PAKISTAN SLAG CEMENT INDUSTIRES LIMITED
ANNUAL REPORT 2004
STATEMENT OF ETHICS
AND BUSINESS PRACTICES
The business policy of PAKISTAN SLAG CEMENT INDUSTIRES LIMITED is to provide product customers
that meets or exceed requirements in areas of Quality, Cost and On Time Delivery.
Product Quality
Our Operations are based on International Standards PS 232 1983 & BS 12 1958 the that meets national and
International standards for quality reliability.
Dealing with Employees
Provide congenial work atmosphere where all employees treated with respect and dignity. Training is provided
to Employess in order to make them competent.
Responsibility to interested parties
To be objectives, that our dealings with the people must be fair and transparent who have reposed their
confidence in us.
Financial Reporting & Internal Controls
To implement an effective and transparent system of financial reporting and internal controls to safeguard the
interest of our shareholders and fulfill the regulatory requirements.
Procurement of Goods & Services
Our purchasing and procurement system is based on the quality management system purchased goods and
services that are tailored to our requirement and are priced appropriately. Before taking decision about
procurement of any goods or service, quotations are obtained from various sources.
Conflict of Interest
All the decisions of the management must be in the interest of the company and activities and involvement of
the directors and employees in no way conflict with the interest of the company.
Adherence to law of the land
To fulfill all legal requirements of the Government and its regulatory bodies and follow relevant and applicable
laws of the country.
Environment Protection
To protect environment and ensure health and safety of the work force and well being of the people living in
the adjoining areas of our plant.
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.
BALANCE SHEET
AS AT JUNE 30, 2004
			Note	2004	2003
EQUITY AND LIABILITIES				RUPEES
SHARE CAPITAL AND RESERVES
Authorized Capital
31,500,000(2003:31,500,000)
Ordinary shares of Rs.10/- each				315,000,000	315,000,000
Issued, subscribed and paid-up capital			4	64,000,000	64,000,000
Accumulated loss				-75,074,413	-75,329,054
				(11,074,413")	-11,329,054
SURPLUS ON REVALUATION OF FIXED ASSETS			5	97,757,743	—
NON CURRENT LIABILITIES
Supplier credit - Secured			6	30,000,000	30,000,000
Long-term deposits - Unsecured				—	1,125,655
Deferred and other liabilities			7	138,350,947	111,941,759
CURRENT LIABILITIES
Current maturity of long-term loan				—	3,733,522
Temporary book overdraft				—	976,211
Trade creditors			8	110,866,055	87,430,776
Accrued and other liabilities			9	16,871,528	15,024,838
Advance from customers				13,304,239	15,959,117
Provision for taxation			10	1,601,750	952,000
				142,643,572	124,076,464
CONTINGENCIES			11	—	—
				397,677,849	255,814,824
ASSETS
NON CURRENT ASSETS
Tangible fixed assets
Operating fixed assets			12	219,270,334	79,096,241
Long-term deposits			13	1,876,830	1,876,830
CURRENT ASSETS
Stores, spares and loose tools			14	8,426,472	7,130,243
Stock-in-trade			15	58,635,396	69,610,491
Trade debts - Unsecured			16	66,776,770	50,784,206
Loans, advances, trade deposits, prepayments
and other receivables			17	12,062,611	17,200,113
Advance income tax				19,241,944	19,139,570
Cash and bank balances			18	11,387,492	10,977,130
				176,530,685	174,841,753
				397,677,849	255,814,824
REVIEW REPORT TO THE MEMBERS ON STATEMENT OF
COMPLIANCE WITH BEST PRACTICES OF CODE OF
CORPORATE GOVERNANCE
We have reviewed the Statement of Compliance with the best practices contained in the Code of Corporate
Governance prepared by the Board of Directors of Pakistan Slag Cement Industries Limited to comply with the
Listing Regulation No.37 (Chapter XI) of the Karachi Stock Exchange where the Company is listed.
The responsibility for compliance with the Code of Corporate Governance is that of the Board of Directors of
the Company. Our responsibility is to review, to the extent where such compliance can be objectively verified,
whether the Statement of Compliance reflects the status of the Company's compliance with the provisions of
the Code of Corporate Governance and report if it does not. A review is limited primarily to inquiries of the
Company personnel and review of various documents prepared by the company to comply with the Code.
As part of our audit of financial statements we are required to obtain an understanding of the accounting and
internal control systems sufficient to plan the audit and develop an effective audit approach. We have not
carried out any special review of the internal control system to enable us to express an opinion as to whether
the Board's statement on internal control covers all controls and the effectiveness of such internal controls.
Based on our review, nothing has come to our attention, which causes us to believe that the Statement of
Compliance does not appropriately reflect the Company's compliance, in all material respects, with the best
practices contained in the Code of Corporate Governance
CASH  FLOW STATEMENT
FOR THE YEAR ENDED JUNE 30, 2004
			Note	2004	2003
				RUPEES
Cash flow from operating activities
Cash generated from ( Used in) operations			25	27,055,483	-14,220,199
Payments for
Financial charges				-1,317,524	-635,369
Gratuity paid				-49,745	-39,962
Dividend paid				-200	-471,157
Taxation				-102,374	-2,084,716
				-1,469,843	-3,231,204
Net cash inflow / (outflow) from operating activities				25,585,640	-17,451,403
Cash flow from investing activities
Fixed capital expenditure				-1,050,805	-80,000
Long-term deposit				—	-132,000
Net cash (outflow) from investing activities				-1,050,805	-212,000
Cash flow from financing activities
Repayment of long-term loan				-3,733,522	-9,000,000
Interest received				437,000	1,547,027
Deferred liability - net				-20,827,951	35,165,359
Net Cash (Outflow) / Inflow from Financing Activities				-24,124,473	27,712,386
Net Increase in Cash and Cash Equivalent				410,362	10,048,983
Cash and Cash Equivalent as on 1st July 2003				10,977,130	928,147
Cash and Cash Equivalent as on 30th June 2004				11,387,492	10,977,130
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED JUNE 30, 2004
			Note	2004	2003
				RUPEES
Sales - Net			19	129,949,917	186,468,285
Cost of goods sold			20	-138,014,329	-190,435,095
Gross loss				-8,064,412	-3,966,810
Administrative and Selling expenses			21	-4,813,107	-5,616,380
Operating (Loss)				-12,877,519	-9,583,190
Financial charges			22	-5,388,504	-3,419,215
(Loss) for the year				-18,266,023	-13,002,405
Other Income			23	3,472,468	3,977,915
(Loss) before taxation Taxation				-14,793,555	-9,024,490
Current				-649,750	-932,342
Prior				__	-19,658
Deferred				6,011,759	—
				5,362,009	-952,000
(Loss) after taxation				-9,431,546	-9,976,490
Accumulated (loss) brought forward				-75,329,054	-65,352,564
Transfers:
Transferred from surplus on revaluation of fixed assets:				9,686,187	—
Accumulated (loss) carried forward				-75,074,413	-75,329,054
(Loss) per share - basic			24	(1-47)	-1.56
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED JUNE 30, 2004
1       THE COMPANY AND ITS OPERATION
The Company was incorporated in Pakistan as a public limited Company in June 1994 under the Companies
Ordinance, 1984. Its shares are listed on the Karachi Stock Exchange. The Company is principally
engaged in manufacturing and sale of cement.
2      GOING CONCERN ASSUMPTION
The Company has incurred a loss of Rs.9.432 million (2003: Rs 9.976 million) for the year ended June
30, 2004 and as of that date its accumulated losses exceeded its share capital by Rs.11.074 million
(2003: Rs.11.329 million). The accounts have been prepared under going concern assumption as the
Company expects continued support from lenders.
3      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3.1   Statement of compliance