| D.G. Khan Cement Company Limited |
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| Annual
Report 2000 |
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| CONTENTS |
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| Company
profile |
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| Notice
of meeting |
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| Directors'
report |
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| Five
years at a glance |
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| Auditors'
report |
|
| Balance
sheet |
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| Profit
and loss account |
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| Statement
of changes in equity |
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| Cash
flow statement |
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| Notes
to the accounts |
|
| Pattern
of share holding |
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|
|
| COMPANY
PROFILE |
|
|
| Board
of Directors |
Mrs. Naz Mansha |
|
Chief Executive |
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|
Mr. Khalid Qadeer Qureshi |
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|
Mr. H. Hatim Dayala |
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Nominee -ICP |
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|
Mr. Muhammad Azam |
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|
Mr. Zaka-ud-Din |
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|
Mr. Aftab Ahmad Khan |
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|
Mr. Inayat Ullah Niazi |
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| Company
Secretary |
Mr. Khalid Mahmood Chohan |
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| Bankers |
|
ABN-AMRO Bank N.V. |
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|
AI-Faysal Investment Bank
Limited |
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|
Atlas Investment Bank
Limited |
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|
Habib Bank Limited |
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|
Mashreq Bank Psc |
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|
Muslim Commercial Bank
Limited |
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|
Union Bank Limited |
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| Auditors |
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M/s A.F. Ferguson &
Co. |
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|
Chartered Accountants |
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| Registered
Office |
Nishat House, 53-A,
Lawrence Road, Lahore-Pakistan |
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Phone: 92-42-6367812-20
Fax: 92-42-6367414 |
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Email: info@dgcement.com |
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| Factory |
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Khofli Sattai, Distt.
Dera Ghazi Khan-Pakistan |
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Phone: 92-641-460025-7 |
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Fax: 92-641-462392 |
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Email:
dgsite@dgcement.com |
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| NOTICE
OF ANNUAL GENERAL MEETING |
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| Notice
is hereby given that 22nd Annual General Meeting of the Shareholders Of D.G.
Khan Cement |
|
| Company
Limited (the Company) will be held on 23r~ December, 2000 (Saturday) at 10:00
a.m. at |
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| Nishat
House, 53-A, Lawrence Road, Lahore to transact the following business: |
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| 1.
To confirm minutes of the last meeting. |
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| 2.
To receive and adopt the audited accounts of the Company for the financial
year ended |
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| June
30, 2000 together with the Directors' and Auditors' reports thereon. |
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| 3.
To appoint Auditors for the year 2000 - 2001 and fix their remuneration. The
present Auditors |
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| M/s.
A. F. Ferguson & Company, Chartered Accountants, Lahore retire and being
eligible, offer |
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| themselves
for re-appointment. |
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|
| 4.
Any other matter with the permission of the Chair. |
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|
By order of the Board |
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| Lahore: |
|
(KHALID MAHMOOD CHOHAN) |
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| November
27, 2000 |
|
Company Secretary |
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|
| NOTES: |
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| 1.
Share transfer books of the Company will remain closed from 16-12-2000 to
23-12-2000 (both |
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| days
inclusive). Physical transfers / CDS Transactions IDs received in order at
Nishat House, |
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| 53-A,
Lawrence Road, Lahore upto 1:00 p.m. on December 15, 2000 will be considered
in time |
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| for
attending of meeting. |
|
|
| 2.
A member eligible to attend and vote at this meeting may appoint another
member his / her |
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| proxy
to attend and vote instead of him/her. Proxies in order to be effective must
reach the |
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| Company's
Registered office not less than 48 hours before the time for holding the
meeting. |
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| Proxies
of the Members through CDC shall be accompanied with attested copies of their
NIC. |
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| The
shareholder through CDC, are requested to bring original NIC, Account Number
and |
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| Participant
Account Number to produce at the time of attending the meeting. |
|
|
| 3.
Shareholders are requested to immediately notify the change in address, if
any. |
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| DIRECTORS'
REPORT TO THE SHAREHOLDERS |
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| Your
Directors are pleased to present 22nd annual report, along with audited
accounts for the year |
|
| ended
June 30, 2000. |
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|
| PRODUCTION |
|
| The
production of Clinker and Cement for the period was as under: |
|
|
2000 |
1999 |
% Inc. |
|
| -
Clinker (M. Tons) |
|
1,124,302 |
1,020,605 |
10.16 |
|
| -
Cement (M. Tons) |
|
1,149,312 |
1,111,504 |
3.40 |
|
|
| DESPATCHES |
|
| Despatches
during the year under review were 1,157,426 tons as compared to previous
year's figure |
|
| of
1,115,288 tons registering an increase of 3.78%. In addition, 41,438 tons of
clinker was also exported |
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| to
Bangladesh. |
|
|
| PLANT
PERFORMANCE |
|
| Performance
of the plant remained satisfactory but due to depressed market conditions the
plant |
|
| operated
at 68.13% of capacity (1999: 61.85%), thus showing an increase of 6.28% from
the previous |
|
| year. |
|
|
| OPERATING
RESULTS |
|
| Net
sales during the year under review were Rs. 2,943.014 million,
(1999:2,259.814 million) with an |
|
| increase
of Rs. 683.200 million (30.23%) over the previous year. It was due to an
increase in the volume |
|
| of
sales as well as better sales price. Inspire of increase in input prices,
(the price of Furnace Oil alone |
|
| showed
a sharp increase, since August 1999), your Company earned a gross profit of
Rs. 448.761 million |
|
| against
the gross loss of Rs. 57.620 in the previous year. |
|
|
| The
Company after accounting for all charges including depreciation, amortization
and provision for |
|
| turnover
tax, has sustained a net loss of Rs. 101.199 million (1999: Rs. 580.369
million). Due to this loss, no |
|
| appropriation
for dividend or bonus shares etc. have been recommended. |
|
|
| MARKET
REVIEW |
|
| Overview |
|
| The
market conditions of the industry remained stagnant and there has been no
improvement during |
|
| the
period under review. The economy is still in recession. Capacity utilization
of the industry during |
|
| the
year was 58% showing a nominal increase of 3% over last year. |
|
|
| The
cement industry in Pakistan is the highest taxed in the region and we are
trying to draw the |
|
| Government
attention that in order to increase demand we must reduce the price of cement
by |
|
| reducing
the taxes. |
|
|
| Export |
|
| You
will be pleased to note that your Company was the first northern unit to
export clinker to Bangladesh |
|
| to
the tune of 41,438 tons. It is also gratifying to learn that the clinker was
preferred in quality to the |
|
| clinker
coming from Indonesia and Thailand. However, the export rebate due to the
Company is still |
|
| awaited
from the Government. We have not made further exports due to unclear
Government policies. |
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|
| Future
Outlook |
|
| On
5th of September 2000, the Government imposed General Sales Tax (GST) on the
cement industry. |
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| However,
three cement manufacturers located in NWFP are exempted from this tax. This
discrimination |
|
| is
likely to hurt our marketing activities as the difference between GST paid
cement bag and exempted |
|
| bag
is substantial. |
|
|
| We
would like to bring to your attention a new kind of discrimination, which is
likely to take place. Gas |
|
| connections
are being allotted to a select few cement manufacturers. This could affect
the profitability |
|
| of
your company as the difference between producing a ton of cement on furnace
oil as compared |
|
| to
gas is approximately Rs. 600/ton. |
|
|
| The
Government is currently making concerted and sustained efforts to initiate
and implement strategies |
|
| like
restoration of investors confidence, improvement in law and order situation.
In order to revive the |
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| economy
and steer the nation towards self-reliance. |
|
|
| ISO-14000 |
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| After
obtaining ISO-9002 certification, your Company has embarked upon a program
for the certification |
|
| of
ISO-14000, ISO-14000 covers Environment Control with respect to solid waste,
gaseous emissions and |
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| liquid
effluents, |
|
|
| DEBT
SERVICING |
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| The
Restructuring of International Finance Corporation (IFC) Loans have already
been approved by |
|
| their
Board and agreements are expected to be signed in the near future. |
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|
| PATTERN
OF SHAREHOLDINGS |
|
| The
pattern of shareholding of the Company is annexed with the Annual Report. |
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| AUDITORS |
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| M/s
A. F. Ferguson & Company, Chartered Accountants, Lahore, the retiring
Auditors, being eligible, |
|
| offered
themselves for re-appointment. |
|
|
| M/s
Amin Mudassar & Company, Chartered Accountants, Lahore have been
appointed as Cost |
|
| Auditors
for the year ended 30th June 2000. |
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|
| ACKNOWLEDGEMENT |
|
| The
relations between the management and workers remained cordial and peaceful.
The Directors |
|
| place
on record their appreciation for the hard work put in by the workers, staff
and officers during |
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| the year. |
|
|
|
On behalf of the Board |
|
|
| Lahore: |
|
MRS. NAZ MANSHA |
|
| November
27, 2000 |
|
Chief Executive |
|
|
|
| FIVE
YEARS AT A GLANCE |
|
|
|
2000 |
1999 |
1998 |
1997 |
1996 |
|
| PRODUCTION
& SALES |
|
|
(M. Tons) |
|
| Clinker |
|
1,124,302 |
1,020,605 |
940,007 |
634,821 |
730,450 |
|
| Cement |
|
1,149,312 |
1,111,504 |
912,976 |
667,937 |
767,363 |
|
| Despatches |
|
1,157,426 |
1,115,288 |
900,010 |
671,417 |
753,608 |
|
|
|
|
| OPERATING
RESULTS |
|
|
|
(Rupees in thousand) |
|
| Net Sales |
|
2,943,014 |
2,259,814 |
1,238,983 |
1,347,594 |
1,547,090 |
|
| Gross
Profit/(Loss) |
|
448,761 |
(57,620) |
141,112 |
274,692 |
591,430 |
|
| Pre-tax
profit/(Loss) |
|
(85,454) |
(577,680) |
(46,566) |
83,571 |
308,411 |
|
| After
tax profit/(Loss) |
|
(101,199) |
(580,369) |
(58,284) |
71,454 |
248,411 |
|
|
| FINANCIAL
POSITION |
|
| Current Assets |
|
1,325,131 |
1,096,846 |
1,029,452 |
989,212 |
1,297,610 |
|
| Current
Liabilities |
|
3,253,225 |
3,000,680 |
2,223,023 |
957,506 |
717,423 |
|
| Operating
Fixed Assets |
|
6,437,914 |
6,879,071 |
7,055,845 |
804,047 |
786,929 |
|
| Total Assets |
|
8,720,784 |
8,800,307 |
9,069,278 |
8,102,729 |
7,390,244 |
|
| Long
Term Liabilities |
|
1,858,093 |
2,581,873 |
3,049,132 |
3,288,816 |
2,887,875 |
|
| Shareholders'
Equity |
|
3,609,466 |
3,217,754 |
3,798,123 |
3,856,407 |
3,784,946 |
|
|
| RATIOS |
|
| Current
Ratio |
|
0.41:1 |
0.37:1 |
0.46:1 |
1.03:1 |
1.81:1 |
|
| Debt
to Equity |
|
34:66 |
45: 55 |
45: 55 |
46: 54 |
43: 57 |
|
| Gross
Profit/(Loss) to Sales (%) |
15.25 |
(2.55) |
11.39 |
20.38 |
38.23 |
|
| Net
Profit/(Loss) to Sales (%) |
|
(3.44) |
(25.68) |
(4.70) |
5.30 |
16.06 |
|
| Break
Up Value per share (Rs.) |
|
23.69 |
24.30 |
28.69 |
29.13 |
34.82 |
|
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of D.G. Khan Cement Company Limited as
at |
|
| June
30, 2000 and the related profit and loss account, statement of changes in
equity and cash flow |
|
| statement
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 disclosures 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 Company Ordinance, 1984, and are in agreement with |
|
| the
books of account and are further in accordance with 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, profit and loss account, statement of changes in equity and
cash flow |
|
| statement
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, 2000 and of the loss, its changes in
equity and cash |
|
| flows
for the year then ended; and |
|
|
| (d)
in our opinion zakat deductible at source under the Zakat and Ushr Ordinance,
1980 (XVIII of |
|
| 1980),
was deducted by the company and deposited in the Central Zakat Fund
established |
|
| under
section 7 of that Ordinance, |
|
|
| Lahore: |
|
A. F. FERGUSON & Co |
|
| November
27, 2000 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 2000 |
|
|
|
|
2000 |
1999 |
|
|
Note |
(Rupees in
thousand) |
|
|
| CAPITAL
AND RESERVES |
|
| Authorised
share capital |
|
| 300,000,000
ordinary shares of Rs. 10/-each |
|
3,000,000 |
3,000,000 |
|
|
========== |
========== |
|
| Issued,
subscribed and paid up share capital |
|
| 152,391,380
(1999:132,391,380) ordinary |
|
| shares
of Rs. 10/- each |
|
3 |
1,523,914 |
1,323,914 |
|
| Reserves |
|
4 |
2,824,569 |
2,532,042 |
|
| Accumulated
loss |
|
(739,017) |
(638,202) |
|
|
----------- |
----------- |
|
|
3,609,466 |
3,217,754 |
|
| LONG
TERM LIABILITIES |
|
| Long
term loans - secured |
|
5 |
1,802,017 |
2,465,121 |
|
| Liabilities
against assets subject to finance lease |
6 |
10,312 |
73,875 |
|
| Deferred
liabilities |
|
7 |
23,022 |
19,226 |
|
|
|
|
| LONG
TERM DEPOSITS |
|
8 |
22,742 |
23,651 |
|
| CURRENT
LIABILITIES |
|
| Current
portion of long term liabilities |
|
| Long
term loans - secured |
|
5 |
1,839,841 |
1,531,250 |
|
| Liabilities
against assets subject to finance lease 6 |
|
133,879 |
45,091 |
|
| Finances
under mark up arrangements |
|
9 |
698,501 |
605,655 |
|
| Creditors,
accrued and other liabilities |
|
10 |
545,914 |
783,594 |
|
| Provision
for taxation |
|
|
35,090 |
35,090 |
|
|
|
----------- |
----------- |
|
|
|
3,253,225 |
3,000,680 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
11 |
-- |
-- |
|
|
|
|
----------- |
----------- |
|
|
8,720,784 |
8,800,307 |
|
|
========== |
========== |
|
|
| FIXED
CAPITAL EXPENDITURE |
|
| Operating
fixed assets |
|
12 |
6,437,914 |
6,879,071 |
|
| Assets
subject to finance lease |
|
13 |
320,092 |
163,414 |
|
| Capital
work in progress |
|
14 |
-- |
2,093 |
|
|
----------- |
----------- |
|
|
6,758,006 |
7,044,578 |
|
| LONG
TERM INVESTMENTS |
|
15 |
631,610 |
635,602 |
|
| LONG
TERM LOANS TO EMPLOYEES |
|
16 |
2,065 |
2,961 |
|
| LONG
TERM DEPOSITS AND DEFERRED COSTS |
17 |
3,972 |
20,320 |
|
| CURRENT
ASSETS |
|
|
|
| Stores,
spares and loose tools |
|
18 |
513,552 |
378,852 |
|
| Stock
-in - trade |
|
19 |
66,715 |
118,027 |
|
| Trade debts |
|
20 |
50,731 |
37,298 |
|
| Short
term investments |
|
21 |
398,082 |
296,288 |
|
| Advances,
deposits, prepayments and |
|
|
|
| other
receivables |
|
22 |
186,908 |
169,271 |
|
| Cash
and bank balances |
|
23 |
109,143 |
97,110 |
|
|
----------- |
----------- |
|
|
1,325,131 |
1,096,846 |
|
|
----------- |
----------- |
|
|
8,720,784 |
8,800,307 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Chief Executive |
|
Director |
|
|
|
|
|
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2000 |
|
|
|
|
2000 |
1999 |
|
|
Note |
(Rupees in
thousand) |
|
| Sales |
|
|
|
2,943,014 |
2,259,814 |
|
| Cost
of goods sold |
|
|
2,494,253 |
2,317,434 |
|
|
|
|
|
----------- |
----------- |
|
| Gross
profit/(Loss) |
|
|
448,761 |
(57,620) |
|
|
|
|
| Operating
Expenses |
|
|
|
Administrative and general expenses |
|
26 |
35,221 |
31,176 |
|
|
Selling and distribution expenses |
|
27 |
71,631 |
20,561 |
|
|
|
----------- |
----------- |
|
|
|
|
|
106,852 |
51,737 |
|
| Operating
profit/(Loss) |
|
|
|
341,909 |
(109,357) |
|
| Other
income |
|
|
28 |
65,207 |
100,727 |
|
|
|
----------- |
----------- |
|
|
|
|
|
407,116 |
(8,630) |
|
|
|
|
| Financial
charges |
|
29 |
562,851 |
578,163 |
|
| Other
charges |
|
30 |
(70,281 ) |
(9,113) |
|
|
|
----------- |
----------- |
|
|
|
|
|
492,570 |
569,050 |
|
|
|
----------- |
----------- |
|
| Loss
before taxation |
|
|
(85,454) |
(577,680) |
|
| Provision
for taxation |
|
|
31 |
15,745 |
2,689 |
|
|
|
----------- |
----------- |
|
| Loss
after taxation |
|
|
(101,199) |
(580,369) |
|
|
|
|
|
========== |
========== |
|
| Loss
per share (Rs.) |
|
38 |
(0.66) |
(4.38) |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Chief Executive |
|
Director |
|
|
|
|
|
|
|
| STATEMENT
OF CHANGES IN EQUITY FOR THE YEAR ENDED JUNE 30, 2000 |
|
|
|
(Rupees in thousand) |
|
|
Share |
Share |
General |
Accumulated |
|
|
|
capital |
Premium |
Reserve |
Profit/(Loss) |
Total |
|
|
| Balance
as at June 30, 1998 |
1,323,914 |
1,593,742 |
938,300 |
(57,833) |
3,798,123 |
|
|
| Net
loss for the year |
-- |
-- |
-- |
(580,369) |
(580,369) |
|
|
------------ |
------------ |
------------ |
------------ |
------------ |
|
|
| Balance
as at June 30, 1999 |
1,323,914 |
1,593,742 |
938,300 |
(638,202) |
3,217,754 |
|
|
|
|
|
| Reserves
acquired upon |
|
|
| merger |
|
-- |
120,000 |
172,527 |
384 |
292,911 |
|
| Net
loss for the year |
-- |
-- |
-- |
(101,199) |
(101,199) |
|
| Share
capital issued |
|
|
| during
the year |
200,000 |
-- |
-- |
-- |
200,000 |
|
|
------------ |
------------ |
------------ |
------------ |
------------ |
|
|
| Balance
as at June 30, 2000 |
1,523,914 |
1,713,742 |
1,110,827 |
(739,017) |
3,609,466 |
|
|
|
========== |
========== |
========== |
========== |
========== |
|
|
|
Chief Executive |
|
Director |
|
|
|
|
|
|
|
|
|
|
|
| CASH
FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 2000 |
|
|
|
|
2000 |
1999 |
|
|
Note |
(Rupees in
thousand) |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Cash
generated from operations |
|
32 |
817,519 |
810,091 |
|
| Financial
charges paid |
|
(571,564) |
(552,038) |
|
| Gratuity
and leave encashment paid |
|
(1,074) |
(2,771) |
|
| Tax
refunds / (taxes paid) |
|
29,396 |
(11,384) |
|
|
------------ |
------------ |
|
| NET
CASH INFLOW FROM OPERATING ACTIVITIES |
|
274,277 |
243,898 |
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
| Fixed
capital expenditure |
|
(29,079) |
(131,405) |
|
| Sale
proceeds of investments |
|
64,617 |
15,279 |
|
| Cash
equivalents acquired upon merger |
|
36,516 |
|
|
| Long
term loans to employees |
|
1,193 |
1,784 |
|
| Long
term security deposits |
|
48 |
(1,117) |
|
| Sales
proceeds of fixed assets |
|
6,405 |
23,448 |
|
| Dividend
received |
|
84,583 |
52,796 |
|
|
------------ |
------------ |
|
| NET
CASH OUTFLOW FROM INVESTING ACTIVITIES |
|
164,283 |
(39,215) |
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Long
term loans |
|
(381,467) |
(34,358) |
|
| Long
term deposits |
|
(909) |
(481 ) |
|
| Liabilities
against assets subject to finance lease |
|
(86,997) |
(64,042) |
|
| Dividend
paid |
|
(50,000) |
(1) |
|
|
------------ |
------------ |
|
| NET
CASH (OUTFLOW) FROM FINANCING ACTIVITIES |
|
(519,373) |
(98,882) |
|
|
