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Clariant Pakistan Limited
Annual Report 1999
Clariant Scientific Centre
Customer service at its best is provided in Clariant Scientific Centre which is
spread over 4000 square meters and equipped with state of the art instruments
and machinery. The Centre plays decisive role in our customers' manufacturing
processes and upgrades their end product.
Dedicated and high calibre staff provide service and solve problems covering the
whole spectrum of textile industry starting from sizing to finishing. Centre's new
addition, 'Eco Lab', equipped with advanced facilities for effluent testing is yet
another proof of Clariant's concern for environment.
Leather Centre at the premises houses sophisticated and modern machinery for the
physical and chemical testing. It also has expertise for treating leather to
transform the raw material into high quality leather for value added articles of
clothing and upholstery in addition to traditional products. Other facilities include
Foam Finishing and Roller Coating.
Ultra modern Training Centre with an auditorium and audio-visual facilities is
providing training to the students and technicians coming from universities and
industrial units.
Clariant Scientific Centre is a manifestation of Clariant's commitment to support
the national economy by contributing to country's largest foreign exchange earning
textile and leather industries.
Contents
Company Information
Report of the Board of Directors
Notice of Meeting
Auditors' Report to the Members
Balance Sheet
Profit and Loss Account
Cash Flow Statement
Statement of Changes in Equity
Notes to the Accounts
Pattern of Shareholding
Company Information
Chairman		U. Cuntze
Chief Executive &
Managing Director		Farhat A. Mirza
Directors		P. Brandenburg		(Alternate: Dr. S.A.O Shah)
		Albert Hug		(Alternate: S. K. Mehdi)
		Herbert Wohlmann		(Alternate: Dr. S. Mubarik Ali)
		F. Dennefeld
		Samir Ahmed
Secretary		S.K. Mehdi
Bankers		ABN- Amro Bank
		Allied Bank of Pakistan Limited
		ANZ Grindlays Bank plc
		Credit Agricole Indosuez - The Global French Bank
		Citibank N.A.
		Deutsche Bank
		Emirates Bank International PJSC
		Habib Bank Limited
		The Hongkong & Shanghai Banking Corporation Limited
		National Bank of Pakistan
		Standard Chartered Bank
		Societe Generale - The French and International Bank
Auditors		A.F. Ferguson & Co., Chartered Accountants
Registered Office		1-A/1, Sector 20,
		Korangi Industrial Area,
		Korangi, Karachi.
Share Registrars		Ferguson Associates (Pvt.} Ltd.
		State Life Building 1-A
		I.I. Chundrigar Road
		Karachi.
Factories		Petaro Road, Jamshoro
		Korangi Industrial Area, Karachi
		Katarband Road, Thokar Niaz Baig, Lahore
Report of the Board of Directors
The Directors of your company take pleasure in presenting the
Annual Accounts and Report for the operating year of the
Company ended on 31 December 1999.
Board of Directors
As the term of office of the present seven Directors is due to
expire on 29 May 2000, an election of Directors will be held at
the forthcoming annual general Meeting.
Since the last report, Mr. Razi-ur-Rehman Khan, the nominee of
National Investment Trust Limited, was replaced by Mr. Samir
Ahmed. The Board places on record its appreciation for the
valuable contribution made by Mr. Razi-ur-Rehman Khan and
welcomes Mr. Samir Ahmed on the Board.
Business Overview
The Board is pleased to record a growth of 10% in turnover
during the year despite difficult business environment resulting
from the aftermath of economic sanctions imposed on Pakistan
after the nuclear test in May 1998.
Continued low activity in textile processing units and extremely
depressed production in the leather industry forced the
consumption industries in general to maintain lower end of their
production activity. Your Company has, however, been able to
increase its market share by product improvisation and providing
quality service from its Scientific Centre in Karachi and other
satellite laboratories in the country. The pressure on selling
prices nevertheless remained throughout the year on account
of aggressive pricing policy adopted by suppliers from China,
India and other far eastern countries. Sales of Masterbatches
and Cellulose, Ethers and Polymerisates have once again
recorded good growth fully demonstrating the ability to provide
satisfactory products and services to the customers.
The control on working capital has shown positive results. Net
current assets, after deducting trade creditors and other current
liabilities, have increased by only 3% which is a fraction of the
inflation and growth in volume.
Under difficult conditions, the increase in operating profit by
13% over 1998 reflects well on the resilience of your Company.
Financial charges were 5% lower than the previous year mainly
due to the Company's ability to repay the repatriable USD 10
Million offshore loan taken in 1997 for financing the purchase of
assets of Hoechst Specialty Chemicals Business. This became
possible because the State Bank of Pakistan eased restrictions
on the remittance of foreign exchange. During 1998 the roll over
of this loan was forced at exorbitant cost resulting from a major
change in the exchange rate mechanism and high forward cover
cost.
Finance and Accounts
The combined effect of higher sales, control on working capital
and containing costs, the profit after tax at Rs 48.12 Mio, against
Rs 4.87 Mio in 1998, recorded a highly satisfying increase.
Together with the unappropriated profit of Rs 0.23 Mio brought
forward from the previous year, a total of Rs 48.35 Mio is available
for appropriation. The Directors are pleased to propose a cash
dividend of 25%.
The proposed appropriation of profit of the Company is as under:
					(Rs. '000)
Profit for the year after taxation					48,124
Unappropriated profit brought forward					230
					------------------
Profit available for appropriation					48,354
Proposed cash dividend @ 25%					38,992
					------------------
Unappropriated profit carried forward					9,362
					------------------
Pattern of Shareholding
A statement of the pattern of shareholding is shown on Page 30.
Holding Company
The Company is a subsidiary of Clariant International Limited
incorporated in Switzerland.
Auditors
The present auditors, Messrs A.F. Ferguson & Co., retiring on the
date of Annual General Meeting, being eligible, have offered
themselves for reappointment.
Report of the Board of Directors
Future Outlook
Growth in Company's sales and profitability largely depends
upon the business environment, economic policies of the
Government towards industry in general and those sectors in
particular. which directly affect your Company's products,
viz.; textiles, leather, plastics, construction and paints etc.
Government's efforts to bring the economy back on rail and
restore. normalcy in all areas, especially banking and finance,
should bring the desired improvement to allow your Company
to play its role in meeting its customers' demand for quality
products at economical prices and supportive technical back up.
Sale volume of Masterbatches and products belonging to the
Division Cellulose, Ethers & Polymerisates is increasing despite
intense domestic competition and cheaper imports. Your
Company has taken appropriate steps to maintain this growth
momentum by increasing in future the production capacity and
optimizing the product range.
The pressure on selling prices is likely to increase due to the
upward trend in prices of chemicals and intermediates used by
your Company. Efforts will continue to mitigate the effects
of this inflationary phenomenon and remain competitive in
the market through further improvement in productivity,
containment of costs and control on working capital.
The management of your Company wishes the Government success
in its efforts to maintain a conducive and stable business environment,
which will allow the industrial sector to make its due contribution to
the economy and enable your Company to maintain its competitive
edge in the new Millennium.
Acknowledgement
1999 performance is the result of best inputs from all members of the
staff and workers. The Board is pleased to record its recognition of
their excellent effort and looks forward to their continued dedication
and interest for meeting challenges that lie ahead.
					On behalf of the Board
					Farhat A. Mirza
Karachi: 21 April 2000					Managing Director
Notice of Meeting
NOTICE is hereby given that the fourth Annual General
Meeting of Clariant Pakistan Limited will be held at the
Company's Registered Office at 1-A/1, Sector 20, Korangi
Industrial Area, Korangi, Karachi on Monday 29 May
2000 at 10:00 a.m. for the purpose of transacting the
following business:
1. To receive and approve the Audited Accounts for
the year ended 31 December 1999 alongwith the
Directors' Report thereon.
2. To approve 25% cash dividend (Rs 2.50 per share),
as recommended by the directors.
3. To appoint auditors for the year ending 31 December
2000 and to fix their remuneration. M/s. A.F. Ferguson
& Co., Chartered Accountants, the retiring auditors,
offer themselves for reappointment.
4. To elect seven directors in accordance with the Companies
Ordinance, 1984 for a term of three years commencing
from 30 May 2000. The present directors Messrs U. Cuntze,
Farhat A. Mirza, P. Brandenburg, Albert Hug, Herbert
Wohlmann, F. Dennefeld and Samir Ahmed will be retiring
on 29 May, 2000 in pursuance of Section 180 of the
Companies Ordinance, 1984.
5. To transact any other ordinary business with the
permission of the Chair.
					By Order of the Board
					S K Mehdi
Karachi: 21 April 2000					Secretary
NOTES:
1. The share transfer books of the Company will remain closed from 16 May to 29 May 2000 (both days inclusive). Transfers received
in order by the Share Registrars, Ferguson Associates (Private) Limited at State Life Building No. l-A, I. I. Chundrigar Road, Karachi
by 15 May 2000 will be in time to entitle the transferees for the dividend and to attend and vote at the Annual General Meeting.
2. A member entitled to attend and vote at the Annual General Meeting may appoint a proxy to attend and vote instead of him/her. A
proxy need not be a member of the Company. Proxies, in order to be valid must be received at the Registered Office of the Company
not later than 48 hours before the Meeting.
3. In pursuance of Circular No. 1 of 2000 of Securities and Exchange Commission of Pakistan (SECP) dated 26 January 2000, the
beneficial owners of the shares registered in the name of Central Depository Company (CDC) and/or their proxies are required to
produce their original National Identity Card (NIC) or Passport for identification purpose at the time of attending the meeting.
The form of proxy must be submitted with the Company within the stipulated time, duly witnessed by two persons whose names,
addresses and NIC numbers must be mentioned on the form, alongwith attested copies of the NIC or the Passport of the beneficial
owner and the proxy.
Auditors' Report to the Members
We have audited the annexed Balance Sheet of Clariant
Pakistan Limited as at December 31, 1999 and the related
Profit and Loss Account, Cash Flow Statement and the
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 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 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, Cash Flow
Statement and the Statement of Changes in Equity,
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 December 31, 1999
and of the profit, cash flows and the changes in
equity for the year then ended; and
(d) in our opinion no Zakat was deductible at source
under the Zakat and Ushr Ordinance, 1980.
					A.F. FERGUSON & CO.
Karachi: 21 April 2000					Chartered Accountants
Balance Sheet as at December 31, 1999
				Note	1999	1998
					(Rupees '000)
Share Capital and Reserves
Authorised capital
50,000,000 (1998: 50,000,000) ordinary shares of Rs 10 each					500,000	500,000
					------------------	------------------
Issued, subscribed and paid-up capital				3	155,968	135,624
Capital reserves				4	--	20,344
Revenue reserves				5	150,000	150,000
Unappropriated profit					9,362	230
					------------------	------------------
					315,330	306,198
Redeemable Capital				6	574,935	441,602
Current Liabilities
Current portion of redeemable capital				6	434,667	--
Short-term loans				7	590,000	846,250
Short-term running finances utilised under
mark-up arrangements				8	191,667	498,228
Creditors, accrued and other liabilities				9	362,203	453,502
					------------------	------------------
					1,578,537	1,797,980
Contingent Liabilities and Commitments				10
					------------------	------------------
					2,468,802	2,545,780
					==========	==========
Tangible Fixed Assets
Operating assets				11	521,002	564,852
Capital work-in-progress				12	72,845	26,975
					------------------	------------------
					593,847	591,827
Long-term Loans and Advances				13	4,970	4,772
Long-term-Deposits and Prepayments				14	2,604	2,042
Current Assets
Stores and spares				15	31,919	36,783
Stock-in-trade				16	641,411	749,568
Trade debts				17	772,249	763,026
Loans and advances				18	7,185	9,260
Deposits and short-term prepayments				19	20,976	84,173
Taxation recoverable					255,386	186,104
Other receivables				20	45,886	43,880
Cash and bank balances				21	92,369	74,345
					------------------	------------------
					1,867,381	1,947,139
					------------------	------------------
					2,468,802	2,545,780
					==========	==========
The annexed notes form an integral part of these accounts.
	Farhat A Mirza				S K Mehdi
	Chief Executive				Director
Profit and Loss Account
for the year ended December 31, 1999
				Note	1999	1998
					(Rupees '000)
Turnover				22	2,842,517	2,578,754
Discount and commission					216,191	173,978
Excise duty and sales tax					370,260	290,206
					------------------	------------------
					586,451	464,184
					------------------	------------------
Net Sales:					2,256,066	2,114,570
Cost of Sales:
Cost of goods sold				23	1,607,599	1,493,782
Administration and marketing expenses				24	277,011	290,279
					------------------	------------------
					1,884,610	1,784,061
					------------------	------------------
					371,456	330,509
Indent commission -
net of payment of Rs 5.222 million (1998: Rs 5.361 million)					17,383	14,301
					------------------	------------------
Operating profit					388,839	344,810
Other income				25	9,336	6,601
					------------------	------------------
					398,175	351,411
Other charges				27	8,046	5,497
					300,051	315,543
					------------------	------------------
Profit before taxation					98,124	35,868
Taxation-current					50,000	31,000
					------------------