| Cherat Cement Company Limited |
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| Annual
Report 2000 |
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| CONTENTS |
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| COMPANY
INFORMATION |
|
| NOTICE
OF MEETING |
|
| DIRECTORS'
REPORT TO MEMBERS |
|
| YEARWISE
STATISTICAL SUMMARY |
|
| RATIO
ANALYSIS |
|
| AUDITORS'
REPORT TO MEMBERS |
|
| BALANCE
SHEET |
|
| PROFIT
& LOSS ACCOUNT |
|
| CASH
FLOW STATEMENT |
|
| STATEMENT
OF CHANGES IN EQUITY |
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| NOTES
TO THE FINANCIAL STATEMENTS |
|
| PATTERN
OF SHAREHOLDING |
|
| SECP
CIRCULAR OF JANUARY 26, 2000 |
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| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
|
| Mr.
Mohammed Faruque |
|
Chairman |
|
| Mr.
Zahid Faruque |
|
Chief Executive/Managing
Director |
|
| Mr.
Akbarali Pesnani |
|
Director |
|
| Mr.
Khalifa Muhammad Aminullah (NIT) |
Director |
|
| Mr.
Abdul Latif Uqaili (ICP) |
|
Director |
|
| Mr.
Azam Faruque |
|
Director |
|
| Mr.
Anis Wahab Zuberi (NIT) |
|
Director |
|
| Mr.
Muhammad Nawaz Tishna (NIT) |
Director |
|
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| COMPANY
SECRETARY |
|
| Rauf Jafrani |
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| AUDITORS |
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| Sidat
Hyder Qamar & Co. |
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| BANKERS |
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| ABN
Amro Bank |
|
| Allied
Bank of Pakistan Limited |
|
| American
Express Bank Ltd. |
|
| Bank
AI-Habib Ltd. |
|
| Credit
Agricole Indosuez |
|
| Muslim
Commercial Bank Ltd. |
|
| National
Bank of Pakistan |
|
| Standard
Chartered Grindlays Bank Ltd. |
|
| Union
Bank Limited |
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| United
Bank Limited |
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| REGISTERED
OFFICE |
|
| Modern
Motors House, |
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| Beaumont
Road, |
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| Karachi-75530 |
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| FACTORY |
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| Village Lakrai, |
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| R O. Box 28, |
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| Nowshera. |
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| SALES
OFFICE |
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| 1st
Floor, Betani Arcade, |
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| Jamrud Road, |
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| Peshawar. |
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| REGIONAL
OFFICE |
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| 3,
Sunder Das Road, |
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| Lahore. |
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| ISLAMABAD
OFFICE |
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| No
7, Mezzanine Level, |
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| Razia
Sharif Plaza, |
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| 92, Blue Area, |
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| Islamabad. |
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| NOTICE
OF MEETING |
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| NOTICE
IS HEREBY GIVEN that the Nineteenth Annual General Meeting of this Company
will be held |
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| on
Monday, December 18, 2000 at 10:00 a.m. at the Registered Office of the
Company at Modern |
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| Motors
House, Beaumont Road, Karachi to transact the following business: |
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|
| 1.
To receive and consider the audited accounts of the company for the year
ended on June 30, |
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| 2000,
with the Directors' and the Auditors' Reports thereon. |
|
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| 2.
To declare dividend of Rs. 2.50 per share (@ 25%) for the financial year
ended on June 30, |
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| 2000
as recommended by the Directors. |
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| 3.
To elect eight directors of the Company as fixed by the Board u/s 178 (1) of
the Companies |
|
| Ordinance
1984 at its meeting held on November 08, 2000. The names of retiring
Directors |
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| are
(1) Mr. Mohammed Faruque, (2) Mr. Zahid Faruque, (3) Mr. Akbarali Pesnani, |
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| (4)
Mr. K.M. Aminullah (NIT), (5) Mr. Abdul Latif Uqaili (ICP), (6) Mr. Azam
Faruque |
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| (7)
Mr. Anis Wahab Zuberi (NIT) and (8) Mr. Muhammad Nawaz Tishna (NIT). |
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| 4.
To appoint auditors for the ensuing year and to fix their remuneration. |
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|
By Order of the Board |
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|
R. JAFRANI |
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| Karachi,
November 08, 2000. |
|
Secretary |
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|
| NOTES: |
|
| (1)
A member eligible to attend and vote at the Annual General Meeting may
appoint another |
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| member
as his/her proxy to attend and vote in his/her stead. Proxies to be effective
must be in |
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| writing
and must be received by the Company 48 hours before the Meeting. |
|
|
| (2)
The register of members of the Company will be closed from Friday, December
08 to Monday, |
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| December
18, 2000 inclusive, and no transfers will be registered during that time.
Shares |
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| received
in order at the registered office of the Company at the close of business on
Thursday, |
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| December
07, 2000 will be treated in time for entitlement of the above dividend. |
|
|
| (3)
Shareholders whose shares are registered in their account/sub-account/group
account with |
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| Central
Depository System (CDS) are requested to bring original NIC along with their
account |
|
| number
in CDS and participant's ID Number for verification. In case of appointment
of proxy by |
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| such
account holders and sub-account holders the guidelines as contained in SECP's
circular |
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| of
January 26, 2000 to be followed. |
|
|
| (4)
The Shareholders are requested to notify the Company immediately the change
in their |
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| address,
if any. |
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|
| DIRECTORS'
REPORT TO THE MEMBERS |
|
| for
the year ended 30th June, 2000 |
|
|
| Dear
Shareholders, |
|
| Your
directors are pleased to place before you the financial results of the
company alongwith |
|
| the
Audited Accounts for the year ended 30th June, 2000. |
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|
| PRODUCTION |
|
| In
view of the over capacity in the cement industry the production of Clinker
and Cement during |
|
| the
year under review was adjusted in line with the market demand. |
|
|
| The
Comparative figures for production of clinker and cement are as under:- |
|
|
|
1999-2000 |
1998-1999 |
%Change |
|
|
Tons |
Tons |
|
|
|
| Clinker |
497,513 |
504,949 |
(1.5) |
|
| Cement |
521,224 |
532,684 |
(2.1) |
|
|
| DESPATCHES |
|
| Since
the production of Clinker and Cement during the period under review was
adjusted in line |
|
| with
the demand, we were able to despatch the entire quantity of cement that was
produced. The |
|
| comparative
figures for quantity of cement booked and despatched during the last two
years are |
|
| as follows: |
|
|
|
1999-2000 |
1998-1999 |
%Change |
|
|
Tons |
Tons |
|
|
| Cement Booked |
521,462 |
532,749 |
(2.1) |
|
| Cement Despatched |
522,592 |
531,894 |
(1.7) |
|
|
| SALES
AND MARKETING |
|
| Even
though the quantity of cement despatched during the year was slightly lower
than last year, |
|
| the
stabilization of cement prices helped the company in improving its revenues.
In Rupee terms |
|
| the
sales for year were up by about 11.4 percent (Rs. 2.153 million for 1999-2000
compared with |
|
| Rs.
1.932 million for 1998-1999). While the increase sales revenue helped in
substantially reduc- |
|
| ing
the financial charges, we were also able to keep our selling and distribution
expenses at the |
|
| same
level as last year, with the result that both the Gross Profit and the
Operating Profit showed |
|
| a
marked improvement over the previous year. The net profit after tax was also
up by Rs. 103.9 |
|
| million,
compared to last year. |
|
|
| Our
contribution to the exchequer in the form of excise duty and income tax
amounted to Rs. 833 |
|
| million
which works out to around 39% of our Net Sales. |
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|
| OPERATING
RESULTS |
|
| The
summarized operating results are as follows: |
|
|
|
1999-2000 |
19998-1999 |
% Change |
|
|
(Rs. In Million) |
(Rs. In Million) |
|
|
| Net Sales |
|
2,153.13 |
1,932.21 |
11.40 |
|
| Cost of Sales |
|
(1,760.273) |
(1,759.955) |
-- |
|
|
----------- |
----------- |
----------- |
|
| Gross Profit |
|
392.86 |
172.25 |
128.10 |
|
| Expenses |
|
(105.965) |
(120.585) |
(12.1 ) |
|
| Taxes |
|
(125.193) |
6.16 |
2,133.30 |
|
|
----------- |
----------- |
----------- |
|
| Net Profit |
|
161.698 |
57.826 |
179.600 |
|
|
========== |
========== |
========== |
|
| Other
comparative figures are reflected in the Financial Statements. |
|
|
| APPROPRIATION
OF PROFIT |
|
| The
profit after tax for current year amounts to Rs. 161.698 million which
together with unappropriated |
|
| profit
of Rs. 6.119 million from last year gives us Rs. 167.817 million to be
appropriated. The |
|
| directors
propose the following appropriation of available profit: |
|
|
|
(Rs. In Million) |
|
| Net
profit for the year |
|
161.698 |
|
| Add:
Unappropriated profit brought forward |
6.119 |
|
|
----------- |
|
| Total
available for appropriation |
167.817 |
|
|
| Appropriations: |
|
| Proposed
cash dividend @ 25% |
|
120.331 |
|
| Transfer
to General Reserves |
|
25.000 |
|
|
----------- |
|
| Balance
to be carried forward |
|
22.486 |
|
|
========== |
|
|
| FUTURE
PROSPECTS |
|
| Since
there is an excess capacity in the industry as a whole, the plants are forced
to curtail their |
|
| production
in line with the market demand. So far the sector has not been successful in
promot- |
|
| ing
alternate use of cement i.e. for road building nor getting into the export
market. To promote |
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| export
the government needs to provide the requisite incentives and necessary
facilities at ports |
|
| to
encourage the manufactures to explore this avenue. This could also become a
source of |
|
| Foreign
Exchange earning for the country in these difficult times. The wide
fluctuation and con- |
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| tinuous
increase in the price of furnace oil is also having a negative impact on the
industry. The |
|
| high
rate of taxation and other government levies are also having a negative
impact on the growth |
|
| of
cement industry. The rationalisation of these charges could be beneficial to
all the stakeholders. |
|
|
| DEBT
OBLIGATION |
|
| We
are happy to report that so far we have been able to meet all our financial
commitments and |
|
| debt
obligations as per agreed schedule including payment against foreign currency
loan. |
|
|
| AUDITORS |
|
| The
present Auditors M/s. Sidat Hyder Qamar & Co., Chartered Accountants,
retire and being |
|
| eligible
offer themselves for reappointment. |
|
|
| ACKNOWLEDGEMENT |
|
| In
the end we wish to express our thanks to all the financial institutions
including the French |
|
| banks
which have been associated with us, for their continued support,
understanding and coop- |
|
| eration.
We would also like to thank all our dealers and customers for their loyalty
and support. |
|
| Our
special thanks are due to our team of dedicated managers and other
executives, supervisors |
|
| and
hard working employees, who continue to put in their best efforts for
achieving optimum |
|
| results
in these difficult times. |
|
|
| Thank you, |
|
|
On behalf of the Board |
|
|
Cherat Cement Company
Limited |
|
|
|
(MOHAMMED FARUQUE) |
|
| Karachi:
November 08, 2000 |
|
Chairman |
|
|
|
| YEARWISE
STATISTICAL SUMMARY |
|
|
|
2000 |
1999 |
1998 |
1997 |
1996 |
1995 |
1994 |
1993 |
1992 |
1991 |
|
|
(Tons in '000) |
| Clinker
production |
498 |
505 |
612 |
742 |
712 |
423 |
254 |
426 |
421 |
395 |
|
| Cement
production |
521 |
533 |
671 |
798 |
716 |
438 |
270 |
455 |
448 |
438 |
|
| Cement
despatched |
523 |
532 |
663 |
798 |
721 |
429 |
271 |
457 |
450 |
433 |
|
| (Rs. in million) |
|
|
| ASSETS
EMPLOYED |
|
(Rs. in million) |
|
| Fixed Assets |
|
973 |
1,069 |
1,186 |
1,260 |
1,378 |
1,471 |
1,453 |
1,236 |
1,059 |
861 |
|
| Investments
and |
|
| Long-term
Advances |
|
| & Deposits |
|
12 |
11 |
12 |
13 |
14 |
14 |
12 |
11 |
9 |
73 |
|
|
| Current
Assets |
742 |
665 |
645 |
589 |
638 |
427 |
376 |
357 |
242 |
154 |
|
|
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
|
| Total Assets Employed |
1,727 |
1,745 |
1,843 |
1,862 |
2,030 |
1,912 |
1,841 |
1,604 |
1,310 |
1,088 |
|
|
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
|
| FINANCED
BY |
|
| Shareholders
equity |
929 |
887 |
926 |
921 |
885 |
864 |
704 |
621 |
457 |
385 |
|
| Long-Term
Liabilities |
73 |
185 |
271 |
336 |
434 |
544 |
633 |
572 |
520 |
438 |
|
| Deferred
Liabilities |
188 |
167 |
191 |
191 |
206 |
165 |
42 |
40 |
31 |
2 |
|
| Current
Liabilities |
537 |
506 |
455 |
414 |
505 |
339 |
462 |
371 |
302 |
263 |
|
|
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
|
| Total
Funds Invested |
1,727 |
1,745 |
1,843 |
1,862 |
2,030 |
1,912 |
1,841 |
1,604 |
1,310 |
1,088 |
|
|
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
|
| TURNOVER
& PROFIT |
|
| Turnover(Net) |
|
2,153 |
1,932 |
2,299 |
2,830 |
2,213 |
1,482 |
754 |
1,070 |
910 |
818 |
|
| Operating
Profit |
328 |
112 |
74 |
174 |
334 |
337 |
143 |
309 |
197 |
130 |
|
| Profit
before Taxation |
287 |
52 |
12 |
118 |
274 |
289 |
122 |
277 |
157 |
85 |
|
| Profit
after Taxation |
162 |
58 |
5 |
108 |
166 |
159 |
83 |
164 |
73 |
70 |
|
| Cash Dividend |
|
120 |
96 |
-- |
72 |
144 |
-- |
-- |
-- |
-- |
-- |
|
| Stock
Dividend ..... |
-- |
-- |
-- |
-- |
-- |
96 |
64 |
64 |
33 |
25 |
|
| Transfer
to Reserves |
25 |
-- |
-- |
25 |
25 |
55 |
15 |
100 |
40 |
40 |
|
| Profit c/f |
|
22 |
6 |
45 |
40 |
29 |
32 |
24 |
20 |
20 |
20 |
|
|
|
| RATIO
ANALYSIS ON ACCOUNTS |
|
| for
the year ended 30th June, 2000 |
|
|
|
2000 |
1999 |
|
| PROFITABILITY |
|
| Gross
Profit (percentage) |
|
18.25 |
8.91 |
|
| Operating
Profit (percentage) |
|
15.24 |
5.80 |
|
| Profit
Before Tax (percentage) |
|
13.32 |
2.67 |
|
| Net
Profit After Tax (percentage) |
|
7.51 |
2.99 |
|
| Net
Profit to Shareholder's Equity Average (percentage) |
17.41 |
6.51 |
|
| E.P.S..
(Before Tax) |
|
5.96 |
1.07 |
|
| E.P.S.
(After Tax) |
|
3.36 |
1.20 |
|
| Net
Profit to Total Assets Average (percentage) |
|
9.31 |
3.22 |
|
| Increase/(decrease)
in Sales (Net percentage) |
|
11.43 |
(15.95) |
|
| Material
as % of Net Sales |
|
6.38 |
7.80 |
|
| Labour
as % of Net Sales |
|
4.41 |
4.57 |
|
| Other
Cost of Sales Expenses as % of Net Sales |
|
70.97 |
78.72 |
|
| Raw
& Packing Material as % of Cost of Sales |
|
7.80 |
8.56 |
|
| Administrative
Expenses as % of Net Sales |
|
1.84 |
1.80 |
|
| Selling
Expenses as % of Net Sales |
|
1.17 |
1.32 |
|
| Income
Tax as % of Net Sales |
|
4.86 |
0.94 |
|
| Financial,
other charges (other income) as % of Net Sales |
0.91 |
2.93 |
|
|
|
|
| SHORT
TERM SOLVENCY |
|
|
|
| Working
Capital Ratio |
|
1.75:1 |
1.82:1 |
|
| Acid
Test Ratio |
|
1.54:1 |
1.62:1 |
|
| Working
Capital Turnover (Net Sales) times |
|
6.77 |
6.46 |
|
| Inventory
Turnover/Times |
|
26.87 |
28.21 |
|
|
|
|
| OVERALL
VALUATION AND ASSESSMENT |
|
|
|
| Number
of Times Interest Earned |
|
7.35 |
1.63 |
|
| Return
on Equity after tax |
|
17.41 |
6.50 |
|
| Book
Value Per Share |
|
19.30 |
18.44 |
|
| Long-Term
Debts to Equity Ratio |
|
0.28 |
0.40 |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of CHERAT CEMENT COMPANY LIMITED as at
June |
|
| 30,
2000 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 purposes 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
conducted 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 discloures in the above said statements.
An audit also |
|
| includes
assessing the accounting policies and significant estimates made by
management, as well |
|
| as,
evaluating the overall presentation of the 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 account 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 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)
in our opinion and to the best of our information and according to the
explanations given to us, |
|
| the
balance sheet, the profit and loss account, cash flows statement and
statement of changes |
|
| in
equity together with the notes forming part thereof, conform with approved
accounting stand- |
|
| ards
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, 2000 and of the profit, its cash flows and changes in
equity for |
|
| the
year then ended; and |
|
|
| d)
in our opinion, zakat deductible at source under the Zakat and Ushr
Ordinance, 1980 was de- |
|
| ducted
by the Company and deposited in the Central Zakat Fund established under
section 7 of |
|
| that
Ordinance. |
|
|
| KARACHI:
November 08, 2000 |
|
SIDAT HYDER QAMAR &
CO. |
|
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT 30TH JUNE, 2000 |
|
|
|
NOTE |
2000 |
1999 |
|
|
|
(Rupees
'000) |
|
| SHARE
CAPITAL |
|
| Authorised |
|
| 50,000,000
(1999: 50,000,000) Ordinary |
|
| shares
of Rs. 10/-each |
|
500,000 |
500,000 |
|
|
|
|
| Issued,
subscribed and paid-up |
|
3 |
481,324 |
481,324 |
|
| General
reserves |
|
425,000 |
400,000 |
|
| Unappropriated
profit |
|
22,486 |
6,119 |
|
|
------------ |
------------ |
|
|
928,810 |
887,443 |
|
|
|
|
| REDEEMABLE
CAPITAL |
|
37,304 |
67,629 |
|
| LONG-TERM
LOANS |
|
5 |
-- |
73,164 |
|
| LIABILITIES
AGAINST ASSETS SUBJECT |
|
|
|
|
|
6 |
19,262 |
22,734 |
|
|
|
|
|
| LONG-TERM
DEPOSITS- unsecured |
|
7 |
17,395 |
20,998 |
|
| DEFERRED
LIABILITY |
|
8 |
187,701 |
167,053 |
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
|
| Short-term
finance |
|
9 |
43,702 |
116,761 |
|
| Current
maturity of long-term liabilities |
|
10 |
113,071 |
140,668 |
|
| Creditors,
accrued and other liabilities |
|
11 |
152,272 |
131,953 |
|
| Taxation |
|
104,000 |
18,091 |
|
| Unclaimed
dividend |
|
3,884 |
2,302 |
|
| Proposed
dividend |
|
120,331 |
96,265 |
|
|
537,260 |
506,040 |
|
| Contingencies
and commitments |
|
12 |
|
|
|
|
------------ |
------------ |
|
|
1,727,732 |
1,745,061 |
|
|
========== |
========== |
|
| FIXED
ASSETS - TANGIBLE |
|
| Operating
assets - at book value |
|
13 |
909,471 |
1,003,992 |
|
| Assets
subject to finance lease |
|
14 |
63,873 |
65,109 |
|
|
|
------------ |
------------ |
|
|
|
973,344 |
1,069,101 |
|
| INVESTMENTS
- at Cost |
|
15 |
5,800 |
5,800 |
|
|
| LONG-TERM
DEPOSITS |
|
6,293 |
5,565 |
|
|
| CURRENT
ASSETS |
|
| Stores,
spares and loose tools |
|
16 |
215,348 |
238,937 |
|
| Stock-i n-trade |
|
17 |
87,919 |
72,322 |
|
| Advances,
deposits, prepayments and |
|
|
|
| other
receivables |
|
18 |
205,819 |
172,186 |
|
| Short-term
investments |
|
19 |
124,520 |
111,739 |
|
| Cash
& Bank balances |
|
20 |
108,689 |
69,411 |
|
|
------------ |
------------ |
|
|
742,295 |
664,595 |
|
|
------------ |
------------ |
|
|
1,727,732 |
1,745,061 |
|
|
========== |
========== |
|
| These
financial statements should be read with the annexed notes. |
|
|
|
ZAHID FARUQUE |
|
AKBARALI PESNANI |
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| for
the year ended 30th June, 2000 |
|
|
|
|
NOTE |
2000 |
1999 |
|
|
|
|
(Rupees
'000) |
|
| Sales - net |
|
21 |
2,153,129 |
1,932,209 |
|
| Cost
of goods sold |
|
22 |
1,760,273 |
1,759,955 |
|
|
------------ |
------------ |
|
| Gross profit |
|
392,856 |
172,254 |
|
