| Cyanamid (Pakistan) Limited |
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| Annual
Report 1999 |
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| Contents |
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| CORPORATE
PROFILE |
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
| REPORT
OF THE DIRECTORS |
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| BALANCE
SHEET |
|
| PROFIT
AND LOSS ACCOUNT |
|
| CASH
FLOW STATEMENT |
|
| NOTES
TO THE ACCOUNTS |
|
| 10
YEARS HISTORY |
|
| PATTERN
OF SHAREHOLDING |
|
|
|
| Corporate
Profile |
|
|
| BOARD
OF DIRECTORS |
|
|
| U.
Mustafa Khan |
|
Chief Executive |
|
| Khwaja
Bakhtiar Ahmed |
|
| Bernard Poussot |
|
| John R. Stafford |
|
(Alternate: S. Anwarul
Haque) |
|
| Marco
A. Fonseca |
|
(Alternate: Nadeem
Tufail) |
|
| James
Robertson |
|
(Alternate: Farida A.
Latif) |
|
| Abbas Yaghi |
|
| Akhtar
Mahmood |
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| COMPANY
SECRETARY |
|
| Khwaja
Bakhtiar Ahmed |
|
|
| BANKERS |
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| Citibank N. A. |
|
| Standard
Chartered Bank |
|
| ABN-Amro
Bank |
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| ANZ
Grindlays Bank |
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| Bank
of America NT&SA |
|
| Habib
Bank Limited |
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| Muslim
Commercial Bank Limited |
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| American
Express Bank Limited |
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| AUDITORS |
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| Sidat
Hyder Qamar & Co. |
|
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| LEGAL
ADVISORS |
|
| Orr.
Digham & Company |
|
| Syed
Qamaruddin Hassan |
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| Legal
Advisor Inc. |
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| SHARE
REGISTRAR |
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| THK
Associates (Pvt) Ltd. |
|
| Ground Floor, |
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| Shaikh
Sultan Trust Building No. 2, |
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| Beaumont
Road, Karachi. |
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| Ph.
# 5689021, 5686658 |
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| HEAD
OFFICE / REGISTERED OFFICE |
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| S-33,
Hawkesbay Road, S.I.T.E., |
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| G.P.O.
Box No. 167, Karachi. |
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| Telephone:
2567411-34 & 111-777-333 |
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| Fax:
92-21-2564428 |
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| Notice
of annual general meeting |
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| NOTICE
is hereby given that the Fifty First Annual General Meeting of Cyanamid
(Pakistan) Limited will |
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| be
held on Friday, May 26, 2000, at 10.00 a.m. at the Registered Office of the
Company, S-33, Hawkes Bay |
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| Road,
SITE, Karachi, to transact the following business · |
|
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| 1.
To confirm the minutes of the last Annual General Meeting. |
|
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| 2.
To receive and adopt the Balance Sheet and Profit & Loss Account for the
year ended |
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| November
30, 1999 together with the Directors' and Auditors' report thereon. |
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| 3.
To appoint Auditors for the year ending November 30, 2000 and to authorize
Board of Directors to fix |
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| their
remuneration. |
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|
By order of the Board |
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|
KHWAJA BAKHTIAR AHMED |
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| Karachi'
May 01, 2000 |
|
Director/Company
Secretary |
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| NOTES |
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| 1.
The Share Transfer Books of the Company will remain closed from May 19, 2000
to May 26, 2000 (both |
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| days inclusive) |
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| 2.
A member entitled to attend and vote at the above meeting may appoint a Proxy
to attend and vote |
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| on
his behalf. A proxy need not be a member of the company. The complete Proxy
Form must be |
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| deposited
at the Registered Office of the Company not less than 48 hours before the
time for holding |
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| the meeting. |
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| 3.
Shareholders whose shares are deposited with Central Depository Company (CDC)
are requested to |
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| bring
their Original National Identity Card and account number in CDC for
verification. |
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|
|
| Report
of the directors |
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| |
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| Your
Directors present their Annual Report together with the Audited Accounts for
the year ended November |
|
| 30, 1999. |
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|
| BUSINESS
REVIEW |
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|
| Sales |
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| Net
sales of the Legal Entity for the under review was Rs. 2,286.0 million. This
reflects a growth of 13.9% |
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| over
the same period last year. The segment-wise review is given below :- |
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| Pharmaceuticals |
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| Domestic |
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| Despite
the deteriorating economic and trading environment that persisted during the
year and continued |
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| freeze
of selling prices by the Government, your Company maintained a strong growth
in Pharma |
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| Business.
Net sales of domestic market at Rs. 1,604.6 million have shown 26.1% growth
over the |
|
| same
period of last year. This healthy growth includes the following
rationalization measures taken |
|
| as
were also mentioned in our half yearly report. |
|
|
| --
Distribution Restructuring. |
|
|
| --
Product portfolio rationalization. |
|
|
| --
Increased focus on existing products resulted in improved volume growth. |
|
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| --
Reorganization of sales force. |
|
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| Export |
|
| . |
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| Exports
at Rs. 227.9 million recorded tremendous growth of 159.4% over the same
period last year |
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| owing
to significant growth of export business with Russia, South Africa and
Philippines. We expect |
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| that
the same trend will continue in the year 2000. |
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| Overall
growth of pharmaceutical sales was Rs. 472.2 million i.e. 34.7% over the same
period last |
|
| year. |
|
|
| Agricultural
Products |
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| The
overall industry business shrank from Rs. 10.5 billion in 1998 to Rs. 9.2
billion in 1999, a decrease |
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| of
12.4%. Many multinationals lost 15% to 25% of their sales. In the last three
years generics have |
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| increased
their market share from 17% to 40% because the farmer is increasingly price
sensitive now |
|
| and
prefers to use cheaper non-branded pesticides. |
|
|
| Net
sales at Rs. 453.5 million are lower by 30.0% from last year. This
significant decrease is due |
|
| to
the following factors. |
|
|
| --
Pest infestation has been the lowest in last 6 years. |
|
| --
Deflationary prices for pesticides due to low pest infestation. |
|
| --
Volume decreased by 26% on account of heavy sales returns from the prior
years' sales. |
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| Profits |
|
|
| The
segment-wise comments are as under :- |
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|
| Pharmaceutical |
|
|
| Gross
profit at Rs. 471.8 million is significantly higher by 62.3% against the same
period last year. |
|
| This
was made possible due to increased turnover and reduction in Cost of Goods
Sold which is lower |
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| by
4.3% of net sales from last year. Inspite of consistent rupee depreciation
and general inflation we |
|
| have
restricted our cost at a lower level and established significant savings in
our Cost of Goods in |
|
| terms
of purchase price by seeking out more economical sourcing of imported
materials, control over |
|
| inventories,
discontinuation of non-profitable products, reduction in headcount and
rationalization of |
|
| manufacturing
operations. |
|
|
| Administrative
and Selling expenses are Rs. 296.6 million i.e. lower by 7.8% and 7.5% of net
sales |
|
| over
last year despite increasing trend in utilities, tariff, transportation and
fuel prices. Operating profit |
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| of
Rs. 175.2 million in comparison to last year's operating loss of Rs. 31.1
million is mainly due to |
|
| above
measures and strict control over expenses without compromising on the quality
of good |
|
| manufacturing
practices and principles of safety. |
|
|
| Agricultural
Products |
|
|
| Gross
profit at Rs. 24.8 million is lower by 81.2% against the same period last
year. The significant |
|
| decrease
in G.P. is due to low turnover due to lowest pest infestation, reduced
selling prices, higher |
|
| discounts
and increased Cost of Goods. The increase in cost primarily due to rupee
depreciation and |
|
| general inflation. |
|
|
| Administrative
and selling expenses are Rs. 171.0 million higher by 39.4% and 18.8% of net
sales |
|
| over
last year mainly on account of sales promotion of Stomp, hiring of more
Territory Sales Officers |
|
| for
1999 season, transportation for sales returns and depreciation charged on
assets deployed in |
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| Agricenters.
Operating loss at Rs. 146.2 million in comparison to last year's profit of
Rs. 9.3 million |
|
| has
significantly been the result of above factors. |
|
|
| Overall
Company's Loss Before Taxation is Rs. 84.9 million as against loss of Rs.
116.6 million last year. |
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| Despite
generating an excellent operating profit in Pharma Division the total results
of the Company could |
|
| not
be converted into profit because of heavy losses in the Agriculture Division. |
|
|
| The
Directors feel that the results would not have been that bad if various
adverse factors had not affected |
|
| the
operations of Agriculture Business. |
|
|
| The
Company introduced one line extension i.e. Premarin VC (Conjugated Estrogens)
a Harmone Replacement |
|
| Therapy
for females. However your Company is determined to launch more new products
and line extensions |
|
| in
years 2000 and 2001. |
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|
| DIRECTORS |
|
|
| During
the year Messrs M. Mustafa Khan, Mr. Abbas Yaghi, James Robertson and Akhtar
Mahmood (NIT) |
|
| joined
the Board. Messrs Roger Kimmett, Luciano Giovanni DePortu, Frederick Paul
Theobald III and Samir |
|
| Ahmed
(NIT) left the Board. The Board of Directors wish to place on record
appreciation of services rendered |
|
| by
the former Directors and welcome the new Directors. Further the Board also
welcomes Mr. M. Mustafa |
|
| Khan
as new Chief Executive of the Company. |
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|
| PROSPECTS |
|
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| The
Pharmaceutical industry is one of the most strictly regulated industries in
the country, which has long |
|
| suffered
due to strict price controls. No price increase has been forthcoming since
November 1996, Future |
|
| prospects
are greatly dependent on the government's policy towards the pharmaceutical
industry specially |
|
| pricing.
Your Company may come into a difficult situation to maintain viability of the
operation unless a business |
|
| friendly,
transparent and consistent basis of pricing adjustment to compensate increase
in costs is decided |
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| by
the government immediately. |
|
|
| On
our part Company's management is committed to a long-term growth strategy
which is reflected by taking |
|
| the
above stated measures. In addition, reorganization of the Company's
distribution system is in process, |
|
|
| switching
over from a National Distributor to Regional Distributors effective March
2000 which will help in |
|
| increasing
our turnover by increasing focus in respective areas. The Company is
currently engaged in |
|
| maintaining
lower cost and expenses by way of rationalization of plant and
reorganization/restructuring in |
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| all
areas to further strengthen the profitability and making the business viable. |
|
|
| SUBSEQUENT
EVENTS |
|
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| No
material changes or commitment affecting financial position of the Company
have taken place between |
|
| the
end of the financial year and the date of this report. |
|
|
| AUDITORS |
|
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| The
present Auditors, M/s Sidat Hyder Qamar & Co. retire and being eligible
offer themselves for reappointment. |
|
| YEAR
2000 READINESS |
|
|
| Year
2000 presented a very challenging scenario to the business world. In effect,
it was based on the inability |
|
| of
most computer programs to recognize "00" as the year 2000. Our goal
was to avoid, or at least minimize |
|
| as
much as possible, any disruptions as we enter the next millennium. Stated
simply, the Year 2000 effort |
|
| has
been one of the top priorities for the entire company. |
|
|
| Our
parent company established a Program Management Office, the sole purpose of
which was to manage |
|
| and
direct the total company effort on a global basis. We addressed the Year 2000
challenge, successfully |
|
| rolled
over into Year 2000 and continue to provide the same high-level customer
service that was expected. |
|
|
| EMPLOYEES |
|
|
| The
Directors are pleased to acknowledge that relations .between management and
workers remained cordial |
|
| throughout
the year. |
|
|
| The
Directors wish to thank all employees for their hard work and devotion to
duty and expect them to continue |
|
| in
the same spirit in future. |
|
|
| PARENT
COMPANIES |
|
|
| American
Home Products Corporation incorporated in the State of Delaware, U.S.A. holds
576,470 (40.55%) |
|
| shares
and American Cyanamid Company, New Jersey, U.S.A. (100% owned company of
American Home |
|
| Products
Corporation) holds 448,560 (31.55%) shares thus the total holding of both the
companies is 72.10%. |
|
|
| PATTERN
OF SHAREHOLDING |
|
|
| A
statement of Pattern of Shareholding of the Company as at November 30, 1999
is shown on page 30. |
|
| Earning
per share for the year is negative Rs. 79.53 (1998:Rs.101.74 negative). |
|
|
|
By Order of the Board |
|
|
| Karachi: |
|
M. Mustafa Khan |
|
Khwaja Bakhtiar Ahmed |
|
| April 18, 2000 |
|
Chief Executive |
|
Director |
|
|
|
|
| Auditors'
report to the members |
|
|
|
| We
have audited the annexed balance sheet of Cyanamid (Pakistan) Limited as at
30 November 1999 |
|
| and
the related profit and loss account and the statement of changes in financial
position, together with |
|
| the
notes forming pad 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 and the statement of changes in
financial position, 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 30 November 1999 and of the loss and the changes in financial position
for the year |
|
| then ended; and |
|
|
| d)
in our opinion no zakat was, deductible at source under the Zakat and Ushr
Ordinance, 1980 |
|
|
| Sidat
Hyder Qamar & Co. |
|
| Chartered
Accountants |
|
|
| Karachi:
April 26, 2000 |
|
|
|
| BALANCE
SHEET AS AT 30 NOVEMBER 1999 |
|
|
|
Note |
1999 |
1998 |
|
|
|
(Rupees
'000) |
|
|
|
|
| Fixed
Assets - Tangible |
|
3 |
157,617 |
170,373 |
|
| Capital
work-in-progress |
|
-- |
37 |
|
| Goodwill |
|
4 |
6,701 |
8,376 |
|
| Long
term loans, deposits and prepayments |
|
5 |
20,967 |
15,767 |
|
|
| CURRENT
ASSETS |
|
| Stores,
spares and loose tools |
|
6 |
39,985 |
41,405 |
|
| Stock-in-trade |
|
7 |
945,046 |
742,425 |
|
| Trade debts |
|
8 |
325,622 |
374,167 |
|
| Loans,
advances, deposits, prepayments and |
|
|
|
| other
receivables |
|
9 |
28,744 |
54,685 |
|
| Taxation - net |
|
10 |
307,959 |
206,916 |
|
| Cash
and bank balances |
|
11 |
10,218 |
2,601 |
|
|
---------- |
---------- |
|
|
1,657,574 |
1,422,199 |
|
|
| LESS:
CURRENT LIABILITIES |
|
| Current
maturity of liability against assets |
|
| subject
to finance leases |
|
17 |
7,942 |
8,226 |
|
| Short
term loans- unsecured |
|
12 |
712,040 |
-- |
|
| Running
finance under mark-up arrangements- secured |
13 |
72,915 |
592,846 |
|
| Creditors,
accrued and other liabilities |
|
14 |
717,559 |
561,156 |
|
| Unclaimed
dividend |
|
541 |
10,871 |
|
|
---------- |
---------- |
|
|
1,510,997 |
1,173,099 |
|
|
---------- |
---------- |
|
| NET
CURRENT ASSETS |
|
146,577 |
249,100 |
|
|
|
---------- |
---------- |
|
|
|
331,862 |
443,653 |
|
|
|
========== |
========== |
|
| REPRESENTED
BY |
|
|
| Share capital |
|
15 |
142,161 |
142,161 |
|
| Reserves |
|
16 |
382,147 |
382,147 |
|
| Accumulated
loss |
|
16 |
(256,173) |
(143,109) |
|
|
|
---------- |
---------- |
|
|
|
268,135 |
381,199 |
|
| Liability
against assets subject to finance leases |
|
17 |
15,082 |
17,238 |
|
| Deferred
liability- Staff gratuity and pension |
|
|
48,645 |
45,216 |
|
|
|
|
|
| CONTINGENCIES
AND COMMITMENTS |
|
18 |
-- |
-- |
|
|
|
---------- |
---------- |
|
|
331,862 |
443,653 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
M. Mustafa Khan |
|
Khwaja Bakhtiar Ahmed |
|
|
Chief Executive |
|
Director |
|
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR ENDED 30 NOVEMBER 1999 |
|
|
|
Note |
1999 |
1998 |
|
|
|
(Rupees
'000) |
|
|
| Sales-net |
|
19 |
2,286,040 |
2,007,853 |
|
| Cost
of goods sold |
|
20 |
1,789,484 |
1,585,125 |
|
|
|
---------- |
---------- |
|
| Gross profit |
|
|
496,556 |
422,728 |
|
| Administrative
and selling expenses |
|
21 |
467,618 |
444,564 |
|
|
|
---------- |
---------- |
|
| Operating
profit/(loss) |
|
|
28,938 |
(21,836) |
|
| Other income |
|
22 |
10,610 |
5,423 |
|
|
|
---------- |
---------- |
|
|
|
39,548 |
(16,413) |
|
| Financial
charges |
|
23 |
122,814 |
98,478 |
|
| Amortization
of goodwill |
|
4 |
1,675 |
1,675 |
|
|
---------- |
---------- |
|
|
124,489 |
100,153 |
|
|
---------- |
---------- |
|
| Loss
before taxation |
|
(84,941) |
(116,566) |
|
| Taxation |
|
| Current |
|
20,670 |
23,265 |
|
| Prior years' |
|
7,453 |
8,156 |
|
| Deferred |
|
-- |
(3,356) |
|
|
---------- |
---------- |
|
|
28,123 |
28,065 |
|
|
---------- |
---------- |
|
| Loss
after taxation |
|
(113,064) |
(144,631) |
|
| Accumulated
loss brought forward |
|
(143,109) |
1,522 |
|
|
---------- |
---------- |
|
| Accumulated
loss carried forward |
|
(256,173) |
(143,109) |
|
|
========== |
========== |
|
|
Rupees |
Rupees |
|
| Loss
per share - Basic and diluted |
|
24 |
79.532 |
101.738 |
|
|
========== |
========== |
|
|
|
|
| The
annexed .notes form an integral part of these accounts. |
|
|
|
M. Mustafa Khan |
|
Khwaja Bakhtiar Ahmed |
|
|
Chief Executive |
|
Director |
|
|
|
|
|
| CASH
FLOW STATEMENT FOR THE YEAR ENDED 30 NOVEMBER 1999 |
|
|
|
Note |
1999 |
1998 |
|
|
|
(Rupees
'000) |
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| Cash
generated from / (used in) operations |
|
29 |
55,870 |
167,482 |
|
|
|
|
| Interest
and mark-up paid |
|
|
(43,493) |
(93,158) |
|
| income tax paid |
|
|
(129,166) |
(129,047) |
|
| Lease
financial charges paid |
|
|
(3,557) |
(4,486) |
|
| Payment
of gratuity and pension |
|
|
(16,069) |
(3,841) |
|
| Increase
in Long-term loans, deposits and prepayments |
|
(5,200) |
(3,059) |
|
|
|
----------- |
----------- |
|
|
|
(197,485 |
(233,591) |
|
| Net
cash outflow from operating activities |
|
|
(141,615) |
(66,109) |
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
|
| Fixed
capital expenditure |
|
|
(35,062) |
(41,141) |
|
| Sale
proceeds of fixed assets |
|
|
4,955 |
5,953 |
|
|
|
|
| Net
cash outflow from investing activities |
|
|
(30,107) |
(35,188) |
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
|
| Dividend paid |
|
|
(10,330) |
(3,713) |
|
| Increase/(Decrease)
in shod term loans |
|
|
712,040 |
(419,070) |
|
| Increase/(Decrease)
in liabilities against assets |
|
|
|
| subject
to finance leases |
|
|
(2,440) |
11,015 |
|
|
|
----------- |
----------- |
|
|
|
699,270 |
(411,768) |
|
|
|
----------- |
----------- |
|
|
|
527,548 |
(513,065) |
|
|
|
(590,245) |
(77,180) |
|
|
|
----------- |
----------- |
|
|
30 |
(62,697) |
(590,245) |
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
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|
M. Mustafa Khan |
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Khwaja Bakhtiar Ahmed |
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|
Chief Executive |
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Director |
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| NOTES
TO THE ACCOUNTS FOR THE YEAR ENDED 30 NOVEMBER 1999 |
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| 1.
STATUS AND NATURE OF BUSINESS |
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| Cyanamid
(Pakistan) Limited is a public limited company quoted on the Karachi and
Lahore Stock |
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| Exchanges.
The current business activities of the Company consist of the manufacture and
marketing |
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| of
research based ethical specialties and other pharmaceutical and agro -
chemical products. |
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| 2.
SIGNIFICANT ACCOUNTING POLICIES |
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| 2.1
Accounting convention and basis of preparation |
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| These
accounts have been prepared under the historical cost convention and in
accordance with |
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| the
International Accounting Standards as applicable in Pakistan. |
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| 2.2
Fixed assets, capital work in progress and depreciation |
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| (a) Owned |
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| Fixed
assets are stated at cost less accumulated depreciation except for freehold
land, |
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| leasehold
land and capital work in progress which are stated at cost. |
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| Depreciation
is charged to income applying the straight line method. Due to reassessment |
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| of
the remaining useful lives of its operating assets in the previous year, the
Company |
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| considered
the net book values of these assets as at 01 December 1997 to be written |
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| off
over the remaining useful lives of the assets under the straight line method.
Full year's |
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| depreciation
is charged on additions during the year while no depreciation is charged for |
|
| the
assets disposed off during the year. |
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| Maintenance
and normal repairs are charged to income as and when incurred. Gain or |
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| loss
on sale or retirement of fixed assets is included in income currently. |
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|
