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Fecto Cement Limited
Annual Report 1999
CONTENTS
Corporate Information
Notice of Meeting
Directors' Report
Pattern of Shareholding
Auditors' Report
Balance Sheet
Profit & Loss Account
Statement of Changes in Financial Position
Notes to the Accounts
CORPORATE INFORMATION
BOARD OF DIRECTORS
CHAIRMAN
Mr. Mohammed Asad Fecto
CHIEF EXECUTIVE
Mr. Mohammed Yasin Fecto
DIRECTORS
Mr. Ghulam Mohammed A. Fecto
Mr. Mohammed Ilyas Khan
Mr. Muhammad Nasim Khan
Mr. Mohammad Umer Memon
Mr. Safdar Abbas Morawala
Mr. A. Rauf Chandio
Mr. Afaq Jamal Hussain
Mr. Abdul Jaleel Shaikh
SECRETARY	Mr. Abdul Aleem, FCA
AUDITORS	Taseer Hadi Khalid & Co.
	Chartered Accountants
	Rahim Iqbal Rafiq & Co.
	Chartered Accountants
LEGAL ADVISOR	Nisar Law Associates
	51, Mozang Road
	Lahore
REGISTERED OFFICE	35-Darulaman Housing Society
	Block 7/8, Shahra-e-Faisal
	Karachi
FACTORY	Sangjani, Islamabad
MARKETING OFFICE	2nd Floor, Majeed Plaza
	Bank Road, Saddar
	Rawalpindi
SHARE REGISTRAR OFFICE	Uni Corporate & Financial Services
	Westland Trade Centre
	Opposite Flyover, Shaheed-e-Millat Road
	Karachi
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the 18th Annual General Meeting of the Members of the Company will be held at
Registered Office, 35-Darulaman Housing Society, Block 7/8, Shahra-e-Faisal, Karachi on Friday, December 31,
1999 at 10.00 a.m. to transact the following business:
1. To confirm the Minutes of the 17th Annual General Meeting held on December 31, 1 998.
2. To receive and adopt the Annual Audited Accounts for the year ended June 30, 1999 together with the
Directors' and Auditors' Reports thereon.
3. To appoint Auditors and fix their remuneration. The present Auditors Messrs. Taseer Hadi Khalid & Co.,
Chartered Accountants and Messrs. Rahim Iqbal Rafiq & Co., Chartered Accountants retire and being eli-
gible, offer themselves for re-appointment.
4. To transact any other business with the permission of the Chair.
		By Order of the Board
		(ABDUL ALEEM)
Karachi: November 29, 1999		Company Secretary
Notes:
1. The Share Transfer Books of the Company will remain closed from Friday, December 24, 1999 to Friday,
December 31, 1999 (both days inclusive).
2. A Member entitled to attend, speak and vote at this meeting may appoint another Member as his/her proxy
to attend, speak and vote on his/her behalf.
3. Account Holders and Sub-Account Holders of Central Depository Company of Pakistan Limited are
requested to bring their original National Identity Card along with a photocopy of the same for identification
and in case of proxy must enclose an attested copy of his/her National Identity Card.
4. An instrument appointing a proxy must be received at the Registered Office of the Company not later than
forty-eight hours before the time appointed for the Meeting. A Member shall not be entitled to appoint more
than one proxy. If a Member appoints more than one proxy and more than one instrument of proxy are
deposited by a Member with the Company, all such instruments shall be rendered invalid.
5. Members are requested to notify any change in their address immediately.
6. Members should quote their Folio Number in all correspondence and at the time of attending the Meeting.
DIRECTORS' REPORT TO THE MEMBERS
Dear Members
Your Directors are pleased to present their report along. with the audited accounts for the year ended June 30,
1999.
The cement industry continues to suffer due to depressed market conditions and excess supply. These factors have
adversely affected the operating efficiency, however, due to adoption of effective marketing strategy by the
management the financial results of the company have shown improvement during the year.
OPERATING PERFORMANCE
The production and despatches for the year under review are as follows:
		1999	1998
		Tonnes
Production
Clinker		467,000	547,302
Cement		496,210	574,507
Despatches		497,969	573,727
FINANCIAL RESULTS
Despite the glut of cement due to excess production capacity in the country and the prevailing adverse .economic
conditions, the better marketing strategy adopted by the management has resulted in improvement in the financial
results.
The gross profit rate has increased from 0.80% to 11.52% mainly due to increase in selling prices and reduction
in fuel and power costs. Although the operating expenses and financial charges have increased by 5.09% and
4.44% respectively as compared to corresponding period but still company earned profit before tax of Rs. 4.86
million as compared to last year loss of Rs. 79.273 million.
The earning per share for the year under review was Re. 0.05.
DEBT OBLIGATIONS
Inspite of liquidity squeeze the company continues to meet its financial commitments and debt obligations on time.
FUTURE PROSPECTS
The cement industry is still facing the problem of excess supply, which may continue for a long period unless the
Government achieves a drastic improvement in economy. Further, subsequent to year-end the Government has
increased the price of furnace oil and has also imposed sales tax on furnace oil and electricity. The increase in
these basic input costs has enhanced the cost of production. Due to marketing constraints it is not possible to pass
on the increase to the consumers. Thus the threat of major crises in the cement industry has again become immi-
nent.
BOARD OF DIRECTORS
During the year under review National Development Finance Corporation changed its nominee Director from the
Board and as a result Mr. A. Rauf Chandio replaced Mr. Shahid Hassan. The Board places on record its appre-
ciation for the valuable support and contribution by the outgoing Director and welcomes the new Director.
AUDITORS
Present auditors M/s. Taseer Hadi Khalid & Co., Chartered Accountants and M/s. Rahim Iqbal Rafiq & Co.,
Chartered Accountants, retire and being eligible, have offered themselves for re-appointment.
YEAR 2000 COMPLIANCE
The management has carried out the necessary modifications, by utilizing the in-house expertise, to ensure that
the Millennium bug shall not affect computer software. Computer hardware have also been made Y2K compliant
by replacement/modification of the non-compliant units.
PATTERN OF SHAREHOLDING
A statement showing the pattern of shareholding as at June 30, 1999 is annexed.
ACKNOWLEDGMENT
The Directors would like to place on record their appreciation for the strenuous efforts and dedicated work of the
staff and workers and for the efforts made by the dealers in giving full support to our marketing policies. We
would also like to express our sincere thanks to all the financial institutions for their continued support and co-
operation.
		On behalf of the Board
		(MOHAMMED YASIN FECTO)
Karachi: November 29, 1999		Chief Executive
PATTERN OF SHAREHOLDING AS AT JUNE 30, 1999
Number of	Shareholding		Total
Shareholders	From	To	Shares Held
531	1	100	53,100
2545	101	500	1,171,600
4125	501	1000	400,100
361	1001	5000	894,600
49	5001	10000	372,800
14	10001	15000	175,200
6	15001	20000	107,400
3	20001	25000	70,500
3	25001	30000	88,000
6	30001	35000	202,400
1	45001	50000	46,800
1	85001	90000	88,000
1	90001	95000	93,800
2	95001	100000	198,900
1	110001	115000	112,000
1	130001	135000	132,000
2	135001	140000	276,000
1	140001	145000	141,000
1	155001	160000	156,000
1	160001	165000	162,300
1	180001	185000	182,200
1	225001	230000	228,000
1	230001	235000	230,200
1	240001	245000	243,900
1	245001	250000	249,000
1	270001	275000	270,700
1	275001	280000	280,000
1	280001	285000	285,000
1	290001	295000	295,000
1	295001	300000	300,000
1	305001	310000	309,500
2	320001	325000	650,000
1	325001	330000	330,000
2	330001	335000	670,000
1	335001	340000	340,000
2	340001	345000	690,000
1	345001	350000	350,000
1	360001	365000	365,000
1	370001	375000	375,000
1	395001	400000	398,200
1	415001	420000	420,000
1	425001	430000	427,900
1	455001	460000	459,800
2	810001	815000	1,625,000
1	995001	1000000	999,300
2	1495001	1500000	2,999,600
2	1895001	1900000	3,790,834
1	1940001	1945000	1,945,000
1	3135001	3140000	3,139,700
2	3785000	3790000	7,576,666
1	3935001	3940000	3,939,000
1	6290001	6295000	6,293,000
--------------------	--------------------	--------------------	--------------------
3,981			45,600,000
Categories of Shareholders	Number of Shareholders	Shares Held	Percentage
Individuals	3,936	28,713,400	62.97
Investment Companies	22	3,832,700	8.41
Insurance Companies	2	14,900	0.03
Joint Stock Companies	3	10,900	0.02
Financial Institutions	7	10,561,600	23.16
Modaraba Companies	4	58,600	0.13
Foreign Investors	4	2,401,900	5.27
Others	3	6,000	0.01
	--------------------	--------------------	--------------------
Total	3,981	45,600,000	100.00
AUDITORS' REPORT TO THE MEMBERS
We have audited the annexed balance sheet of FECTO CEMENT LIMITED as at June 30, 1999 and the related
profit and loss account and statement of changes in financial position, 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 the 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 accor-
dance 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 June 30, 1999
and of the profit 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.
Karachi: November 29, 1999	TASEER HADI KHALID & CO.		RAHIM IQBAL RAFIQ & CO.
	Chartered Accountants		Chartered Accountants
BALANCE SHEET AS AT JUNE 30, 1999
			(Rupees in Thousands)
		Note	1999	1998
SHARE CAPITAL
Authorised:
50,000,000 Ordinary Shares of Rs. 10/- each			500,000	500,000
			===========	===========
Issued, subscribed and paid-up:
45,600,000 Ordinary Shares of Rs. 10/- each
Issued for Cash			456,000	456,000
RESERVES		4	151,849	149,653
			---------------------	---------------------
			607,849	605,653
LONG TERM LOANS		5	99,586	103,643
DEFERRED LIABILITIES		6	264,615	262,431
LONG TERM DEPOSITS		7	19,842	21,810
CURRENT LIABILITIES:
Short Term Running Finance		8	30,834	--
Current Maturity of Long Term Liabilities		9	28,453	112,222
Creditors, Accrued & Other Liabilities		10	270,381	376,756
Provision for Taxation			15,729	5,607
			---------------------	---------------------
			345,397	494,585
			---------------------	---------------------
			1,337,289	1,488,122
			===========	===========
OPERATING FIXED ASSETS		11	896,357	996,158
LONG TERM DEPOSITS			4,426	4,253
CURRENT ASSETS:
Stores and Spares		12	285,627	298,473
Stock-in-Trade		13	17,467	23,665
Trade Debtors-Unsecured Considered Good			2,809	19,292
Advances and Pre-payments		14	82,164	88,639
Cash and Bank Balances		15	48,439	57,642
			---------------------	---------------------
			436,506	487,711
			---------------------	---------------------
			1,337,289	1,488,122
			===========	===========
These accounts Should be read in conjunction with the attached notes
(MOHAMMAD YASIN FECTO)		(ABDUL JALEEL SHAIKH)
Chief Executive		Director
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED JUNE 30, 1999
			(Rupees in Thousands)
		Note	1999	1998
SALES-NET		16	1,030,202	1,098,932
COST OF SALES		17	911,572	1,090,193
			---------------------	---------------------
GROSS PROFIT			118,630	8,739
OPERATING EXPENSES
General & Administrative		18	36,652	34,807
Selling & Distribution		19	24,201	23,101
			---------------------	---------------------
			60,853	57,908
			---------------------	---------------------
			57,777	(49,169)
FINANCIAL CHARGES		20	54,667	52,343
OTHER INCOME		21	(2,001)	(22,388)
WORKERS' FUNDS			256	149
			---------------------	---------------------
			52,922	30,104
			---------------------	---------------------
PROFIT/(LOSS) BEFORE TAXATION			4,855	(79,273)
PROVISION FOR TAXATION
Current Year		22	15,729	5,607
Prior Year			-	(21,116)
Deferred			(13,070)	(23,719)
			---------------------	---------------------
			2,659	(39,228)
PROFIT/(LOSS) AFTER TAXATION			2,196	(40,045)
ACCUMULATED (LOSS) BROUGHT FORWARD			(100,347)	(60,302)
			---------------------	---------------------
ACCUMULATED (LOSS) CARRIED FORWARD			(98,151)	(100,347)
			=============	=============
Earning / (Loss) per share- basic (Rupee)		23	0.05	(0.88)
These accounts should be read in conjunction with the attached notes
(MOHAMMAD YASIN FECTO)			(ABDUL JALEEL SHAIKH)
Chief Executive			Director
STATEMENT OF CHANGES IN FINANCIAL POSITION
FOR THE YEAR ENDED JUNE 30, 1999
			(Rupees in Thousands)
			1999	1998
Cash Flows from Operating Activities
Net Profit/(Loss) before Taxation			4,855	(79,273)
Adjustments for:
Depreciation			99,904	11 2,463
Amortisation of Deferred Cost			-	1.15
Loss/(Gain) on Disposal of Fixed Assets			427	(763)
Foreign Exchange Loss/(Gain)			8,222	(990)
Financial Charges			46,445	53,333
			------------------	------------------
Operating Profit before Working Capital Changes			159,853	85,923
Decrease/(Increase) in Stores and Spares			12,846	(9,414)
Decrease/(Increase) in Stock-in-Trade			6,198	(8,283)
Decrease in Trade Debtors			16,483	7,284
(Increase)/Decrease in Advances and Pre-payments			(327)	1,308
Increase in Short Term Running Finance			30,834	-
(Decrease)/Increase in Creditors, Accrued and
Other Liabilities			(31,723)	18,735
			------------------	------------------
Cash Generated from Operations			194,164	95,553
Financial Charges Paid			(112,627)	(62,457)
Income Tax Paid/Deducted at Source			(8,480)	(30,832)
Long Term Deposits Received			(1,968)	(1,414)
Long Term Deposits Given			(173)	7,519
			------------------	------------------
Net Cash from Operating Activities			70,916	8,369
Cash Flows from Investing Activities
Fixed Capital Expenditure			(1,913)	(3,221)
Sale Proceeds of Fixed Assets			1,383	3,321
Advances to Associated Companies			9,675	74,345
			------------------	------------------
Net Cash from Investing Activities			9,145	74,445
Cash Flows from Financing Activities
Repayment of Long Term Loans			(72,070)	(68,539)
Repayment of Redeemable Capital			(15,756)	(21,239)
Dividend Paid			(1,438)	(5,367)
			------------------	------------------
Net Cash used in Financing Activities			(89,264)	(95,145)
			------------------	------------------
Net (Decrease)in Cash & Bank Balances			(9,203)	(12,331)
Cash and Bank Balances as at July 1			57,642	69,973
			------------------	------------------
Cash and Bank Balances as at June 30			48,439