. Yoshio Tanabe

Mr. Meguru Kajiwara

Mr. Minoru Okamoto

Pattern of Shareholding

The Pattern of share holding of the Company as at June 30, 2003, is annexed with this annual report.

Trading in Shares

No transactions took place