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Chakwal Cement Company Limited
Annual Report 2001
CONTENTS
Company Information
Notice of Meeting
Directors' Report
Pattern of Shareholding
Auditors' Report
Balance Sheet
Statement of Changes in Financial Position (Cash Flow Statement)
Notes to the Accounts
COMPANY INFORMATION
BOARD OF DIRECTORS		Khawaja Mohammad Jawed		(Chief Executive)
		Khawaja Mohammad Jahangir
		Khawaja Mohammad Tanveer
		Khawaja Mohammad Nadeem
		Khawaja Mohammad Naveed
		Khawaja Mohammad Aman
		Mst. Zubaida Khatoon
		Mr. Shamsuddin Khan		(Nominee NIT)
COMPANY SECRETARY		Mr. Muhammad Anwar Sheikh
		M. Com., FCMA
AUDITORS		M. Hussain Chaudhry & Co.
		Chartered Accountants
LEGAL ADVISORS		Cornelius Lane & Mufti
		Advocates and Solicitors
BANKERS		Citibank N. A.
		Faysal Bank Limited
		Muslim Commercial Bank Limited
		National Bank of Pakistan
		Platinum Commercial Bank Limited
		Prime Commercial Bank Limited
		Standard Chartered Bank
REGISTERED OFFICE		7/1 E-3, Main Boulevard,
		Gulberg-III, Lahore.
		Tel: (042) 5717510-4
CORPORATE & SHARES		31-F, Near Main Market,
DEPARTMENT		Gulberg-II, Lahore.
		Tel: 5755774 Fax: 5755760
PLANT SITE		Karuli Near Kallar Kahar
		District Chakwal - Pakistan
NOTICE OF 8TH ANNUAL GENERAL MEETING
NOTICE is hereby given that the 8th Annual General Meeting of the shareholders of
Chakwal Cement Company Limited will be held on Monday, December 31, 2001 at 10:00 a.m. at
7-Happy Homes, 38-A, Main Gulberg, Lahore to transact the following business:
1. To confirm the minutes of the last Annual General Meeting of the shareholders of the Company held on
December 30, 2000.
2. To receive and adopt the audited accounts of the Company for the year ended June 30, 2001 and the
reports of Directors and Auditors thereon.
3. To appoint Auditors for the year ending June 30, 2002 and to fix their remuneration.
4. To consider any other business which may be placed before the meeting with the permission of the
Chair.
				By Order of the Board
Lahore:				MUHAMMAD ANWAR SHEIKH
December 06, 2001				Corporate Secretary
Notes:
1. The shares transfer books of the Company shall remain closed from December 26, 2001 to
January 02, 2002 (both days inclusive).
2. A member entitled to attend and vote at this meeting may appoint another member as his/her proxy to
attend the meeting and vote instead of him/her. Proxies in order to be effective must be received by the
Company not later than 48 hours before the meeting.
3. Any individual Beneficial Owner of CDC, entitled to attend and vote at this meeting, must bring his/her
NIC or Passport, Account and participant I.D. numbers to provided his/her identity and in case of proxy
must enclose an attested copy of his/her NIC or Passport. Representative of corporate members
should bring the usual documents required for such purpose.
4. Shareholders are requested to notify the company promptly of any change in their address.
DIRECTORS' REPORT TO THE SHAREHOLDERS
The Directors are pleased to place before you the annual report along with the audited accounts for the
year ended June 30, 2001.
Your directors' continuous struggle to revive the project has born some result. After hard persuasion and
representations to the Government that the project could be revived and is still viable, the Government
provided relief in the form of waiver of demurrage to the extent of 70 percent of the leviable demurrage.
According to the notification issued the consignments lying at port were to be cleared within three months.
Whilst we take this as a major achievement we have again taken up the matter with the concerned
Governmental agencies and emphasized that the time period for lifting of the consignment must be
extended and the balance 30 percent demurrage may be deferred and recovered after the
commencement of production activities. Similar request has been made for the
deferment of the custom duties and taxes. It is also pertinent to note that the foreign shareholders,
representing majority, and the lenders have also requested the Government to consider the waiver or
deferment of demurrage and custom duties. Both the requests are under consideration by the relevant
Government departments and we are hopeful of a favourable outcome.
The above said charges of demurrage, custom duties and taxes form significant part of the short fall
required to complete the project. With hopes that these issues shall successfully be resolved, your
directors have made an action plan to revive the project. The plan has been discussed with the foreign
shareholders, and the lenders who also share our views. Your directors are committed to revive the
project and have sought assistance from the shareholders, lenders and above all the Government to help in
completing the land mark project.
The auditors' observation regarding the ability of the company to continue as a going concern is largely
mitigated by the above explanations. In addition to the above your directors are in contact with the lenders
and are in negotiations for restructuring/rescheduling of the liabilities. Your directors believe that upon
successful outcome of the concessions by the Government, the negotiations shall speed up and shall be
amicably resolved.
The pattern of shareholding as on June 30, 2001 is annexed.
The present Auditors M/s Hussain Chaudhury & Company Chartered Accountants, retire & being
eligible offer themselves for re-appointment.
We put on record our special thanks to the shareholders. We also put on record our gratitude to the foreign
lenders, bankers and Government functionaries for their continued support and cooperation.
					On Behalf of the Board
Lahore:					(KHAWAJA MOHAMMAD JAWED)
December 06, 2001					Chief Executive
PATTERN OF SHAREHOLDING AS AT JUNE 30, 2001
NUMBER OF		SHARE HOLDING		TOTAL SHARES
SHARE	FROM		TO	HELD
HOLDERS
3	1	--	100	300
1377	101	--	500	687,700
260	501	--	1000	259,900
754	1001	--	5000	2,617,067
328	5001	--	10000	2,891,500
123	10001	--	15000	1,618,000
96	15001	--	20000	1,815,000
66	20001	--	25000	1,561,333
50	25001	--	30000	1,441,000
24	30001	--	35000	800,500
18	35001	--	40000	700,000
10	40001	--	45000	440,000
35	45001	--	50000	1,725,900
8	50001	--	55000	425,000
7	55001	--	60000	408,500
12	60001	--	65000	760,500
7	65001	--	70000	475,000
4	70001	--	75000	293,000
8	75001	--	80000	627,500
8	80001	--	85000	661,500
8	85001	--	90000	705,000
3	90001	--	95000	281,500
17	95001	--	100000	1,697,200
4	100001	--	105000	413,500
3	105001	--	110000	319,000
1	110001	--	115000	111,500
2	115001	--	120000	236,500
5	120001	--	125000	622,500
1	125001	--	135000	132,500
2	135001	--	140000	276,000
1	140001	--	145000	141,500
4	145001	--	150000	593,000
1	150001	--	155000	152,000
4	155001	--	160000	636,000
1	160001	--	165000	164,500
3	165001	--	175000	520,500
1	175001	--	180000	177,000
4	195001	--	200000	797,800
1	200001	--	205000	200,500
2	205001	--	230000	454,500
3	230001	--	235000	700,000
2	235001	--	240000	474500
5	240001	--	250000	1,248,000
1	250001	--	255000	250,500
1	255001	--	260000	257,000
1	260001	--	265000	261,000
1	265001	--	290000	286,000
1	290001	--	305000	301,000
1	305001	--	310000	310,000
1	310001	--	315000	315,000
2	320001	--	325000	645,400
1	325001	--	330000	329,500
1	330001	--	350000	350,000
1	350001	--	360000	358,000
1	360001	--	375000	375,000
1	375001	--	385000	384,000
1	385001	--	390000	386,500
1	395001	--	400000	398,000
1	435001	--	440000	439,000
1	455001	--	460000	459,700
1	470001	--	475000	473,000
1	480001	--	485000	481,500
1	490001	--	495000	492000
1	505001	--	510000	508,500
2	515001	--	520000	1,033,500
1	530001	--	535000	530,200
1	690001	--	695000	694,425
1	735001	--	740000	736,500
1	895001	--	900000	896,100
1	900001	--	905000	902,000
3	995001	--	1000000	2,997,000
1	1795001	--	1800000	1,798,000
12	1995001	--	2000000	23,976,200
1	2135001	--	2140000	2,138,325
1	2495001	--	2500000	2,499,700
1	2995001	--	3000000	2,997,000
1	3460001	--	3465000	3,464,700
1	8145001	--	8150000	8,146,619
1	8940001	--	8945000	8,943,711
1	11980001	--	11985000	11,988,000
1	13870001	--	13875000	13,874,142
1	14995001	--	15000000	15,000,000
1	17060001	--	17065000	17,064,095
1	19995001	--	20000000	19,999,980
2	24515001	--	24520000	49,038,190
1	24570001	--	24575000	24,572,476
1	50000001	--	50005000	50,000,300
1	259840001	--	259845000	259,840,400
------------------				------------------
3337				562,456,363
==========				==========
CATEGORIES OF			NUMBER OF	SHARES	PERCENTAGE
SHAREHOLDERS			SHARES	HELD
INDIVIDUAL			3,241	176,825,214	31.44
INVESTMENT COMPANY			4	2,271,825	0.40
INSURANCE COMPANY			3	20,064,980	3.57
JOINT STOCK COMPANY			57	12,872,900	2.29
FINANCIAL INSTITUTION			9	65,687,925	11.68
MODARABA COMPANY			3	559,000	0.10
FOREIGN COMPANY			5	284,011,019	50.49
OTHERS			15	163,500	0.03
			------------------	------------------	------------------
			3,337	562,456,363	100.00
			==========	==========	==========
AUDITORS' REPORT TO THE MEMBERS
We have audited the annexed balance sheet of CHAKWAL CEMENT COMPANY LIMITED as at June 30,
2001 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 informations 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 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;
(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, 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, 2001 and its cash flows for the year then
ended; and
d) in our opinion no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980.
Without qualifying our opinion, we draw attention to note 1.3, 5 and 7 to the financial statements. The company's
current liabilities exceed its current assets by Rs. 2,364.125 million as at June 30, 2001 which alongwith other
matters as set forth in note 1.3 and 5 raise substantial doubt that the company will be able to continue as a
going concern.
Lahore:					(M. HUSSAIN CHAUDHURY & CO.)
Dated: December 06, 2001					Chartered Accountants
BALANCE SHEET AS AT JUNE 30, 2001
				2001	2000
			NOTE	(RUPEES)	(RUPEES)
CAPITAL AND LIABILITIES
Share Capital and Reserves
Authorised capital:
750 million (2000:750 million) ordinary
shares of Rs. 10 each				7,500,000,000	7,500,000,000
				==========	==========
Issued, subscribed and paid up capital			3	5,624,563,630	5,624,563,630
Capital rescue			4	214,838,692	214,838,692
				------------------	------------------
				5,839,402,322	5,839,402,322
Long Term Loan - Secured			5	--	124,199,750
Deferred Liability - Gratuity Payable				1,477,258	1,221,266
Current Liabilities
Current potion of long term loan				1,033,200,000	869,398,250
Due to sponsors and directors				30,108,764	29,464,347
Creditors, accrued and other liabilities			6	1,441,143,658	1,094,530,460
				------------------	------------------
				2,504,452,422	1,993,393,057
Contingencies and Commitments			7	--	--
				------------------	------------------
				8,345,332,002	7,958,216,395
				==========	==========
Note:
1) The annexed notes from 1 to 15 form an integral part of these accounts.
2) Auditors' Report (Annexed)
Lahore:				(KHAWAJA MOHAMMAD JAWED)
December 06, 2001				Chief Executive
PROPERTY AND ASSETS
Fixed Capital Expenditure
Operating fixed assets			8	31,153,002	31,485,990
Capital work in progress - net			9	8,173,851,417	7,783,067,999
				------------------	------------------
				8,205,004,419	7,814,553,989
Current Assets
Advances, deposits, prepayments and
other receivables			10	138,975,120	135,860,120
Cash and bank balances			11	1,352,463	7,802,286
				------------------	------------------
				140,327,583	143,662,406
				------------------	------------------
				8,345,332,002	7,958,216,395
				==========	==========
					(KHAWAJA MOHAMMAD NADEEM)
					Director
CASH FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 2001
				2001	2000
			NOTE	(RUPEES)	(RUPEES)
CASH FLOW FROM INVESTING ACTIVITIES
Operating fixed assets				(2,500)	(1,350)
Capital work in progress - net				(14,710,329)	(14,550,610)
Financial charges paid				(23,311)	(1,888)
				------------------	------------------
Net cash used in investing activities				(14,736,140)	(14,553,848)
CASH FLOW FROM FINANCING ACTIVITIES
Interest income received				617,381	689,386
				------------------	------------------
Net cash from financing activities				617,381	689,386
(Increase)/decrease in current assets				97,832	(194,391)
Increase in current liabilities				10,857,265	16,068,244
Income tax paid				(3,178,161)	(115,291)
Gratuity paid				(108,000)	--
				------------------	------------------
Increase/(decrease) in cash & cash equivalents				(6,449,823)	1,894,100
Cash and cash equivalents at beginning of the year				7,802,286	5,908,186
				------------------	------------------
Cash and cash equivalents at end of the year				1,352,463	7,802,286
				==========	==========
	(KHAWAJA MOHAMMAD JAWED)				(KHAWAJA MOHAMMAD NAEEM)
	Chief Executive				Director
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED JUNE 30, 2001
1. The company and its operations
1.1 Chakwal Cement Company Limited was incorporated in Pakistan on May 23, 1993 as a private
limited company and subsequently converted into a public limited company on October 18,
1994 under the Companies Ordinance, 1984. The Company is listed on all Stock Exchanges of
Pakistan. The principal activity of the company is to set up an industrial undertaking for the
manufacture and sale of cement.
1.2 Profit and loss account for the year ended June 30, 2001 has not been drawn up as the company has
not commenced its operating activities.
1.3 Going concern:
The company had originally envisaged commencement of commercial production by October 1997.
But the project could not be completed due to certain financial constraints and non clearance of
certain parts of imported plant and machinery lying at the Karachi Port. Due to the financial
constraints the company has not been able to pay any installment in respect of the foreign currency
loan that has become totally due and the lender has filed a suit for recovery as explained in note 5.
These fac