| Cherat Cement Company Limited |
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| Annual
Report 2001 |
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| CONTENTS |
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| PROGRESS
GRAPHS |
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| COMPANY
INFORMATION |
|
| NOTICE
OF MEETING |
|
| DIRECTORS'
REPORTTO 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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| NOTESTOTHE
FINANCIAL STATEMENTS |
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| PATTERN
OF SHAREHOLDING |
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| PROGRESS
GRAPHS |
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| WEALTH
GENERATED & DISTRIBUTED |
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| DEVELOPMENT
OF BALANCE |
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| FINANCIAL
CHARGES |
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| CEMENT
SALES (IN TONS) |
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|
| RETURN
ON EQUITY (INCLUDING RESERVES) |
|
| CLINKER/CEMENT
PRODUCTION |
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| COMPANY
INFORMATION |
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|
| BOARD
OF DIRECTORS |
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|
| Mr.
Mohammed Faruque |
|
Chairman |
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| 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 |
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| Mr.
Anis Wahab Zuberi (NIT) |
|
Director |
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| Mr.
Muhammad Nawaz Tishna (NIT) |
Director |
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| COMPANY
SECRETARY |
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| Mr. 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 |
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| Allied
Bank of Pakistan Limited |
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| American
Express Bank Ltd. |
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| Bank
Al-Habib Ltd. |
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| Credit
Agricole Indosuez |
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| Muslim
Commercial Bank Ltd. |
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| National
Bank of Pakistan |
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| Standard
Chartered Grindlays Bank Ltd. |
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| Union
Bank Limited |
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| United
Bank Limited |
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| REGISTERED
OFFICE |
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| 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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| P. 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, |
|
| Lahore. |
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| ISLAMABAD
OFFICE |
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| No
3, Mezzanine Floor, |
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| Razia
Sharif Plaza, |
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| 91, Blue Area, |
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| Islamabad. |
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| NOTICE
OF MEETING |
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| NOTICE
IS HEREBY GIVEN that the Twentieth Annual General Meeting of this Company
will be held |
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| on
Monday, December 10, 2001 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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| 2001
with the Directors' and the Auditors' Reports thereon. |
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| 2.
To declare dividend of Rs. 2.00 per share (@ 20%) for the financial year
ended on June 30, |
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| 2001
as recommended by the Directors. |
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|
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| 3.
To appoint Auditors for the ensuing year and to fix their remuneration. |
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| SPECIAL
BUSINESS: |
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| To
consider and if deemed fit to pass with or without modification the following
Resolutions: |
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| 1.
ORDINARY RESOLUTION: |
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| "That
the authorized capital of the company be and is hereby increased from Rs.
500,000,000 |
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| to
Rs. 800,000,000 by the creation of 30,000,000 shares of Rs. 10/- each and the
increased |
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| share
capital be subject to the same rights and privileges as attached to the
existing capital |
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| under
the Memorandum and Articles of Association of the Company". |
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|
|
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| 2.
SPECIAL RESOLUTIONS: |
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|
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| (1)
"That in Clause V of the Memorandum of Association of the Company the
figures "500,000,000" |
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| and
"50" be and are hereby substituted with the figures
"800,000,000" and "80" and the words |
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| appearing
in the brackets "(Rupees five hundred million)" by "(Rupees
eight hundred million)" |
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| respectively". |
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|
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| (2)
"That the existing capital clause 5 of the Articles of Association of
the Company be and is |
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| hereby
substituted with the following new clause": |
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| The
share capital of the Company is Rs. 800,000,000 (Rupees eight hundred
million) divided |
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| into
80,000,000 shares of Rs. 10/-, each. |
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|
By Order of the Board |
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|
R. JAFRANI |
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| Karachi:
October 25, 2001 |
|
Secretary |
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| NOTES: |
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| 1.
The register of members of the Company will be closed from Tuesday, December
04 to Mon- |
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| day,
December 10, 2001 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
Monday, |
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| December
03, 2001 will be treated in time for entitlement of the above dividend. |
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|
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| 2.
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 |
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| in
writing and must be received by the Company 48 hours before the Meeting. |
|
|
| 3.
Shareholders whose shares are registered in their account/sub-account/group
account with |
|
| 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 |
|
| such
account holders and sub-account holders the guide lines as contained in
SECP's circular |
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| of
January 26, 2000 (as reproduced on the reverse side of the enclosed proxy
form) to be |
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| followed. |
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|
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| 4.
The shareholders are requested to notify the Company immediately the change
in their ad- |
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| dress, if any. |
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| Statement
under Section 160(I)(b) of the Companies Ordinance 1984 |
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| The
present authorized capital of the Company is Rs. 500 million divided into 50
million ordinary shares |
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| of
Rs. 10/- each, and the paid up capital is Rs. 481.324 million, which leaves a
very little margin |
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| between
the authorized and issued capital. With a view to enabling the company to
issue further shares |
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| as
and when necessary, the Board recommends to enhance the authorized capital
from Rs. 500,000,000 |
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| to
Rs. 800,000,000 divided into 80,000,000 shares of Rs. 10/- each. |
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| Accordingly
it is also necessary to approve alteration the capital clauses of the
Company's Memoran- |
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| dum
and Articles of Association in the manner as stated in the above resolutions. |
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|
| DIRECTORS'
REPORT TO THE MEMBERS |
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| FOR
THE YEAR ENDED 30 JUNE 2001 |
|
|
| Dear
Shareholders, |
|
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| Your
directors wish to place before you the Financial Results of the company along
with the Audited |
|
| Accounts
for the year ended June 30, 2001. |
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| GENERAL |
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| During
the year under review, the economic growth in the country remained under
pressure. To stabilize |
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| the
economy and improve the GDP, the Government has taken various measures and it
is hoped that |
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| the
corrective measures and steps taken will have positive impact on the economy. |
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| As
to the performance of your company, the directors are pleased to report the
following: |
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| PRODUCTION |
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| Because
of the slow economic growth in the country, the cement industry as a whole is
also in difficul- |
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| ties.
During the year under review, plants had to adjust their production capacity
in line with the market |
|
| demand,
which meant that plants were not operating at their full capacity. Inspite of
the general slow |
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| down,
we recorded a little over 8% increase in production. |
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| The
Comparative figures for the last two years for production of clinker and
cement are as under: |
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|
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|
2000-2001 |
1999-2000 |
Change |
|
|
|
Tons |
Tons |
(%) |
|
|
| Clinker |
|
538,101 |
497,513 |
8.16 |
|
| Cement |
|
565,945 |
521,224 |
8.58 |
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|
| DISPATCHES |
|
| Since
the production of clinker and cement during the period under review was
adjusted in line with the |
|
| demand,
we were able to dispatch the entire quantity of cement that was produced. The
comparative |
|
| figures
for quantity of cement booked and dispatched during the last two years are as
follows: |
|
|
|
|
2000-2001 |
1999-2000 |
Change |
|
|
|
Tons |
Tons |
(%) |
|
|
| Cement Booked |
|
565,740 |
521,462 |
8.49 |
|
| Cement
Dispatched |
|
564,055 |
522,592 |
7.93 |
|
|
| OPERATIONAL
PERFORMANCE |
|
| Even
though the quantity of cement dispatched during the year was higher than last
year, the adverse |
|
| fluctuation
in cement prices resulted in lower than expected revenues. Additionally, the
increase in |
|
| furnace
oil prices by about 52% (average) during the year also had its impact on the
gross profit, which |
|
| is
down by about 49%.The increase in administration and selling expenses are in
line with inflation. |
|
| However,
there has been a reasonable increase in other income and also a reduction in
financial |
|
| charges,
which is reflected in the net profit before tax. |
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| Our
contribution to the exchequer in the form of excise duty sales and income
tax, amounted to Rs. |
|
| 882
million, which works out to around 40% of sales. |
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|
| OPERATING
RESULTS |
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| The
summarized operating results are as follows: |
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|
2000-2001 |
1999-2000 |
Change |
|
|
|
(Rs. In Million) |
(Rs. In Million) |
(%) |
|
|
| Net Sales |
|
1,341.5 |
1,424.8 |
(5.8) |
|
| Cost of Sales |
|
1,140.6 |
1,031.9 |
10.50 |
|
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|
------------------ |
------------------ |
------------------ |
|
| Gross Profit |
|
200.9 |
392.9 |
(48.9) |
|
| Expenses
and adjustments |
|
(76.8) |
(106.0) |
(27.5) |
|
| Taxes |
|
(48.8) |
(125.2) |
(61.0) |
|
|
|
------------------ |
------------------ |
------------------ |
|
| Net Profit |
|
75.3 |
161.7 |
(53.4) |
|
|
========== |
========== |
========== |
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| Other
comparative figures are reflected in the Financial Statements. |
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|
| APPROPRIATION
OF PROFIT |
|
| The
profit after tax for current year amounts to Rs. 75.32 million, which
together with unappropriated |
|
| profit
of Rs. 22.49 million from last year, gives us Rs. 97.81 million to be
appropriated. The directors |
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| propose
the following appropriation of available profit: |
|
|
|
|
(Rs. In Million) |
|
|
| Net
profit for the year |
|
75.32 |
|
| Add:
un-appropriated profit brought forward |
|
22.49 |
|
|
|
|
------------------ |
|
| Total
available for appropriation |
|
97.81 |
|
|
|
|
|
|
| Appropriations: |
|
|
| Proposed
cash dividend @20% |
|
96.27 |
|
|
|
|
------------------ |
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| Balance
to be carried forward |
|
1.54 |
|
|
|
|
========== |
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|
| FUTURE
PROSPECTS |
|
| In
order to ensure reasonable return to the shareholders and to remain
competitive, the management |
|
| has
decided to switch to coal firing system. To this end, letter of credit has
already been established |
|
| and
the first shipment is expected in April 2002. Total conversion to coal firing
is expected to be |
|
| completed
by December 2002. This should result in substantial cost saving under fuel
and power. |
|
|
| It
is also hoped that economic activities in the country would pick up and
rehabilitation work should |
|
| start
in Afghanistan as soon as peace returns to that country. Once that happens,
then we are ideally |
|
| placed
and have the capacity to meet this additional demand for cement. |
|
|
| 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. |
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|
| 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,
which have been associated |
|
| with
us, for their continued support, understanding and cooperation. We would also
like to thank to all |
|
| our
dealers and customers for loyalty and support. Our special thanks to our team
of dedicated man- |
|
| agers
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 |
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|
|
|
|
|
|
|
|
(MOHAMMED FARUQUE) |
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| Karachi:
October 25, 2001 |
|
Chairman |
|
|
|
| YEARWISE
STATISTICAL SUMMARY |
|
|
|
|
|
|
2001 |
2000 |
1999 |
1998 |
1997 |
1996 |
1995 |
1994 |
1993 |
1992 |
|
|
|
(Tons in '000) |
|
|
|
| Clinker
production |
538 |
498 |
505 |
612 |
742 |
712 |
423 |
254 |
426 |
421 |
| Cement
production |
566 |
521 |
533 |
671 |
798 |
716 |
438 |
270 |
455 |
448 |
| Cement
despatched |
564 |
523 |
532 |
663 |
798 |
721 |
429 |
271 |
457 |
450 |
|
|
|
|
|
(Rs. in million) |
|
|
| ASSETS
EMPLOYED |
|
| Fixed Assets |
|
881 |
973 |
1,069 |
1,186 |
1,260 |
1,378 |
1,471 |
1,453 |
1,236 |
1,059 |
|
|
|
| Investments
and |
|
| Long-term
Advances |
|
| & Deposits |
|
12 |
12 |
11 |
12 |
13 |
14 |
14 |
12 |
11 |
9 |
| Current Assets |
|
750 |
742 |
665 |
645 |
589 |
638 |
427 |
376 |
357 |
242 |
|
|
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
| Total Assets Employed |
1,643 |
1,727 |
1,745 |
1,843 |
1,862 |
2,030 |
1,912 |
1,841 |
1,604 |
1,310 |
|
|
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
|
|
|
| FINANCED BY |
|
|
| Shareholders
equity |
908 |
929 |
887 |
926 |
921 |
885 |
864 |
704 |
621 |
457 |
| Long-Term
Liabilities |
35 |
73 |
185 |
271 |
336 |
434 |
544 |
633 |
572 |
520 |
| Deferred
Liabilities |
178 |
188 |
167 |
191 |
191 |
206 |
165 |
42 |
40 |
31 |
| Current
Liabilities |
522 |
537 |
506 |
455 |
414 |
505 |
339 |
462 |
371 |
302 |
|
|
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
| Total Funds Invested |
1,643 |
1,727 |
1,745 |
1,843 |
1,862 |
2,030 |
1,912 |
1,841 |
1,604 |
1,310 |
|
|
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
|
|
|
| TURNOVER
& PROFIT |
|
|
| Turnover (Net) |
|
1,342 |
2,153 |
1,932 |
2,299 |
2,830 |
2,213 |
1,482 |
754 |
1,070 |
910 |
| Operating Profit |
|
130 |
328 |
112 |
74 |
174 |
334 |
337 |
143 |
309 |
197 |
| Profit
before Taxation |
124 |
287 |
52 |
12 |
118 |
274 |
289 |
122 |
277 |
157 |
| Profit
after Taxation |
75 |
162 |
58 |
5 |
108 |
166 |
159 |
83 |
164 |
73 |
| Cash Dividend |
|
96 |
120 |
96 |
-- |
72 |
144 |
-- |
-- |
-- |
-- |
| Stock Dividend |
|
-- |
-- |
-- |
-- |
-- |
-- |
96 |
64 |
64 |
33 |
| Transfer
to Reserves |
-- |
25 |
-- |
-- |
25 |
|
55 |
15 |
100 |
40 |
| Profit c/f |
|
2 |
22 |
6 |
45 |
40 |
29 |
32 |
24 |
20 |
20 |
|
|
| RATIO
ANALYSIS ON ACCOUNTS |
|
| FOR
THE YEAR ENDED 30 JUNE 2001 |
|
|
|
|
|
2001 |
2000 |
|
| PROFITABILITY |
|
|
|
| Gross
Profit (percentage) |
|
|
14.97 |
27.57 |
|
| Operating
Profit (percentage) |
|
|
9.66 |
23.02 |
|
| Profit
Before Tax (percentage) |
|
|
9.25 |
20.14 |
|
| Net
Profit After Tax (percentage) |
|
|
5.61 |
11.35 |
|
| Net
Profit to Shareholder's Equity (percentage) |
|
8.30 |
17.41 |
|
| E.P.S.
(Before Tax) |
|
|
2.58 |
5.96 |
|
| E.P.S.
(After Tax) |
|
|
1.56 |
3.36 |
|
| Net
Profit to Total Assets (average after tax) (percentage) |
4.47 |
9.31 |
|
| (Decrease)/Increase
in Sales (Net percentage) |
|
(5.85) |
25.40 |
|
| Material
as % of Net Sales |
|
|
10.23 |
9.64 |
|
| Labour
as % of Net Sales |
|
|
6.85 |
6.66 |
|
| Other
Cost of Sales Expenses as % of Net Sales |
|
67.95 |
56.13 |
|
| Raw
& Packing Material as % of Cost of Sales |
|
12.03 |
13.31 |
|
| Administrative
Expenses as % of Net Sales |
|
3.25 |
2.78 |
|
| Selling
Expenses as % of Net Sales |
|
2.06 |
1.77 |
|
| Income
Tax as % of Net Sales |
|
|
4.40 |
7.33 |
|
| Financial,
other charges (other income) as % of Net Sales |
(0.30) |
1.38 |
|
|
| SHORT
TERM SOLVENCY |
|
| Working
Capital Ratio |
|
|
1.56:1 |
1.75:1 |
|
| Acid Test Ratio |
|
|
1.38:1 |
1.54:1 |
|
| Working
Capital Turnover (Net Sales) times |
|
4.97 |
4.48 |
|
| Inventory
Turnover - Times |
|
|
15.57 |
17.78 |
|
|
| OVERALL
VALUATION AND ASSESSMENT |
|
| Return
on Equity after tax |
|
|
8.30 |
17.81 |
|
| Book
Value Per Share |
|
|
18.86 |
19.30 |
|
| Long-Term
Debts to Equity Ratio |
|
|
0.23 |
0.28 |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of CHERAT CEMENT
COMPANY LIMITED as at June |
|
| 30,
2001 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 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 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, 2001 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. |
|
|
|
|
|
|
SIDAT HYDER QAMAR & CO. |
|
| KARACHI:
October 25, 2001 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT 30 JUNE 2001 |
|
|
|
NOTE |
2001 |
2000 |
|
|
(Rupees
'000') |
|
| SHARE
CAPITAL |
|
| Authorised |
|
|
| 50,000,000
(2000: 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 |
425,000 |
|
| Unappropriated
profit |
|
1,541 |
22,486 |
|
|
|
|
------------------ |
------------------ |
|
|
907,865 |
928,810 |
|
|
| REDEEMABLE
CAPITAL |
|
4 |
4,093 |
37,304 |
|
| LIABILITIES
AGAINST ASSETS SUBJECT |
|
|
| TO
FINANCE LEASE |
|
5 |
15,142 |
19,262 |
|
| LONG-TERM
DEPOSITS - unsecured |
6 |
16,161 |
17,395 |
|
| DEFERRED
LIABILITY |
|
7 |
177,508 |
187,701 |
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Short-term
finance |
|
8 |
181,671 |
43,702 |
|
| Current
maturity of long-term liabilities |
9 |
42,903 |
113,071 |
|
| Creditors,
accrued and other liabilities |
10 |
146,980 |
152,272 |
|
| Taxation |
|
|
48,449 |
104,000 |
|
| Unclaimed
dividend |
|
|
6,254 |
3,884 |
|
| Proposed
dividend |
|
|
96,265 |
120,331 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
522,522 |
537,260 |
|
