| Dadex Eternit Limited |
|
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|
| Annual
Report 1999 |
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| Board
of Directors |
|
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| KASSIM
DADA, S.K. (Pak.), Off. L.II (Belgium) |
|
| Chairman |
|
|
| ABU
TALIB H.K. DADA |
|
| M.
IRSHAD UDDIN |
|
| MAQBOOL
H. H. RAHIMTOOLA |
|
| ZAHID ZAHEER |
|
| DR.
MAHMOOD AHMED |
|
| PHILIPPE COENS |
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|
| JACQUES
STIEVENART |
|
| A. A. BHOJANI |
|
|
| TARIQ ALl JAFRI |
|
|
| Director
Corporate Affairs |
|
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| Managing
Director |
|
| & Chief Executive |
|
SIKANDER DADA |
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|
|
|
| Director |
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| Technical
& Projects |
ZAIMUDDIN AHMED |
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|
|
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| Company
Secretary |
NAZIR AHMED |
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|
FCMA |
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|
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| Auditors |
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A. F. FERGUSON & CO. |
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|
Chartered Accountants |
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HYDER BHIMJI & CO. |
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|
Chartered Accountants |
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|
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| Bankers |
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AMERICAN EXPRESS BANK
LIMITED |
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|
ANZ GRINDLAYS BANK
LIMITED |
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BANK AL-HABIB LIMITED |
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BANK OF AMERICA |
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|
HABIB BANK LIMITED |
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MUSLIM COMMERCIAL BANK
LIMITED |
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|
OMAN INTERNATIONAL BANK
S.A.O.G. |
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THE HONG KONG &
SHANGHAI BANKING |
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|
|
CORPORATION LIMITED |
|
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| Registered Office |
|
KASSAM MANZIL, RANDAL
ROAD, |
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P.O. BOX NO. 7429, |
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KARACHI, 74400. |
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| NOTICE
OF MEETING |
|
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| Notice
is hereby given that the 40th Annual General Meeting of the shareholders will
be held on |
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| Thursday,
November 18, 1999 at 12:00 noon at Mateen Hall of the Institute of Cost & |
|
| Management
Accountants of Pakistan, Hussain Shah Shaheed Road, Soldier Bazar, Karachi |
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| to
transact the following business: |
|
|
| 1.
To receive and adopt the Report of Directors and Audited Accounts for the
financial year |
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| ended
June 30, 1999. |
|
|
| 2.
To consider the dividend recommended by the Board of Directors. |
|
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| 3.
To appoint Auditors for the year 1999-2000 and fix their remuneration. |
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|
By Order of the Board |
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|
(NAZIR AHMED) |
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| Karachi,
October 12, 1999 |
|
Company Secretary |
|
|
| NOTES: |
|
|
| 1.
The Share Transfer Books will remain closed from October 20, 1999 to October
26, 1999 |
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| (both
days inclusive) in order to update the register of shareholders for the
purpose of |
|
| determining
the names of shareholders for issuing notices of Annual General Meeting, |
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| Annual
Report and Accounts and to determine the names of shareholders for the
entitlement |
|
| of
cash dividend in respect of the year ended June 30, 1999. Transfers received
in order at |
|
| the
Registered Office of the Company by the close of business hours on October
19, 1999 |
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| will
be treated in time for the entitlement of the above. |
|
|
| 2.
A member entitled to attend and vote at the Annual General Meeting is
entitled to appoint |
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| another
member as a proxy to attend and vote in his absence. |
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|
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| 3.
The instrument appointing a proxy must be received at the Registered Office
of the |
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| Company,
not later than forty-eight hours before the time of the meeting. |
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| 4.
Account holders and sub-account holders holding book entry securities of the
Company in |
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| Central
Depository Company of Pakistan Limited, who wish to attend the Annual General |
|
| Meeting,
are requested to bring original National Identity Card with copy thereof duly |
|
| attested
by their Bankers for identification purpose. |
|
|
| 5.
Members who are interested to claim exemption from compulsory deduction of
Zakat from |
|
| payments
against dividends are advised to file their declaration on Form CZ-50 or an |
|
| attested
true copy thereof with the Registered Office of the Company latest by
November 8, |
|
| 1999
to enable the Company to note their instructions for non-deduction of Zakat.
A draft of |
|
| declaration
on Form CZ-50 is being sent with the Annual Report. |
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| DIRECTORS'
REPORT |
|
|
| The Shareholders |
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| Dadex Eternit Ltd. |
|
|
| Gentlemen |
|
|
| Your
directors have pleasure in placing before you the 40th Annual Report with
audited accounts |
|
| for
the financial year ended June 30, 1999 as follows: |
|
|
|
|
(Rupees in '000) |
|
|
| Net
profit before taxation |
|
67,168 |
|
| Less'
Provision for taxation |
|
7,394 |
|
|
------------------ |
|
| Net
profit after taxation |
|
|
59,774 |
|
| Add:
Unappropriated profit brought forward |
|
201 |
|
|
|
|
------------------ |
|
| Profit
available for appropriation |
|
|
59,975 |
|
| Your
directors have decided to appropriate as under: |
|
| Transfer
to Revenue Reserves - General |
|
10,000 |
|
| Dividend
Equalisation |
|
|
2,000 |
|
|
|
|
| Transfer
to Capital Reserves Fixed Assets Replacement |
|
3,000 |
|
| Proposed
final dividend Rs. 4.00 per share (40%) |
|
43,056 |
|
|
|
|
------------------ |
|
|
|
|
58,056 |
|
|
|
|
------------------ |
|
| Unappropriated
profit carried forward |
|
1,919 |
|
|
|
|
========== |
|
|
| Estimated
break up value per share is Rs. 37.12 |
|
|
| The
pattern of shareholding is shown on page 30 of this report. |
|
|
| M/s.
A. F. Ferguson & Co., and M/s. Hyder Bhimji & Co., auditors of the
company retire and offer |
|
| their
services for the ensuing year. |
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|
|
|
On behalf of the Board |
|
|
|
|
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|
|
|
KASSlM DADA |
|
| Karachi,
September 28, 1 999 |
|
Chairman |
|
|
|
| CHAIRMAN'S
REVIEW |
|
|
| I
have pleasure in presenting you the report for 1998-99, which happens to be
the 40th year of the |
|
| company's
operations. |
|
|
| From
operational point of view, the year has been extremely difficult for the
company. Economic |
|
| downturn,
which was compounded as a result of international sanctions, affected the
operations |
|
| negatively.
Development schemes and construction activities were held-up affecting sales
volumes. |
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| However,
due to concerted efforts and timely planning, the company was successful in
maintaining |
|
| the
same level of sales as of the previous year. |
|
|
| Profitability
was hit by many factors including heavy cost escalation resulting from
devaluation of |
|
| the
rupee, general inflation, revision of gas and electricity tariffs, price
increases in cement, wage |
|
| increases.
Transportation cost also increased due to price increase in petrol and spare
parts. |
|
| Although
your Company continued it's efforts in cost saving and productivity
improvement but these |
|
| measures
were not sufficient to bridge the gap created by escalation. On the other
hand, the prices |
|
| of
our products could not be increased due to recession and the erosion in the
buying power of the |
|
| customers.
This has resulted in a fall in profitability for the year. We do not expect
any radical |
|
| change
in the near future in the present economic situation. |
|
|
| Your
Company is continuing to explore new markets and products. Lately, a new
product, Polydex, |
|
| has
been launched for hot and cold water applications. We are confident that with
the passage of |
|
| time,
it would generate a sizeable volume of business. |
|
|
| It
is gratifying to note that your Company has achieved ISO 9002 certification
for its Plastic |
|
| (PVC/PE)
Pipe Systems and Rubber Rings. We intend to extend the scope of this activity
to other |
|
| divisions as well. |
|
|
| The
company has prepared a contingency plan to face any potential problem that
may arise due to |
|
| the
millennium bug. All software packages that were not year 2000 compliant, have
been modified. All |
|
| new
hardware, equipment and machinery that are date function sensitive, are
purchased after taking |
|
| compliance
certificate from the manufacturers. The company is confident that it would
not face any |
|
| serious problems. |
|
|
| Your
Company attaches great importance to training of employees at all levels.
Training programs are |
|
| organised
which encompass the workers to the highest level, which is contributing skill
improvement |
|
| and
productivity. Industrial relations remained cordial and satisfactory
throughout the year. The |
|
| Company's
corporate focus on customer satisfaction and productivity has clearly
generated greater |
|
| enthusiasm
and efforts of all employees to improve efficiency. |
|
|
| I
must convey my appreciation to the employees for their untiring efforts,
which has helped the |
|
| management
to maintain a fairly steady course by helping to keep the company out of
troubled |
|
| waters.
I am confident that they would continue to make efforts in the right
direction, in these difficult |
|
| times
ahead, which would not only benefit the employees themselves but as well as
the |
|
| shareholders,
the company and the country. |
|
|
|
|
|
KASSIM DADA |
|
| Karachi,
September 28, 1999 |
|
Chairman |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed Balance Sheet of Dadex Eternit
Limited as at June 30, 1999 |
|
| and
the related Profit and Loss Account and 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 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 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 and
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. |
|
HYDER BHIMJI & CO. |
|
|
Chartered Accountants |
|
Chartered Accountants |
|
|
| Karachi,
October 04, 1999 |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1999 |
|
|
|
Note |
1999 |
1998 |
|
|
|
|
|
(Rupees
'000) |
|
|
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
|
|
| Authorised capital |
|
3 |
200,000 |
200,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up capital |
|
4 |
107,640 |
107,640 |
|
| Reserves |
|
|
|
| Capital |
|
5 |
100,000 |
97,000 |
|
| Revenue |
|
5 |
190,000 |
178,000 |
|
| Unappropriated
profit |
|
|
1,919 |
201 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
291,919 |
275,201 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
399,559 |
382,841 |
|
| DEFERRED
LIABILITY - TAXATION |
|
13 |
-- |
2,680 |
|
|
|
|
|
|
|
| CURRENT
LIABILITIES AND PROVISIONS |
|
|
| Current
portion of liabilities against |
|
|
|
| assets
subject to finance leases |
|
|
-- |
10,278 |
|
| Short-term finances |
|
6 |
83,555 |
86,582 |
|
| Creditors,
accrued and other liabilities |
|
7 |
102,077 |
93,509 |
|
| Taxation |
|
|
10,726 |
28,925 |
|
| Proposed dividend |
|
|
43,056 |
40,365 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
239,414 |
259,659 |
|
| COMMITMENTS |
|
8 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
638,973 |
645,180 |
|
|
|
|
|
========== |
========== |
|
|
|
|
| TANGIBLE
FIXED ASSETS |
|
|
|
|
|
|
| Operating assets |
|
9 |
55,006 |
61,452 |
|
| Capital
work-in-progress |
|
10 |
40,726 |
15,838 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
95,732 |
77,290 |
|
|
|
|
|
|
| LONG-TERM
LOANS AND ADVANCES |
|
11 |
766 |
779 |
|
| LONG-TERM
DEPOSITS |
|
12 |
5,299 |
3,830 |
|
| DEFERRED
TAXATION |
|
13 |
5,151 |
-- |
|
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
|
|
|
|
|
| Stores and spares |
|
14 |
66,708 |
65,134 |
|
| Stock-in-trade |
|
15 |
303,693 |
316,237 |
|
| Trade debts |
|
16 |
57,065 |
48,638 |
|
| Loans
and advances |
|
17 |
14,124 |
6,443 |
|
| Trade
deposits and short-term prepayments |
|
18 |
11,640 |
19,435 |
|
| Other receivables |
|
19 |
2,644 |
3,461 |
|
| Investments |
|
20 |
67,786 |
47,964 |
|
| Cash
and bank balances |
|
21 |
8,365 |
55,969 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
532,025 |
563,281 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
638,973 |
645,180 |
|
|
|
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
SIKANDER DADA |
|
M. IRSHAD UDDIN |
|
|
Chief Executive |
|
Director |
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
Note |
1999 |
1998 |
|
|
|
|
|
(Rupees
'000) |
|
|
|
|
| Sales |
|
|
581,743 |
587,365 |
|
| Cost
of goods s old |
|
22 |
413,499 |
404,491 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
168,244 |
182,874 |
|
| Administration,
selling and distribution expenses |
|
23 |
84,588 |
81,885 |
|
|
|
|
------------------ |
------------------ |
|
| Operating profit |
|
|
83,656 |
100,989 |
|
| Other income |
|
24 |
11,371 |
22,559 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
95,027 |
123,548 |
|
|
|
|
------------------ |
------------------ |
|
| Financial charges |
|
25 |
22,270 |
30,351 |
|
| Other charges |
|
26 |
5,589 |
8,055 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
27,859 |
38,406 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
before taxation |
|
|
67,168 |
85,142 |
|
| Taxation |
|
27 |
7,394 |
19,262 |
|
|
|
|
------------------ |
------------------ |
|
| Profit after taxation |
|
|
59,774 |
65,880 |
|
| Unappropriated
profit brought forward |
|
201 |
10,686 |
|
|
|
------------------ |
------------------ |
|
| Profit
available for appropriation |
|
59,975 |
76,566 |
|
| Appropriations: |
|
|
|
|
| Transfer
to Revenue Reserves - General |
|
10,000 |
36,000 |
|
|
-Dividend Equalisation |
|
2,000 |
-- |
|
|
|
|
|
| Transfer
to Capital Reserves |
- Fixed Assets Replacement |
|
3,000 |
-- |
|
|
|
|
| Proposed
final dividend Rs. 4.00 (1998: Rs 3.75) per share |
|
43,056 |
40,365 |
|
|
|
------------------ |
------------------ |
|
|
|
58,056 |
76,365 |
|
|
|
------------------ |
------------------ |
|
| Unappropriated
profit carried forward |
|
1,919 |
201 |
|
|
|
========== |
========== |
|
|
|
|
|
|
|
Rupees |
Rupees |
|
| Earnings per share |
|
28 |
5.55 |
6.12 |
|
|
|
|
========== |
========== |
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
SlKANDER DADA |
|
M. IRSHAD UDDIN |
|
|
Chief Executive |
|
Director |
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
Note |
1999 |
1998 |
|
|
|
|
|
(Rupees '000) |
|
|
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
|
|
|
| Cash
generated from operations |
|
33 |
100,176 |
49,971 |
|
| Interest
/ mark-up paid |
|
|
(20,801) |
(28,767) |
|
| Taxes paid |
|
|
(33,424) |
(41,270) |
|
| Long-term
loans and advances (net) |
|
|
13 |
276 |
|
| Long-term
deposits (net) |
|
|
(1,469) |
4,400 |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash inflow / (outflow) from operating activities |
|
|
44,495 |
(15,390) |
|
|
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
| Fixed
capital expenditure |
|
|
(33,911) |
(20,910) |
|
| Investments |
|
|
(19,822) |
24,808 |
|
| Proceeds
from disposal of fixed assets |
|
|
1,094 |
2,007 |
|
| Interest received |
|
|
8,735 |
14,514 |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash (outflow) /inflow from investing activities |
|
|
(43,904) |
20,419 |
|
|
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
| Finance
lease repayments |
|
|
(5,247) |
(12,863) |
|
| Short-term
borrowings |
|
|
60,600 |
-- |
|
| Dividends paid |
|
|
(39,921) |
(39,482) |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash inflow /(outflow) from financing activities |
|
|
15,432 |
(52,345) |
|
|
|
|
------------------ |
------------------ |
|
| Net
increase / (decrease) in cash and cash equivalents |
|
|
16,023 |
(47,316) |
|
| Cash
and cash equivalents at beginning of the year |
|
|
(30,613) |
16,703 |
|
|
|
|
------------------ |
------------------ |
|
| Cash
and cash equivalents at end of the year |
|
34 |
(14,590) |
(30,613) |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
SlKANDER DADA |
|
M. IRSHAD UDDIN |
|
|
Chief Executive |
|
Director |
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
| 1.
THE COMPANY AND ITS OPERATIONS |
|
|
| The
company is incorporated in Pakistan and is listed on the Karachi Stock
Exchange. it is |
|
| engaged
in manufacture and sale of construction materials namely fibre cement sheets,
nalidar |
|
| beams,
fibre cement and PVC pressure pipes, building pipes, polyethylene pipes and
other |
|
| allied
products. The company also trades in imported fittings and accessories and
other building |
|
| products. |
|
|
| 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
Accounting convention |
|
|
|
|
|
| These
accounts have been prepared under the historical cost convention except that
certain |
|
| exchange
elements referred to in note 2.7 have been incorporated in the cost of the
relevant |
|
| assets. |
|
|
|
|
|
|
| 2.2
Staff retirement benefit |
|
|
|
|
|
| The
company operates an approved contributory provident fund for all permanent
employees. |
|
|
|
| 2.3 Taxation |
|
|
| Provision
for current taxation is based on taxable income after taking into account tax
credits |
|
| available, if any. |
|
|
|
|
|
| The
company accounts for deferred taxation on all material timing differences
using the liability |
|
| method. |
|
|
|
| 2.4
Tangible fixed assets and depreciation |
|
|
|
| a) Owned |
|
|
| Operating
assets except freehold land are stated at cost less accumulated depreciation. |
|
| Freehold
land and capital work-in-progress are stated at cost. Cost in relation to
certain fixed |
|
| assets
signifies historical cost and exchange differences capitalised as referred to
in note 2.7. |
|
|
| Depreciation
on operating assets except plant and machinery and data processing equipment |
|
| (included
in office and factory equipment) is calculated at varying rates used for
income tax |
|
| purposes
and is charged to income applying the reducing balance method. Depreciation
on |
|
| plant
and machinery and data processing equipment is calculated using the
straight-line method |
|
| based
on estimated useful lives. Depreciable cost for plant and machinery is
determined after |
|
| deducting
the residual values. |
|
|
| Cost
of leasehold land is amortised equally over the period of lease. |
|
|
| Depreciation
on additions to assets during a year is charged for the whole year while no |
|
| depreciation
is charged on fixed assets disposed of during the year. |
|
|
| Gains
and losses on disposal of assets are taken to profit and loss account. |
|
|
| Maintenance
and normal repairs and replacements are charged to income as and when |
|
| incurred.
Major renewals and improvements are capitalise |
