Pakistan Slag Cement Industries Limited

Annual Reports 2003

CONTENTS

COMPANY INFORMATION

BOARD OF DIRECTORS

Jehangir Akber - Chairman / Chief Executive

Faiz Mohammad Brohi

Muhammad Naeem Khan

Haji Ghulam Shabbir

Nisar A. Korai

Ajaz All Panhwar

Muneer Ahmed

COMPANY SECRETARY

Syed Ajmal Hasnain

AUDIT COMMITTEE

Jehangir Akber - Chairman

Faiz Mohammad Brohi

Nisar A. Korai

AUDITORS

Faruq Ali & Company

Chartered Accountants

COST AUDITORS

Siddiqi & Company

Cost & Management Accountants

BANKERS

Saudi Pak Commercial Bank Limited

National Bank of Pakistan

Al Meezan Bank Limited

Muslim Commercial Bank Lin-,t^Qd

HEAD OFFICE / REGISTERED OFFICE

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

FACTORY

DSU-6, Zulfiqarabad, Pakistan Steel Mills, Karachi.

Phone: (0201) 4750129-4750130

Fax:(0201)4750131

NOTICE OF ANNUAL GENERAL MEETING

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 06^th 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: 8^th October 2003 Company Secretary

NOTES:

1. The register of members will remain closed from 27th October 2003 to 06^th November 2003 (both days

inclusive)

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.

REPORT OF THE DIRECTORS

Dear Shareholders,

The Directors of your company are pleased to welcome you to the 14^th Annual General Meeting of the

Company, and to present the Annual Accounts and the Auditor's Report thereon for the year ended 30^th June

2003

Production

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.

Marketing

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

follows.

Auditors

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.

Dividend

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

therefrom.

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

(Army).

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.

FOR AND ON BEHALF

OF BOARD OF DIRECTORS

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.

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 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

company.

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.

FOR AND ON BEHALF OF BOARD OF DIRECTORS

Dated: October 08, 2003 (JEHANGIR AKBAR)