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Pakistan Cables Limited
Annual Report 1999
CONTENTS
Company Information
Notice of Meeting
Highlights
Ten-Year Review
Chairman's Review
Report of the Directors
Pattern of Shareholdings
Graphic Illustrations
Auditors' Report to the Members
Balance Sheet
Profit and Loss Account
Statement of Changes in Equity
Cash Flow Statement
Notes to and Forming Part of the Accounts
COMPANY INFORMATION
BOARD OF DIRECTORS
Towfiq H. Chinoy (Chairman)
Mustapha A. Chinoy
Haroun Rashid
Imtiaz Rasool
Syed Naseem Ahmad
Amjad Waheed
Sara Jawaid
Shahpur Channah
Aslam Sadruddin
Kamal A. Chinoy (Chief Executive)
COMPANY SECRETARY
Aslam Sadruddin
AUDITORS
A.F. Ferguson & Co.
Chartered Accountants
LEGAL ADVISERS
Ghani Law Associates
BANKERS
ANZ Grindlays Bank
Bank of America N.T. & S.A.
Credit Agricole indosuez. The Global French Bank
Hongkong and Shanghai Banking Corporation
Muslim Commercial Bank Limited
Oman International Bank S.A.O.G.
Standard Chartered Bank
Registered Office. Factory and Marketing Office
B/2T Sindh Industrial Trading Estates
Manghopir Road. P.O. Box 5050 Karachi-75700
Telephone Nos: 2561170-5. Telex: 29132 PCL PK. Fax: 92-21-2564614
Regional Office
Lahore		Co-operative Insurance Building. Shahra-e-Quaid-e-Azam
		Telephone Nos: 7355783. 7120790 - 91. 353520. Fax: 7355480
Branch Offices
Multan		Shershah Road. Telephone No. 583332.
Rawalpindi		445-A. Adamjee Street. Telephone No. 568895. Fax: 051-512797
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN THAT the 46th Annual General Meeting of the shareholders of Pakistan
Cables Limited will be held on Wednesday the 8th December. 1999 at 11:00 a.m. at Council
Hall of the Overseas Investors Chamber of Commerce and Industry. Chamber of Commerce
Building. Talpur Road. Karachi. to transact the following business:
Ordinary Business
1. To receive and consider the Statement of Accounts for the year ended June 30.
1999 together with the Reports of the Directors and Auditors thereon.
2. To approve the payment of Dividend as recommended by the Directors. (The Directors
have recommended a dividend of 25%).
3. To appoint Auditors for the ensuing year and to fix their remuneration (Messrs. A.
F. Ferguson & Co. Chartered Accountants. retire. and being eligible. have offered
themselves for re-appointment).
4. To transact any other business which may legally be transacted at an Annual General
Meeting.
					By Order of the Board
					Asian Sadruddin
					Finance Director and
Karachi: November 10th. 1999					Company Secretary
NOTES:
1. A member entitled to attend and vote at this Meeting is entitled to appoint a
proxy to attend and vote instead of him. A proxy need not be a member of the
Company.
2. The instrument appointing the proxy and the Power of Attorney or other authority
under which it is signed. or a notarially certified copy thereof. must be lodged at
the Company's Registered Office i.e. B/21. S.I.T.E.. Karachi. not later than 48 hours
before the time of the Meeting.
HIGHLIGHTS
				1998-99	1997-98
				Rs. Million	Rs. Million
Sales				578.89	500.15
Profit after tax				9.25	832
Dividend				7.80	702
Net assets employed				137.02	147,529
Shareholders' fund				117.01	115,562
Net earning per share				Rs. 2.96	2.67
Net earning per rupee sales				Rs. 0.02	2
TEN-YEAR REVIEW
			1998-99	1997-98	1996-97	*1995-96	1994	1993	1992	1991	1990	1989
			Rs	Rs	Rs	Rs	Rs	Rs	Rs	Rs	Rs	Rs
			Million	Million	Million	Million	Million	Million	Million	Million	Million	Million
Sales			578,895	500,151	636,476	964,652	438,239	380,362	302,149	346.808	360,201	320,656
Operating profit			39.695	24.583	54.204	63.998	30.117	30.390	16.914	24.646	44.661	33.261
Profit before tax			13.218	11.321	20.751	35.058	21.150	15.954	8.242	12.908	31.010	18.369
Profit after tax			9.248	8.321	13.151	19.733	9.157	7.868	4.173	8.331	16.557	14.197
Dividend			7.805	7.024	10.927	14.829	8.585	7.805	2.178	8.580	8.580	7.920
Bonus Issue			--	--	--	--	--	--	2.178	2.640	--	--
Capital expenditure			10.015	2.628	6.569	64.762	3.145	0.741	1.142	1.376	2.096	17.214
Fixed assets at cost			262.971	252.531	246.532	244.126	179.055	175.979	175.420	180.772	180.383	179.669
Current assets less
current liabilities			40.944	47.596	37.359	27.687	41.609	48.633	61.234	55.085	61.849	54.677
Current Assets:
Current Liabilities			1.1:1	1.2:1	1.1:1	1.1:1	1.2:1	1.3:1	1.4:1	1.4:1	1.4:1	1.5:1
Shareholders' funds
Issued capital			31.218	31.218	31.218	31.218	31.218	31.218	29.040	26.400	26.400	26.400
Reserve & retained
earnings			85.787	84.344	83.047	80.823	75.919	75.347	77.462	78.107	78.356	70.379
Total Shareholders' fund			117.005	115.562	114.265	112.041	107.137	106.565	106.502	104.507	104.756	96.779
Long term Loans & Liabilities			20.016	31.967	38.203	47.582	21.708	37.568	47.105	55.413	67.563	76.712
Net Assets employed			137.201	147.529	152.468	159.623	128.845	144.133	153.607	159.920	172.319	173.491
Net Earnings as percentage
of net assets employed		%	7	6	9	12	7	5	3	5	.10	8
Earning per rupee of sales		Rs.	0.02	0.02	0.02	0.02	0.02	0.02	0.01	0.02	0.05	0.04
Earning per share		Rs.	2.96	2.67	4.21	6.32	2.93	2.52	1.44	3.16	6.27	5.38
Cash Dividend per share		Rs.	2.50	2.25	3.50	4.75	2.75	2.50	0.75	3.25	3.25	3.00
Break-up value per share		Rs.	37.48	37.02	36.60	35.89	34.32	34.14	36.67	39.59	39.68	36.6
* Eighteen months ended June 30. 1996
CHAIRMAN'S REVIEW
On behalf of your Board. I am pleased to present to you the report for the year ended
June 30th 1999.
BOARD CHANGES
The following directors were elected unopposed in the Extraordinary General Meeting of the
Company held on May 17. 1999.
Mr. Towfiq H. Chinoy			Dr Amjad Waheed
Mr. Mustapha A. Chinoy			Ms Sara Jawaid
Mr. Haroun Rashid			Mr. Shahpur Channah
Mr. Imtiaz Rascal			Mr. Aslam Sadruddin
Syed Naseem Ahmad			Mr. Kamal A. Chinoy
The Board wishes to place on record its appreciation of the contribution made by the retiring
directors especially Mr. Hanif Adamjee who was on the Board of your company for the
last sixteen years and provided valuable guidance to the company throughout his tenure.
OPERATING PERFORMANCE
During the period under consideration. the country was affected by the economic fallout
resulting from the nuclear explosion of May '98. The economy. which was already in recession
prior to the explosion. was further crippled by uncertainty. lack of business confidence. foreign
exchange restrictions and international sanctions. Commercial activity and industrial demand
remained low. resulting in poor requirement for your company's products. KESC did not
place any orders of note. However we were successful in securing some WAPDA business
during the period.
Inspite of these difficulties. I am pleased to inform you that net sales for the year is
Rs 578.8 million which is 15.7% higher than last year's sales of Rs 500.1 million.
Gross profit of Rs 80.4 million is 14% of sales against Rs 60.6 million last year. which was
12% of the sales. Higher gross profit. both percentage wise as well as in rupee terms was
mainly a result of higher volume of sales.
Operating profit for the year is Rs 39.7 million against Rs 24.6 million last year. showing considerable
improvement. Due to the higher turnover. the requirement for working capital was greater.
as a result of which financial charges have increased to Rs 28.8 million as compared to
Rs 25.2 million last year. Profit before tax for the year is Rs 13.2 million against Rs 11.3
million last year while profit after tax is Rs 9.2 million. which is 11% higher than last year's
net profit of Rs 8.3 million inspire of the payment of sales tax of Rs 6.4 million as discussed
below.
SALES TAX
The company had filed an appeal in the Supreme Court in 1988 in respect of sales tax
claimed by the department on Aluminium Rods for the period 1970 to 1980. During the
year. the Supreme Court finally gave it's judgment. dismissing our appeal. as a result of which
sales tax of Rs 6.4 million has been paid and accounted for during the year.
YEAR 2000 COMPLIANCE
The company has examined all hardware and software in use and ensured that none of
these will be affected by the millennium bug. Your company's performance is not dependent
on the operations of associated companies using computers. It is also not dependent on
any single major supplier. However suppliers have been asked to ensure that their systems
will continue to work smoothly in the year 2000.
INDUSTRY CONCERNS
As highlighted previously as well. deduction of income tax at source has now become an
acute issue for all engineering companies due to exorbitant increases over the years in the
standard rates of deduction which are presently 5% on imports and an additional 3.5% on
payments received. These deductions at source results in substantial refunds receivable from
Tax Department. Genuine taxpayers can be saved from this problem if exemption certificates
under Section 50(4) and 50(5) of the Income Tax Ordinance are issued to companies having
assessed refunds. within 10 days of application and with a validity of 12 months.
In the engineering industry, Wire & Cables are the only items on which both excise duty
and sales tax are levied. making a total levy of 26.5%, in addition to which a further 3%
sales tax is also chargeable (for goods said to unregistered customers). This is too high and
encourage tax evasion, affecting government revenue on the one hand and abetting the
supply of substandard goods on the other hand by the manufacturers in the unorganized
sector. In recognition of this, CBR has entered into an agreement with the All Pakistan Cables
and Conductors Manufacturers Association. to withdraw Excise Duty from cables and retain
only the Sales Tax levy, Regretfully this agreement has yet to be implemented.
DIVIDEND
For the current year. your directors recommended payment of dividend of Rs 2.50 per share
(25%) compared to Rs 2.25 per share (22.5% )last year.
FUTURE PROSPECTS
The economy remains inherently weak. The agreements with the IMF and World Bank are
in jeopardy as well, creating further uncertainty. Politically the country is in a state of flux
in light of the military takeover. With this background. it is difficult to state unequivocally
what the future holds for the company. However we take heart in the fact that we have
some orders in hand from WAPDA and KESC which will assist in boosting our turnover.
STAFF
The total number of employees as on June 30th, 1999 was 290. Relationship with the employees
at all levels remains warm and cordial. On behalf of the directors and employees, of the
company, I express my gratitude to all our valued customers. distributors and banks for their
confidence and support.
					TOWFIQ H. CHINOY
Karachi: October 19. 1999					Chairman
REPORT OF THE DIRECTORS
1. The Directors have pleasure in submitting their Report and Annual Audited Accounts
for the year ended 30th June 1999.
					Rs. '000
The net profit after tax amounted to					9,248
To this is added unappropriated profit
brought forward from last year					344
					------------------
					9,592
					==========
The Directors recommended:
Payment of Cash Dividend at the
rate of Rs. 2.50 per share (25%)					7,805
Transfer to General Reserve					1,500
Leaving unappropriated profit to be
carried forward					287
					------------------
					9,592
					==========
2. The following Directors were elected unopposed in the Extraordinary General Meeting of
the company held on May 17th, 1999.
Mr Towfiq H. Chinoy			Dr Amjad Waheed
Mr Mustapha A. Chinoy			Ms Sara Jawaid
Mr Haroun Rashid			Mr Shahpur Channah
Mr Imtiaz Rasool			Mr Asian Sadruddin
Syed Naseem Ahmad			Mr Kamal A. Chinoy
3. The Chairman's Review on page 6 covers significant activities of your Company.
4. The pattern of shareholding is provided on page 9.
5. The present Auditors M/s. A. F. Ferguson & Co. retire and offer themselves for re-appointment.
					On behalf of the Board
Karachi: October 7. 1999					KAMAL A. CHINOY
					Director & Chief Executive
PATTERN OF SHAREHOLDING AS AT JUNE 30, 1999
No. of		Shareholding		Total
Shareholders				Shares held
392	1	to	100	15,882
412	1	to	500	100,644
111	501	to	1,000	82,656
115	1,001	to	5,000	238,330
6	5,001	to	10,000	37,390
7	10,001	to	15,000	88,200
1	15,001	to	20,000	15,300
--	20,001	to	25,000	--
2	25,001	to	30,000	54,212
--	30,001	to	40,000	--
1	40,001	to	45,000	43,843
1	45,001	to	50,000	47,009
--	50,001	to	60,000	--
1	60,001	to	65,000	61,250
--	65,001	to	85,000	--
1	85,001	to	90,000	85,815
1	90,001	to	95,000	90,552
--	95,001	to	125,000	--
1	125,001	to	130,000	129,869
--	130,001	to	160,000	--
1	160,001	to	165,000	162,853
--	165,001	to	170,000	--
1	170,001	to	175,000	173,710
--	175,001	to	290,000	--
1	290,001	to	295,000	292,230
--	295,001	to	300,000	--
1	300,001	to	305,000	304,400
--	305,001	to	475,000	--
1	475,001	to	480,000	478,299
--	480,001	to	615,000	--
1	615,001	to	620,000	619,356
--	620,001	to	3,121,800	--
------------------				------------------
1,058				3,121,800
==========				==========
Category of shareholders			Number	Shares held	Percentage
Individuals			1,030	1,621,087	5,193
Investment Companies			2	705,171	2,259
Insurance Companies			6	334,610	1,072
Joint Stock Companies			10	318,788	1,021
Financial Institutions			5	116,738	374
Modaraba Companies			--	--	--
Others			5	25,406	0.81
			------------------	------------------	------------------
			1,058	3,121,800	10,000
			==========	==========	==========
OTHERS
Aminia Muslim Girls School Trust				11,304
Pakistan Masonic Institution				1,135
The Pakistan Memon Educational & Welfare Society				12,229
Government of Pakistan. Corporate Law Authority				1
Administrator Abandoned Properties Organization				737
				------------------
				25,406
				==========
AUDITORS' REPORT TO THE MEMBERS
We have audited the annexed balance sheet of Pakistan Cables Limited as at June 30. 1999
and the related profit and loss account. the statement of changes in equity and the 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 and. after due verification thereof.
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 accounting
policies consistently applied;
(ii) the expenditure incurred during the year was for the purposes 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, 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, 1999 and of the
profit, changes in equity and the cash flows for the year then ended; and
(d) in our opinion zakat deductible at source under the Zakat and Ushr Ordinance, 1980 was
deducted by the company and deposited in the Central Zakat Fund established under
section 7 of that Ordinance.
					A.F. FERGUSON & CO.
Karachi: November 4, 1999					Chartered Accountants
BALANCE SHEET AS AT JUNE 30. 1999
					1999	1998
				Note	Rs. '000	Rs. '000
SHARE CAPITAL AND RESERVES
Authorised share capital
5,000,000 ordinary shares of Rs. 10 each					50,000	50,000
					==========	==========
Issued. subscribed and paid-up share capital
3,121,800 (1998: 3,121,800)
ordinary shares of Rs. 10 each				3	31,218	31,218
Reserves				4	85,500	84,000
Unappropriated profit					287	344
					------------------	------------------
					117,005	115,562
LIABILITY AGAINST AN ASSET SUBJECT
TO A FINANCE LEASE				5	841	--
LONGTERM LOANS					--	14,000
DEFERRED LIABILITY					------------------	------------------
Staff retirement benefits					19,175	17,967
CURRENT LIABILITIES AND PROVISIONS
Finances under mark-up arrangements				6	194,491	125,238
Current maturity of customs debentures					--	1,970
Current maturity of liability against an asset
subject to a finance lease				5	135	--
Current maturity of long-term loans					--	7,000
Creditors. accrued expenses and other liabilities				7	120,244	165,791