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Pakistan Slag Cement Industries Limited
Annual Reports 2003
Company Information
Notice of Meeting
Report of the Directors
Vission & Mission
Statement of Compliance With
Best Practices of Corporate Governance.
Review Report to the Members on Statement of Changes
With Best Practices of Code of Corporate Governance
Statement of Ethics and Business Practices.
Auditors' Report
Balance Sheet
Profit and Loss Account
Statement of Changes in Equity
Cash Flow Statement
Notes to the Accounts
Pattern of Shareholdings
Jehangir Akber - Chairman / Chief Executive
Faiz Mohammad Brohi
Muhammad Naeem Khan
Haji Ghulam Shabbir
Nisar A. Korai
Ajaz All Panhwar
Muneer Ahmed
Syed Ajmal Hasnain
Jehangir Akber - Chairman
Faiz Mohammad Brohi
Nisar A. Korai
Faruq Ali & Company
Chartered Accountants
Siddiqi & Company
Cost & Management Accountants
Saudi Pak Commercial Bank Limited
National Bank of Pakistan
Al Meezan Bank Limited
Muslim Commercial Bank Lin-,tQd
4th Floor, Panorama Center, Building # 2, Doctors' Plaza,
Raja Ghazanfar Ali Khan Road, Saddar, Karachi.
Phone : (021) 568 6095 Fax : (021) 521 9067
E-Mail : pscil-fac@cyber.net.pk
DSU-6, Zulfiqarabad, Pakistan Steel Mills, Karachi.
Phone: (0201) 4750129-4750130
Notice is hereby given that the Fourteenth Annual General Meeting of Pakistan Slag Cement Industries
Limited will be held on Thursday October 30, 2003 at 11.00 a.m. at Haji Abdullah Haroon Muslim Gymkhana,
Aiwan-e-Saddar Road, Karachi, to transact the following business:
1. To read and confirm the minutes of last Annual General Meeting held on 06th day of November 2002
2. To receive, consider and adopt the audited accounts for the year ended June 30, 2003 together with the
Directors and Auditors report thereon.
3. To appoint auditor of the company, for the year ending June 30, 2004 and to fix their remuneration.
4. To transact any other business with the permission of the chair.
By the Order of the Board
(Syed Ajmal Hasnain)
Karachi: 8th October 2003 Company Secretary
1. The register of members will remain closed from 27th October 2003 to 06th November 2003 (both days
2. A member entitled to attend and vote at the meeting may appoint an other member as his/her proxy to
attend and vote on his/her behalf. Proxies must be received at the registered office of the Company not
less than 48 hours before meeting.
3. Shareholders are requested to notify any change in their address immediately.
4. Shareholders who have deposited their shares with Central Depository Company of Pakistan Limited
(CDC) are requested to bring their original NIC /Passport alongwith their account number and participants
ID number in CDC for verification.
Dear Shareholders,
The Directors of your company are pleased to welcome you to the 14th Annual General Meeting of the
Company, and to present the Annual Accounts and the Auditor's Report thereon for the year ended 30th June
During the year the Company produced 77,628 tonnes cement as compared to 68,245 tonnes of last year. The
company maintained its production according to availability of clinker and in line with the market demand.
The Company dispatched 77,168.50 tonnes cement during the year as compared to 68,009 tonnes in the
corresponding last year. Inspite of lack of demand, the sale of cement has improved. The Company continued
to supply cement under previous agreement with Director General Procurement (Army) to their various
consignees like Navy, PAF and Army.
Contract for Supply of SR Cement to DGP (Army)
Your Directors are pleased to inform you that the Company, first time in its history, has procured order for
supply of Sulphate Resisting Cement to consignee of DGP (Army). The supplies under the contract
commenced subsequent to the accounting year i.e. from late July 2003.
Financial Results
Though there was an improvement increase in the quantity of cement dispatched during the year but the
company suffered an operating loss of Rs.9.583 Million as compare to Rs. 1.814 million of previous year due
to reduction in selling price of pure slag and fall in sale of granulated slag to Dong Fang Electrical Corporation
has increased the operating loss and because of this the loss after taxation has also increased form Rs. 4.184
Million to Rs. 9.976 Million during the year.
Auditor's Observation
As regards auditor's observation on the preparation of accounts under going concern assumption, the Board
feels that the efforts towards the marketing decrease of financial expense due to payment in full or running
finance facilities of the banks and loan payable to PICIC will be conducive of improving the financial position of
the Company in the long run. Moreover the Company has the financial support of lenders also.
So far as carrying of actuarial valuation employee gratuity is concerned the Company has made the provision
in this behalf sufficient enough to meet the liability of gratuity payable to the employees. However, to comply
with the requirements of IAS- 19. The Company in the process for engaging an Actuary for the actuarial
valuation of gratuity. In burden of financial charges, due to settlement of existing running finance balance, will
contributes towards betterment of Company's financial position.
Meeting of Board of Directors During the Year
During the year the Board of directors meetings held Five the attendance record of each directors is as
Name of Directors Meeting attended
1) Mr. Jehangir Akber 5
2) Mr. Faiz Muhammad Brohi 5
3) Mr. Nisar Ahmed Korai 5
4) Mr. Muhammad Naeem Khan
5) Mr. Haji Ghulam Shabbir
6) Mr. Munir 5
7) Mr. Ejaz Ali Panhor 5
The present Auditors M/s. Faruq AN & Co., Chartered Accountants, stand retired and being eligible have
offered themselves for re-appointment, as Auditors of the Company for the financial year ended 30th June
2004. The Audit Committee has also recommended the re-appointment of M/s. Faruq Ali & Co., Chartered
Accountants as auditors of the company for the said year. The audit committee and company's Board of
Directors has also recommended their name for appointment as auditor for the year 2003-04.
In view of losses no dividend has been recommended for the year 2002-03 by the directors.
Pattern of Share Holding
A statement showing pattern of share holding of the company is included in the report.
Statement on Corporate and Financial Matters
a) The financial statements prepared by the Company, fairly present its state of affairs, the result of its
operations, cash flows and changes in equity.
b) Proper books of accounts have been maintained by the Company.
c) Appropriate accounting policies have been consistently applied in preparation of these financial
statements and accounting estimates are based on reasonable and prudent judgement.
d) Applicable International Accounting Standards, except the implementation of IAS 19 (Employees
Benefits) have been followed in preparation of financial statements and there has been no departure
e) The system of internal control is sound in design and has been effectively implemented and monitored.
f) Although presently the company is not earning profit but efforts are being made to make it a profitable
project and has financial support of the landers therefore there are no significant doubt upon the
Company's ability to continue as a going concern.
g) There has been no material departure from the best practices of corporate governance, as detailed in the
listing regulations.
h) The Company maintains Gratuity Fund accounts for its employees.
Future Prospects
Your directors are pleased to inform you that The Company has qualified for ISO 9001 2000-quality
management system. It is an indicative of our quality consciousness in the filed of Cement and will have far-
reaching effects on the overall capability of the Company in the years to come and this quality management
system will help us in reduction of ou.r cost by preventive measures. The Company expects better financial
results due to expected increase in dispatches of cement on account of addition sale SR Cement for DGP
Appreciation for Employees
The directors would like to thank the employees of the company for their devotion towards their duties and
hoped that they will continue to work with the same spirit. Directors are also thankful to the valued customers
whose continues support is of great source of strength to the Company.
Dated: October 08, 2003 (JEHANGIR AKBAR)
Place: Karachi Chief Executive
Our Vision
Our vision is to provide Superior Quality of our product customer by making a difference in
cement manufacturing concerns engaged in the nations building through the optimum
utilization of resources for the benefit of its stake holder.
Our Mission
To develop a continuous procedure of improvement & development in advancement of
technology to produce a "Quality Product". We aim to develop an organization having
dedicated team of professionals with strong customers & shareholders.
Core Values
Achieve excellence in business.
Continuous improvement & development through advancement & latest technology.
Committed with Quality Product.
Continuous improvement & development in work force by training.
This Statement is being presented to comply with the Code of Corporate Governance contained in the Regulation No. 37,
of the Karachi Stock Exchange for the Purpose of establishing a framework of good governance, whereby a listed
company is managed in compliance with the best practice of Corporate Governance.
The Company has applied the principles contained in the Code in the following manner:
1. The Company encourages representation of independent non-executive directors and directors representing minority
interest on its Board of Directors. At present the Board includes three independent non-executive directors.
2. The directors have confirmed that non of them is serving as director in more than ten listed Companies, including this
3. The directors of Company have voluntary declared that all the resident directors of the Company have no default in
payment of any loan to banking Company, a DPI or NBFI and none of them is a member of Karachi Stock Exchange.
4. The Company has prepared a 'Statement of Ethics and Business Practices', which has been approved by the Board of
Directors and signed by the employees of the Company.
5. The Board has developed a vision/mission statement, overall corporate strategy and significant policies of the
Company. A complete record of particulars of significant policies along with the dates on which these were approved
or amended has been maintained.
6. All powers of the Board have been duly exercised and decisions on material transactions, including appointment and
determination of remuneration and terms and conditions of employment of the CEO and other executive directors,
have been taken by the Board.
7. The meeting of the Board was presided over the Chairman and, in his absence, by a director elected by the Board for
this purpose and the Board met at least once in every quarter. Written notices of the Board meetings, along with
agenda and working papers, were circulated well in time before the meetings. The minutes of the meeting were
appropriately recorded and circulated.
8. The directors have been provided with copies of the listing regulation of the Karachi Stock Exchange and copies of
Memorandum and Article of the Association and they are well conversant with their duties and responsibilities.
9. The Company Secretary and Head of Internal Audit were appointed prior to enforcement of the Code of Corporate
Governance. However, such next appointment, if any including their remuneration and terms and conditions of
employment, as determined by the CEO, will be referred to the Board of Directors for approval.
10. The directors' report for this year has been prepared in compliance with requirement of the Code and fully describes
the salient matters required to be disclosed.
11. The financial statements of the Company were duly endorsed by CEO and CFO before approval of the Board.
12. The directors, CEO and executives do not hold any interest in the shares on the Company other than that disclosed in
the pattern of shareholding.
13. The Company has complied with all the corporate and financial reporting requirement of the Code.
14. The Board has formed an Audit Committee. It presently comprises three members, all of whom are non-executive
directors including the Chairman of the Committee.
15. The meeting of the Audit Committee were held at least once every quarter prior to approval of interim and final results
of the Company and as required by the Code. The terms of reference of the Committee have been formed and
advised to committee for compliance.
16. The Board has set-up and effective internal audit functions.
17. The statutory auditors of the Company have confirmed that they have been given a satisfactory rating under the
quality control review program 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 the rules and regulation of International Federation of Accountants.
18. 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.
19. We confirm that all other material principles contained in the Code of Corporate Governance have been complied with.
Dated: October 08, 2003 (JEHANGIR AKBAR)
Place: Karachi Chief Executive
We have reviewed the Statement of Compliance with the best practices contained in the Code of Corporate
Governance prepared by the Board of Directors of Pakistan Slag Cement Industries Limited to comply with
the Listing Regulation No.37 (Chapter XI) of the Karachi Stock Exchange where the Company is listed.
The responsibility for compliance with the Code of Corporate Governance is that of the Board of Directors of
the Company. Our responsibility is to review, to the extent where such compliance can be objectively verified,
whether the Statement of Compliance reflects the status of the Company's compliance with the provisions of
the Code of Corporate Governance and report if it does not. A review is limited primarily to inquiries of the
Company personnel and review of various documents prepared by the company to comply with the Code.
As part of our audit of financial statements we are required to obtain an understanding of the accounting and
internal control systems sufficient to plan the audit and develop an effective audit approach. We have not
carried out any special review of the internal control system to enable us to express an opinion as to whether
the Board's statement on internal control covers all controls and the effectiveness of such internal controls.
Based on our review, nothing has come to our attention, which causes us to believe that the Statement of
Compliance does not appropriately reflect the Company's compliance, in all material respects, with the best
practices contained in the Code of Corporate Governance.
Faruq Ali & Company
Dated: October 08, 2003 Chartered Accountants
Place: Karachi
The business policy of PAKISTAN SLAG CEMENT INDUSTIRES LIMITED is to provide product customers
that meets or exceed requirements in areas of Quality, Cost and On Time Delivery.
Product Quality
Our Operations are based on International Standards PS 232 1983 & BS 12 1958 the that meets national and
International standards for quality reliability.
Dealing with Employees
Provide congenial work atmosphere where all employees treated with respect and dignity. Training is provided
to Employess in order to make them competent.
Responsibility to interested parties
To be objectives, that our dealings with the people must be fair and transparent who have reposed their
confidence in us.
Financial Reporting & Internal Controls
To implement an effective and transparent system of financial reporting and internal controls to safeguard the
interest of our shareholders and fulfill the regulatory requirements.
Procurement of Goods & Services
Our purchasing and procurement system is based on the quality management system purchased goods and
services that are tailored to our requirement and are priced appropriately. Before taking decision about
procurement of any goods or service, quotations are obtained from various sources.
Conflict of Interest
All the decisions of the management must be in the interest of the company and activities and involvement of
the directors and employees in no way conflict with the interest of the company.
Adherence to law of the land
To fulfill all legal requirements of the Government and its regulatory bodies and follow relevant and applicable
laws of the country.
Environment Protection
To protect environment and ensure health and safety of the work force and well being of the people living in
the adjoining areas of our plant.
We have audited the annexed balance sheet of Pakistan Slag Cement Industries Limited as at June 30, 2003 and
the related profit and loss account, cash flow statement and statement of changes in equity 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.
It is the responsibility of the company's management to establish and maintain a system of internal control, and
prepare and present the above said statements in conformity with the approved accounting standards and the
requirements of the Companies Ordinance, 1984. Our responsibility is to express an opinion on these statements
based on our audit.
We conduct our audit in accordance with the auditing standards as applicable in Pakistan. These standards require
that we plan and perform the audit to obtain reasonable assurance about whether the above said statements are
free of any material misstatement. An audit includes examining on a test basis, evidence supporting the amounts
and disclosures in the above said statement. An audit also includes assessing the accounting policies and significant
estimates made by management, as well as, evaluating the overall presentation of above said statements. We
believe that our audit provides a reasonable basis for our opinion and, after due verification, we report that:
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 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 except for the change in accounting
policy, as described in note 3.8 to the accounts, with which we concur;
i) the expenditure incurred during the year was for the purpose of the company's business; and
i) 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, profits and loss account, cash flow statement and statement of changes in equity together with the notes
forming part thereof conform with approved accounting standards as applicable in Pakistan, and, 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, 2003 and of the loss, its cash flows and
changes in equity for the year then ended; and
d) in our opinion, no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980).
e) without qualifying our opinion,
i) we draw attention to note 2 to the financial statements, which indicates that the Company incurred a net
loss of Rs.9.976 million during the year ended June 30, 2003 and, as of that date company's accumulated
losses exceeded its share capital by Rs.11.329 million. These conditions indicate the existence of material
uncertainty, which may cast significant doubt about the company's ability to continue as a going concern.
ii) we draw attention of members to note 8.1 to the financial statements, which disclose that Company has
not carried out actuarial valuation of staff gratuity therefore, the liability and the related disclosure cannot
be determined and disclosed as required by International Accounting Standard -19 "Employee Benefits".
Faruq Ali & Company
Dated: October 08, 2003 Chartered Accountants
Place: Karachi
AS AT JUNE 30, 2003
Note 2003 2002
Authorized Capital
31,500,000 (2002: 31,500,000)
Ordinary shares of Rs.10/- each 315,000,000 315,000,000
Issued, subscribed and paid-up capital 4 64,000,000 64,000,000
Accumulated loss -75,329,054 -65,352,564
-11,329,054 -1,352,564
Long-term loan - Secured 5 3,733,522
Supplier credit - Secured 6 20,625,000 27,500,000
Long-term deposits - Unsecured 7 1,125,655 . 1,125,655
Deferred and other liabilities 8 111,941,759 899,870
Current maturity of long-term loan 3,733,522 9,000,000
Current and over due portion of supplier credit 9 9,375,000 2,500,000
Short term finance 10 976,211 46,566,543
Trade creditors 11 87,430,776 7,693,674
Accrued and other liabilities 12 15,024,838 90,257,865
Advance from customers 15,959,117
Provision for taxation 13 952,000 1,091,367
133,451,464 157,109,449
255,814,824 189,015,932
Tangible fixed assets
Operating fixed assets 15 79,096,241 97,986,158
Long-term deposits 16 1,876,830 1 ,744,830
Stores, spares and loose tools 17 7,130,243 2,637,525
Stock-in-trade 18 69,610,491 38,890,462
Trade debts - Unsecured 19 50,784,206 24,936,247
Loans, advances, trade deposits, prepayments
and other receivables 20 17,200,113 3,746,342
Advance income tax 19,139,570 18,146,221
Cash and bank balances 21 10,977,130 928,147
174,841,753 89,284,944
255,814,824 189,015,932
The annexed notes form an integral part of these accounts.
Note 2003 2002
Sales - Net 22 186,468,285 207,740,738
Cost of goods sold 23 -190,435,095 -206,124,083
Gross loss -3,966,810 1,616,655
Administrative and Selling expenses 24 -5,616,380 -3,431,600
Operating (Loss) / Profit -9,583,190 -1,814,945
Financial charges 25 -3,419,215 -6,701,360
-13,002,405 -8,516,305
Other Income 26 3,977,915 2,922,390
(Loss) before taxation -9,024,490 -5,593,915
Current -932,342 -1,091,367
Prior -19,658 2,500,983
-952,000 1,409,616
(Loss) after taxation -9,976,490 -4,184,299
Accumulated (loss) brought forward -65,352,564 -61,168,265
Accumulated (loss) carried forward -75,329,054 -65,352,564
(Loss) per share - basic 27 -1.56 -0.65
The annexed notes form an integral part of these accounts.
Note 2003 2002
Cash flow from operating activities
Cash generated from operations 28 -14,220,199 16,397,223
Payments for
Financial charges -635,369 -4,427,282
Gratuity paid -39,962
Dividend paid -471,157 -14,705
Taxation -2,084,716 -3,085,273
-3,231,204 -7,527,260
Net cash (outflow) / inflow from operating activities -17,451,403 8,869,963
Cash flow from investing activities
Fixed capital expenditure -80,000 -30,111,150
Long-term deposit -132,000 362,290
Net cash (outflow) from investing activities -212,000 -29,748,860
Cash flow from financing activities
Repayment of long-term loan -9,000,000 -11,206,028
Interest received 1,547,027
Loan received from Sardar M. Ashraf D. Baluch (Pvt) Ltd. - Net 35,165,359
Supplier credit 30,000,000
Net Cash Inflow from Financing Activities 27,712,386 18,793,972
Net Increase / (Decrease) in Cash and Cash Equivalent 10,048,983 -2,084,925
Cash and Cash Equivalent as on 1st July 2002 928,147 3,013,072
Cash and Cash Equivalent as on 30th June 2003 10,977,130 928,147
The annexed notes form an integral part of these accounts.
subscribed and Accumulated
paid-up-capital (Loss) Total
Balance as on July 01, 2001 64,000,000 -61,168,265 2,831,735
(Loss) after taxation -4,184,299 -4,184,299
Balance as on June 30, 2002 64,000,000 -65,352,564 -1,352,564
(Loss) after taxation -9,976,490 -9,976,490
Balance as on June 30, 2003 64,000,000 -75,329,054 -11,329,054
The annexed notes form an integral part of these accounts.
The Company was incorporated in Pakistan as a public limited Company in June 1994 under the
Companies Ordinance, 1984. Its shares are listed on the Karachi Stock Exchange. The Company is
principally engaged in manufacturing and sale of cement.
The Company has incurred a loss of Rs.9.976 million (2002: Rs.4.184 million) for the year ended June 30,
2003 and as of that date its accumulated losses exceeded its share capital by Rs.11.329 million (2002:
Rs.1.353 million). The accounts have been prepared under going concern assumption as the Company
expects continued support from lenders.
3.1 Statement of compliance
These financial statements have been prepared in accordance with the approved accounting
standards as applicable in Pakistan and the requirements of the Compliance Ordinance, 1984'.
Approved accounting standards comprise of such International Accounting Standards (lASs) as
notified under the provisions of the Companies Ordinance, 1984. Wherever the requirements of the
Companies Ordinance, 1984 or directives issued by the Securities and Exchange Commission of
Pakistan (SECP) differ with the requirements of these standards, the requirements of the Companies
Ordinance, 1984 or the requirements of the said directives take precedence.
In the current year, the following International Accounting Standards become applicable to the
IAS 12 Income Taxes (Revised 2000)
IAS 39 Financial Instruments: Recognition and Measurement
IAS 40 Investment Property
In accordance with the application of revised IAS 12, the Company has changed its accounting
policy with respect to deferred taxation as disclosed in note 3.8. The applicability of IAS 39 and IAS
40 did not have a material impact on the financial statement of the Company.
3.2 Accounting convention
These accounts have been prepared under the historical cost convention.
3.3 Staff retirements benefits
The Company operates un-funded gratuity scheme covering all employees eligible to the benefit.
Provision is made annually to cover the obligation under the scheme.
3.4 Trade and other payable
Short term liabilities for trade and other amount payable are carried at amortized cost.
3.5 Tangible fixed assets and depreciation
Operating assets are stated at cost less accumulated depreciation, except leasehold land and capital
work-in-progress which are stated at cost. Cost of certain fixed assets comprise of historical cost and
the cost of borrowings during construction period in respect of loans specifically taken for the
Depreciation charge is based on the straight line method on plant and machinery and factory building
and at reducing balance method on other assets at the rates specified in Note 15. Full year's
depreciation is charged on additions while no depreciation is charged in the year of dispdsal.
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 and losses on
disposal of assets are included in income currently.
3.6 Stores, spares and loss tools
These are valued at moving average cost except for those in transit, which are valued at cost.
3.7 Stock in trade
Raw and packing material, except for those in transit, are valued at lower of average cost and net
realizable value.
Work in process is valued at average material cost and an appropriate allocation of conversion cost.
Finished goods are valued at lower of average cost, which include prime cost and appropriate
portion of production overheads, and net realizable value.
Item in transit are valued at cost comprising invoice values plus other charges incurred thereon.
Net realizable value signifies the selling price less cost necessary to be incurred in order to make the
3.8 Taxation
Provision for taxation is made at the current rate of tax applicable under Income Tax Ordinance,
During the current year, the Company has changed its accounting policy in respect of deferred
taxation. The change has been made to comply with the requirements of the revised International
Accounting Standard 12; "Income Taxes" which became applicable for financial periods beginning on
or after January 1, 2002. Accordingly, deferred tax is now recognized on all major temporary
difference between the carrying amount for financial reporting purposes and the amounts used for
taxation purposes. Until last year, the Company accounted for deferred taxation on all material timing
difference using the liability method. The change in accounting policy did not have any effect on the
profit and loss account for the year.
The Company has not recognized deferred tax asset amounting to Rs.8.701 million for the reason
that in immediate future, taxable profits will not be available to obtain benefits from the asset.
3.9 Trade debts
Trade debts originated by the Company are recognized and carried at original invoice amount less
an allowance for any un collectible amounts. An estimate for doubtful debt is made when collection
of full amount is no longer probable. Bad debts are written off as incurred.
3.10 Foreign currency translation
Transactions in foreign currencies are recorded using the rates of exchanges ruling at the date of
Assets and liabilities in foreign currencies are translated into Rupees at exchanges rates
approximating those prevailing at the balance sheet date except where forward exchange contracts
have been entered into for repayment of liabilities, in which case the rates contracted for are used.
Any exchange gain or loss charge to profit and loss account.
3.11 Revenue recognition
Revenue is recognized on dispatch of cement to customer.
Sale of pure slag is recognized on receipt of slag by the customer.
3.12 Provisions
A provision is recognized in the balance sheet when the Company has a legal or constructive
obligation as a result of past event, it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable estimate can be made of the amount of
3.13 Cash and cash equivalents
For the purpose of cash flow statement, cash and cash equivalents comprise of cash and bank
3.14 Financial instruments
All the financial assets and liabilities are recognized at the time when the Company becomes a party
to the contractual provisions of the instrument. Any gain or loss on derecognition of the financial
assets and financial liabilities is taken to profit and loss account currently.
Financial instruments carried on the balance sheet include receivables, cash and bank balances,
creditors, borrowings and other payables. The particular recognition method adopted is disclosed in
the individual policy statements associated with each item.
Financial assets and liabilities are offset when the Company has a legally enforceable right to offset
and intends to settle either on a net basis or to realize the asset and settle the liability
2003 2002
6,400,000 Ordinary shares of Rs.10/- each fully paid in cash
(2002: 6,400,000 shares of Rs.10/- each) 64,000,000 64,000,000
6,400,000 64,000,000 64,000,000
5. LONG TERM LOAN - Secured
Pakistan Industrial Credit & Investment Corporation
Balance on 1st July 12,733,522 23,939,550
Less: Payment made during the year 9,000,000 11,206,028
3,733,522 12,733,522
Less: Transferred to current maturity 3,733,522 9,000,000
5.1 Repayment
The above amount represent rescheduled loan from the PICIC. The Company entered into a loan
settlement agreement with PICIC whereby the bank has fixed the Company's loan liability at Rs.74.120
million being the aggregate of principal and mark-up due by the Company as on October 30, 1999 as per
book of PICIC. The repayment schedule has been agreed as under: -
i) Down payment of Rs.20.000 million by November 16, 1999.
ii) The balance decretal amount of Rs.12.120 million in equal monthly installment of Rs.1.347 million
per month starting from December 16, 1999.
iii) Out of the principal not yet due amount of Rs.42.000 million an amount of Rs.28.516 million shall be
paid in 30 equal monthly installment of Rs.0.95 million starting from December 15, 1999 and the
balance amount of Rs.13.484 million in 18 equal monthly installment Rs.0.75 million starting from
June 15, 2002.
5.2 Security
The loan is secured against an equitable mortgage on all present and future operating assets and a
floating charge on all other assets of the Company ranking pari passu with National Bank of Pakistan
(Formerly: National Development Finance Corporation - NDFC).
2003 2002
Mis. M. J. Corporation 30,000,000 30,000,000
Less: Current portion 6,875,000 2,500,000
Over due installments 2,500,000
20,625,000 27,500,000
6.1 The Company has purchased a cement plant under supplier's credit scheme from M/s. M. J.
Corporation. The plant has value of Rs.30.000 million. The credit is secured against first charge on
the plant supplied. The credit carries a mark up rate of 10% per annum (2002: 10% per annum). The
credit is repayable in 16 equal quarterly installments in five years including a grace period of one
year. The loan installment starts from 31st May 2003 and ends on 28th February 2007.
2003 2002
Dealer deposits - Interest free 1,125,655 1,125,655
These represent interest free security deposits from cement stockists repayable on cancellation or
withdrawal of the dealership. The Company in terms of Section 226 of the Companies Ordinance, 1984
has not kept these deposit in a separate account. For which, the Company is in the process of complying
with Section 226, whereby the agreements with stockist are being suitably amended.
Staff Gratuity
Opening balance 899,870
Provision for the year 950,722 899,870
1,850,592 899,870
Less: Payment made 39,962
8.1 1,810,630 899,870
Others 8.2 110,131,129
111,941,759 899,870
8.1 The Company has accounted for the gratuity on liability method. No actuarial valuation has been
carried out for the Company's obligation under the scheme, therefore, the liability is not ascertainable
and the related disclosures cannot be given as required by International Accounting Standard - 19
(IAS-19). However, company intents to engage a qualified actually for the purpose in near future.
8.2 During the year Sardar Muhammad Ashraf D. Baluch (Private) Limited has deferred liability payable
for two year upto last year the same was reflected as other liability and was payable currently. Now
the whole amount is payable after 2005. Hence the same is being reflected as non current liability.
The liability is unsecured and interest free.
Current maturity 6,875,000 2,500,000
Over due installments 2,500,000
9,375,000 2,500,000
Short-term running finance - Secured 9,500,001
Book over draft 976,211 37,066,542
976,211 46,566,543
2003 2002
Due to associated concerns 84,457,375 6,019,296
Others 2,973,401 1,674,378
87,430,776 7,693,674
Accrued expenses 3,557,626 3,399,898
Mark-up payable on supplier credit 3,750,000 1,000,000
Mark-up payable on running finance 466,736
Royalty payable 1,679,558 1,293,715
Workers' profit participation fund 12.1 3,003,493 2,502,911
Unclaimed dividend 238,570 709,727
Sales tax payable 2,063,770 1,679,437
Other liabilities 731,821 79,205,441
15,024,838 90,257,865
12.1 Workers' profit participation fund
Opening balance 2,502,911 1,448,444
Interest provided
For the year 500,582 417,152
Prior years 637,315
500,582 1,054,467
3,003,493 2,502,911
Balance brought forward 1,091,367 7,014,658
Provision for the year 952,000 1,091,367
2,043,367 8,106,025
Advance tax adjusted 1,091,367 4,513,675
Excess provision of prior year written back 2,500,983
1,091,367 7,014,658
952,000 1,091,367
13.1 The assessment of the Company has been completed upto and including assessment year 2002 -
13.2 Relationship between tax expense and accounting profit
Accounting (loss) before tax -9,024,490
Applicable tax rate 35%
Tax on accounting (loss) -3,158,572
Tax effect of gratuity 318,766
Tax (refundable) / payable under normal rules -2,839,806
Minimum tax payable under Income Tax
Ordinance, 2001 (Turnover tax)
Net sales as reported 186,468,285
Applicable tax rate of minimum tax liability 0.50%
Maximum tax liability under Income Tax Ordinance, 2001 932,342
14.1 The National Bank of Pakistan (formerly: National Development Finance Corporation -NDFC) has
filed suit against the Company for recovery of an amount of Rs.1.985 million (2002: Rs.1.985
million). The Company has already repaid an amount of Rs.11.129 million (2002: Rs.11.129 million)
through post dated cheques issued in favour of NBP on the basis of loan settlement proposal
forwarded by the Company. However, the National Bank of Pakistan (NBP) has not withdrawn the
suit due to which an amount of Rs.1.985 million (2002: Rs.1.985 million) is still recoverable from the
Company. The management anticipates that the suit will be decided in it's favour and no liability will
arise against the Company and charge of NBP on Company's fixed assets will be vacated.
14.2 Guarantee issued by commercial bank on behalf of the Company amounting to Rs.3.473 million
(2002: 50.00 million).
14.3 As referred to in note No.6.1, the Company has entered into an agreement with Pakistan Industrial
Credit and Investment Corporation (PICIC) for settlement of loan at an agreed amount. The said
agreement contains a reverting clause, according to which in the case of default by the Company in
making any installment the PICIC will have the right to invoke the reverting clause whereby the
Company will have to pay mark-up amounting to Rs.29.190 million (2002: Rs.29.190 million) to
PICIC. This amount is not charged to profit and loss account as management is making repayment
as per agreement and do not foresee any circumstances that will give PICIC the right to invoke the
reverting clause.
14.4 During the year the Company has lodged claim amounting to Rs.4.658 million with KESC for excess
billing made during the year. The management feels that their claim is based on sold grounds and
will be accepted and no charge will arise to profit and loss account. The amount has been paid under
protest and is now reflected in other receivables.
Cost Depreciation Book value
As at July 01, Addition / As at June Rate As at July For the As at June As at June As at June
2002 (deletion) 30, 2003 % 01,2002 year 30, 2003 30, 2003 30, 2002
Land (Leasehold) 6,721,750 6,721,750 6,721,750 6,721,750
Building on leasehold 45,451,614 45,451,614 5 18,114.34 2,272,581 20.386,925 25 064,689 27.337 270
Plant and Machinery 163,913,569 163,913,569 10 102,744.73 16,391,357 119,136,085 44.777.484 61,168,841
Electric Installations 2,006,604 2,006,604 10 1,187,595 81,901 1,269,496 737,108 819,009
Motor Vehicles 1,237,831 1,237,831 20 1,016,335 44,299 1,060,634 177,197 221,496
Furniture and Fixtures 849,272 33,000 882,272 10 490,386 39,188 529,574 352,698 358,886
Office Equipment 2,275,959 47,000 2,322,959 10 1,188,780 113,418 1,302,198 1,020,761 1,087,179
Generator 718,863 718,863 10 447,136 27,173 474,309 244,554 271,727
2003 223,175,462 80,000 223,255,462 125,189,304 18,969,917 144,159,221 79,096,241
2002 184,256,798 38,918,664 223,175,462 106,188,125 19,001,179 125,189,304 97,986,158
2003 2002
Depreciation charge for the year has been allocated as follows.
Cost of goods sold 18,856,499 18,880,381
Administrative and Selling expenses 113,418 120,798
18,969,917 19,001,179
Interest bearing 16.1 492,080 492,080
Interest free 1,384,750 1,252,750
1,876,830 1 ,744,830
16.1 This represent amount deposited into Karachi Electric Supply Corporation Limited against supply of
electricity. The Company earns interest at the rate of 5% per annum of outstanding deposits.
Stores 4,919,867 1,748,405
Spares 1,782,561 599,295
Loose tools 427,815 289,825
7,130,243 2,637,525
Raw material 61,040,515 32,445,614
Packing material 4,289,891 3,367,058
Work-in-process 492,556 512,965
Finished goods 3,787,529 2,564,825
69,610,491 38,890,462
2003 2002
19. TRADE DEBTS - Unsecured
Trade debts - Considered good 50,784,206 24,936,247
to staff - considered good 616,446 629,916
Advances - Considered good
to Suppliers 490,635 490,635
Against expenses 1,038,255 265,996
Against purchases 6,463,362 562,216
7,992,252 1,318,847
Trade deposits 600,000 800,000
Central excise duty 3,313,169 981,669
Other receivables 20.1 4,678,246 15,910
17,200,113 3,746,342
20.1 Other receivables include claim of Rs.4.658 million lodged with KESC for excess units billed during
the year, as mentioned in note 14.4 of the financial statements.
Cash in hand 36,079 55,000
Cash at bank
In current account 1,037,319 71,920
In dividend account 228,385 699,542
In deposit account 9,675,347 101,685
10,977,130 928,147
Ordinary Portland Cement 315,363,158 274,709,360
Granulated Slag 49,549,376
Boulder Slag 176,593 1,073,548
315,539,751 325,332,284
Central excise duty 75,815,500 68,009,000
Sales tax 45,039,156 49,582,546
Trade discount 8,216,810
129,071,466 117,591,546
186,468,285 207,740,738
2003 2002
Raw and packing material consumed 23.1 139,301,956 147,833,226
Stores, spares and loose tools consumed 2,627,789 2,235,524
Fuel and power 19,491,292 16.411,524
Salaries, wages and benefits 23.4 6,688,372 5,927,280
Grinding charges 12,146.76
Repair and maintenance 863,511 246,070
Depreciation 15 18,856,499 18.880,381
Other production overheads 3,807,971 3,035,756
191,637,390 206,716,517
Work-in-process 23.2 20,409 -31,068
Cost of goods manufactured 191,657,799 206,685,449
Finished goods 23.3 -1,222,704 -561,366
190,435,095 206,124,083
23.1 Raw and packing material consumed
Opening stock 35,812,672 33,159,122
Purchases 168,819,690 150,486,776
Available for use 204,632,362 183,645,898
Closing stock -65,330,406 -35,812,672
139,301,956 147,833,226
23.2 Work-in-process
Opening work-in-process 512,965 481,897
Closing work-in-process -492,556 -512,965
20,409 -31,068
23.3 Finished goods
Opening stock 2,564,825 2,003,459
Closing stock -3,787,529 -2,564,825
-1,222,704 -561,366
2003 2002
Salaries, allowances and benefits 24.1 1,668,880 1,467,112
Traveling and conveyance 431,903 96,692
Motor vehicle running 222,517 82,076
Telephone, postage and telegram 454,797 330,970
Printing and stationery 566,795 424,880
Legal and professional 673,541 387,852
Loading and unloading 683,895
Auditors' remuneration 24.2 140,000 115,000
Advertisement and subscription 10,000
Entertainment 223,955 117,916
Newspaper and periodicals 6,900 6,521
Repair and maintenance 203,177 164,781
Depreciation 15 113,418 120,798
Trade-mark written off 10,000
Miscellaneous 226,602 97,002
5,616,380 3,431,600
24.1 Salaries, allowances and benefits include Rs.188,761/- (2002: Rs.136,114/-) relating to staff
retirement benefits.
24.2 Auditors' remuneration
Statutory audit 80,000 80,000
Cost audit 25,000 25,000
Half yearly review 25,000
Out of pocket expenses 10,000 10,000
140,000 115,000
Bank charges 27,694 38,678
Mark-up on supplier credit 2,750,000 1,000,000
Mark-up on short-term borrowing 3,703,583
Interest on workers' profit participation fund 500,582 1,054,467
Guarantee commission 140,939 904,632
3,419,215 6,701,360
Sales tax recovered 1,188,114
Director remuneration waived written back 1,612,847
Profit on K.E.S.C. deposits 24,600 24,600
Profit on bank deposits 1,522,427 72,578
Sale of waste paper bags 695,530 24,251
Liabilities no longer required to be paid, written back 1,735,358
3,977,915 2,922,390
CEMENT 2003 2002
27. (LOSS) PER SHARE - Basic
(Loss) after taxation -9,976,490 -4,184,299
Number of Shares
Weighted average number of ordinary shares
outstanding during the year 6,400,000 6,400,000
(Loss) per share - basic -1.56 -0.65
(Loss) before taxation -9,024,490 -5,593,915
Adjustment for non cash charges and other items
Deferred liability for staff gratuity 950,722 899,870
Depreciation 18,969,917 19,001,179
Financial charges 3,419,215 5,758,050
Liabilities written back -1,735,358
Trade mark written off 10,000
Interest income -1,547,027
Changes in working capital 28.1 -25,253,178 -3,677,961
-14,220,199 16,397,223
28.1 Changes in working capital
(Increase) / decrease in current assets
Stores and spares -4,492,718 224,999
Stock in trade -30,720,029 -3,245,984
Trade debts -25,847,959 -877,456
Loans, advances, deposits, prepayments
& other receivable -13,453,771 2,623,507
Net decrease / (increase) in current assets -74,514,477 -1,274,934
Increase / (decrease) in current liabilities
Short-term finance - Secured -45,590,332 12,429,350
Trade creditor 81,472,460 -58,713,428
Accrued and other liabilities -2,579,946 43,881,051
Advance from customers 15,959,117
Net (decrease) / increase in current liabilities 49,261,299 -2,403,027
Changes in working capital -25,253,178 -3,677,961
2003 2002
Installed Capacity (Based on 300 working days) 29.1 255,000 255,000
Production 29.2 77,628 68,245
29.1 Installed Capacity
The plant does not produce clinker. Installed capacity is only for grinding.
29.2 Production
Due to market constraints, the Company could only operate at this level of capacity.
The Company's exposure to interest / mark-up rate on its financial assets and liabilities are summarized as
Effective Interest / Markup bearing Non Interest / Markup bearing Total
Maturity Maturity Total Maturity Maturity Total
upto one after one upto one after one 2003 2002
year year year year
Financial Assets
Deposits 5% 492,080 492,080 600,000 1,384,750 1,984,750 2,476,830 3,036,910
Trade debts 50,784,206 50,784,206 50,784,206 24,936,247
Loans, and other
receivables 636,356 636,356 636,356 645,826
Cash and bank
balances 5% to 6% 9,675,347 9,675,347 1,301,783 1,301,783 10,977,130 928,147
Total 9,675,347 492,080 10,167,427 53,322,345 1,384,750 54,707,095 64,874,522 29,547,130
Financial Liabilities
Supplier Credit 10% 9,375,000 20,625,000 30,000,000 30,000,000 30,000,000
Long term loans 3,733,522 3,733,522 3,733,522 12,733,522
Long-term deposits 1,125,655 1,125,655 1,125,655 1,125,655
Deferred and other
liabilities 110,131,129 110,131,129 110,131,129
Short term finances 976,211 976,211 976,211 46,566,543
Trade Creditors 87,430,776 87,430,776 87,430,776 7,693,674
Accrued and other
liabilities 12,961,068 12,961,068 12,961,068 88,578,428
Total 9,375,000 20,625,000 30,000,000 105,101,577 111,256,784 216,358,361 246,358,361 186,697,822
2003 300,347 -20,132,920 -19,832,573 -51,779,232 -109,872,034 -161,651,266 -181,483,839
2002 -20,898,316 -30,741,442 -51,639,758 -106,130,109 127,095 -105,510,934 -157,150,692
The carrying amounts of the financial assets and liabilities approximate their fair values.
The Company does not believe it is exposed to major concentration of credit risk. The Company
applies approved limits to the amount of credit exposure to any one customer.
The aggregate amount charged in the accounts for remuneration, including all benefits, to the Chief
Executive, Directors and Executives of the Company was as follows:
Chief Executive Directors Executive Total
2003 2002 2003 2002 2003 2002 2003 2002
Managerial 120,012 112,686 120,012 112,686
House rent allowance 54,588 50,709 54,588 50,709
Utilities 1,800 2,626 1,800 2,626
Conveyance 3,600 3,000 3,600 3,000
Gratuity 1,500 1,500
195,000 169,021 195,000 169,021
Number of Persons 1 1 6 6 1 1 8 8
2003 2002
Sales of goods to associated undertakings 962,546 1,073,549
Purchase of goods from associated undertakings 142,725,959 154,520,260
Services provided by associated undertakings 12,146,756
32.1 Related parties disclosures
Following are the related parties of the company on the basis of common directorship and / or being
operated under common management control::
Zeal Pak Cement Factory Limited
Indus Steel Pipes Limited
Zeal Pak Paper Sack (Private) Limited
Number of employees as June 30 93 93
34.1 These financial statements are authorized for issue on October 08, 2003 in accordance with the
resolution of the Board of Directors of the company
34.2 Corresponding figures have been rearranged and reclassified for comparison, where necessary.
34.3 Figures have been rounded off to the nearest rupee.
Pattern of Shareholding
As at June 30, 2003
No. of Share Holders From To Total Shares Held Percentage
588 1 100 58,800 0.92%
1908 101 500 915,200 14.30%
41 501 1000 39,200 0.61%
34 1001 5000 93,800 1 .47%
4 5001 10000 31,900 0.50%
2 10001 15000 28,100 0.44%
2 15001 20000 40,000 0.63%
1 925001 930000 927,000 14.48%
1 1065001 1070000 1,066,000 16.66%
1 3195001 3200000 3,200,000 50.00%
2,582 Total 6,400,000 100.00%
Categories of Shareholders
As on June 30, 2003
Particulars Shareholders Shareholding Percentage
INDIVIDUALS 2564 1,881,300 29.4
FOREIGN COMPANIES 1 1,066,000 16.66
OTHERS 15 3,214,000 50.22
COMPANY TOTAL 2582 6,400,000 100
Pattern of Shareholding
As at June 30 2003
Category of Shareholders Number Shares Held Percentage
Associated Companies, Undertakings
and Related Parties
NIT and ICP 2 238,700 3.73%
National Bank of Pakistan Trustee Deptt. 200,000 3.13%
Investment Corporation of Pakistan 38,700 0.60%
Directors, CEO & their Spouses
and Minor Children 7 3,500 0.05%
Mr. Jehangir Akber 500 0.01%
Mr. Faiz Muhammad 500 0.01%
Mr. Nisar Ahmed Korai 500 0.01%
Mr. Muhammad Naeem Khan 500 0.01%
Mr. Munir 500 0.01%
Mr. Haji Ghulam Shabbir 500 0.01%
Mr. Ejaz Ali Panhor 500 0.01%
Public Sector Companies
and Corporations
Banks, Developmnt Finance Institutions, Non - Banking
Finance Institutions, Insurance Companies ,
Modarabas and Mutual Funds
Shareholders holding ten Percent or 2 4,266,000 66.66%
more voting interest in the company
Sikandar Ali Jatoi 3,200,000 50.00%
Landsdown Investment Limited (Foreign Co.) 1,066,000 16.66%
Individual 2,564 1,881,300 29.40%
Others 7 10,500 0.16%
Eastern Capital Limited 400 0.01%
Munaf Sattar Securities (Pvt.) Limited 2,000 0.03%
M. S. Securities (Pvt.) Limited 500 0.01%
Zillion Capital Securities (Pvt.) Limited 500 0.01%
Motiwala Securities (Pvt.) Limited 100 0.00%
Dosslani's Securities (Pvt.) Limited 3,000 0.05%
AI-Mal Securities & Services Limited 4,000 0.06%
2582 6,400,000 100.00%
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