| Japan Power Generation Limited |
|
|
|
|
|
| Annual
Report 1999 |
|
|
|
| Contents |
|
| COMPANY
INFORMATION |
|
| NOTICE
OF THE MEETING |
|
| DIRECTORS'
REPORT |
|
| AUDITORS'
REPORT |
|
| BALANCE SHEET |
|
|
| CASH
FLOW STATEMENT |
|
| NOTES
TO THE ACCOUNTS |
|
| PATTERN
OF SHAREHOLDING |
|
|
|
| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
| MR.
ZAFAR MAHMOOD |
CHIEF EXECUTIVE |
|
| SHEIKH
NIZAZ ALl |
|
| MR.
AKHTAR ALI UPPAL |
|
| MR.
ASAD ALI UPPAL |
|
| MR.
FAISAL QAMMAR UPPAL |
|
| MR.
SAITO YOSHIHIRO |
|
| SHEIKH
MAHMOOD ALl |
|
| MR.
MUHAMMAD ALl |
|
| MR.
HASEEB KHAN |
|
| SYED
ZAFAR HAIDER |
|
| MR.
SHAHARYAR AHMED |
|
| MR.
MAHMOOD AHMED |
|
| MR.
HAMAYUN SADIQ |
|
| MRS.
SAMINA ZAFAR |
|
|
| COMPANY
SECRETARY |
|
| SYED
ZAFAR HAIDER |
|
|
| AUDITORS |
|
| COOPERS
& LYBRAND |
|
| CHARTERED
ACCOUNTANTS |
|
| & |
|
| JAVAID
TARIQ & CO. |
|
| CHARTERED
ACCOUNTANTS |
|
|
| LEGAL
ADVISOR |
|
| SYED RASHID RAHIM |
|
|
| BANKERS |
|
| PRIME
COMMERCIAL BANK LTD. |
|
| ASKARI
COMMERCIAL BANK LTD. |
|
| ALLIED
BANK OF PAKISTAN LTD. |
|
| FAYSAL
BANK LTD. |
|
|
| REGISTERED
OFFICE |
|
| 26,
PESHAWAR BLOCK, |
|
| FORTRESS
STADIUM, |
|
| LAHORE CANTT. |
|
|
| PLANT
LOCATION |
|
| JIA
BAGGA RAILWAY STATION, |
|
| RAIWIND
ROAD, DISTRICT LAHORE. |
|
|
|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
|
| Notice
is hereby given that the 5th Annual General Meeting of the members of Japan
Power Generation Limited will be |
|
| held
on Friday the 31st December, 1999 at 10:00 a.m. at plant site located at
khan-Nepal Road near Jia Bagga Railway |
|
| Station,
Raiwind Road, District Lahore to transact the following business: |
|
|
| 1.
To confirm the minutes of last Annual General Meeting held on December 31,
1998. |
|
|
| 2.
To receive, consider and adopt the audited accounts of the Company for the
financial year ended June 30, |
|
| 1999
together with the Auditors' and Directors' Reports thereon. |
|
|
| 3.
To appoint Auditors for the financial year 1999-2000 and fix their
remuneration. |
|
|
| 4.
To transact any other business that may be placed before the meeting with the
permission of the Chain |
|
|
|
|
For and on behalf of the |
|
|
|
Board of Directors |
|
|
| Lahore |
|
| Date:
December 09, 1999 |
|
(SYED ZAFAR HAIDER) |
|
|
|
Company Secretary |
|
|
| Notes: |
|
|
| i)
The Share Transfer Book of the Company will remain closed from December 21,
1999 to December 31, |
|
| 1999
(both days inclusive) |
|
|
|
|
| ii)
A member entitled to attend and vote at the above meeting may appoint another
person as proxy. Proxies, |
|
| in
order to be effective, must be received at 26-Peshawar Block, Fortress
Stadium, Lahore Cantt, the |
|
| registered
office of the Company not later than forty-eight hours before the time of the
meeting and must be |
|
| duly
stamped, signed and witnessed. |
|
|
|
|
| iii)
Members are requested to immediately notify the change in address, if any. |
|
|
|
|
|
| DIRECTORS'
REPORT |
|
|
| Your
Directors feel pleasure in presenting the 5th Annual Report and Audited
Accounts for the Year ended June 30, |
|
| 1999. |
|
|
| PRESENT
STATUS |
|
|
| With
Allah's blessings your project is 100% complete. On successful internal
commissioning and then 10.2 tests as per |
|
| PPA
the Complex is undergoing final test under section 10.3 of PPA. After
successful completion of these tests, WAPDA |
|
| will
declare Commercial Operation Date (COD) and your Company will Inshallah start
generating revenues. |
|
|
| REASONS
FOR DELAY IN COD |
|
|
| The
original COD as per last year's Annual Report was March, 1999 which is now
Inshallah expected in December, |
|
| 1999.
The main causes for delay in achieving COD are briefly summarized as follows: |
|
|
| 1.
Delay in plant synchronization with WAPDA which was eventually done in
October, 1999. |
|
|
| 2.
Persistent uncertainty prevailing viz-a-viz government's policy towards the
IPPs'. |
|
|
| GENERAL |
|
|
| 1.
As reported in last year's Annual Report, the Company's negotiations with
GOP/WAPDA for reduction in tariff, |
|
| successfully
culminated with signing of a Memorandum of Understanding with WAPDA on July
29, 1999 which |
|
| is
subsequently to be incorpora, t. ed in Power Purchase Agreement (PPA). The
salient features of the package deal |
|
| are as follow: |
|
|
|
| a) Tariff |
|
|
| Average
(1-10 years) |
US$ 0.0481 per kwh |
|
| Levelised |
|
US$ 0.0430 per kwh |
|
|
|
| b)
The term of the project shall be extended from 22 to 30 years. |
|
| c)
RCOD shall be extended up to actual COD without liquidated damages, and
N.O.I.T. will be withdrawn by WAPDA. |
|
| d)
WAPDA will allow synchronization of the plant without any delay. |
|
| e)
The Company commits to provide RTU within 9 months of the date of signing of
the agreement. SCADA system |
|
| will
be provided as per Interim Agreement signed separately. |
|
| f)
Minimum load of the Complex has been agreed to be 8 MW. |
|
| g)
Reactive Capacity Test will be carded out at minimum possible loading instead
of 8 MW. |
|
| h)
Engine Governor Operation Tests will be demonstrated over the range of 2% to
8% with droop being adjusted to |
|
| 2% to 8%. |
|
| i)
During full load rejection test, at least 50%, Diesel Generating Sets shall
remain in operation. |
|
|
| 2.
As reported last year, O&M contract with Toyota Tsusho Corporation
(Japan) / Mitsubishi Heavy Industries |
|
| (Japan), has been effectuated. |
|
|
| 3.
Inspite of its best efforts, the company was not able to get the non-funded
facility rescheduled with the result that |
|
| the
first three installments were funded by the Banks' Syndicate, however, your
management is confident in getting |
|
| this
funded facility rescheduled by the Syndicate. |
|
|
| Y2K
COMPLIANCE |
|
| The
technical and mechanical equipment of your company is based on highly
sophisticated digital systems vulner- |
|
| able
to Y2K bug. Your company's management, being quite conscious of this matter,
has taken necessary safety |
|
| measures
at the time of its installation. It is satisfying to inform you that the
equipment suppliers have confirmed |
|
| that
they have not found any conformance hurdles for the Year 2000 with respect to
machinery and equipment |
|
| supplied to JPGL. |
|
|
| AUDITORS |
|
| Retiring
auditors M/s Coopers & Lybrand, Chartered Accountants and Javaid Tariq
& Co., Chartered Accountants, |
|
| being
eligible, offer themselves for reappointment. |
|
|
| PATTERN
OF SHAREHOLDING |
|
| Statement
reflecting the pattern of shareholding is attached to the Annual Report. |
|
|
| Lahore |
|
ON BEHALF OF THE BOARD OF
DIRECTORS |
|
| Date:
December 04, 1999 |
CHIEF EXECUTIVE |
|
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of Japan Power Generation Limited as
at June 30, 1999 and the elated |
|
| 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 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 and the cash flow statement, together with the notes forming part
thereof, give the informa- |
|
| tion
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 the
cash flows for the year then |
|
| ended. |
|
|
|
| Without
qualifying our opinion we would like to draw the attention of the members to
the information |
|
| captioned
as "Reasons for delay in COD" and "General" in the
Directors' Report; and |
|
|
| (d)
In our opinion no Zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980. |
|
|
| Coopers
& Lybrand |
|
Javaid Tariq & Co. |
|
| Chartered
Accountants |
|
Chartered Accountants |
|
|
| Lahore: |
|
| Date:
December 06, 1999. |
|
|
|
| BALANCE
SHEET |
|
| AS
AT JUNE 30, 1999 |
|
|
|
1999 |
1998 |
|
|
Note |
Rupees |
Rupees |
|
|
|
|
| Fixed
capital expenditure |
|
|
| Fixed
assets |
|
3 |
37,584,697 |
41,982,285 |
|
| Capital
work-in-progress |
|
4 |
4,768,975,471 |
3,916,378,017 |
|
| Pre-operational
cost |
|
5 |
639,297,175 |
181,944,309 |
|
|
|
|
---------------------- |
---------------------- |
|
|
|
|
5,445,857,343 |
4,140,304,611 |
|
| Deferred cost |
|
|
|
64,935,957 |
64,935,957 |
|
|
|
|
| Current assets |
|
|
|
| Stocks and stores |
|
|
59,807,370 |
20,158,387 |
|
| Advances,
deposits, prepayments and other receivables |
6 |
11,074,353 |
7,218,459 |
|
| Cash
and bank balances |
|
7 |
59,964,909 |
90,005,173 |
|
|
|
|
---------------------- |
---------------------- |
|
|
|
|
130,846,632 |
117,382,019 |
|
|
|
|
---------------------- |
---------------------- |
|
|
|
|
5,641,639,932 |
4,322,622,587 |
|
|
|
|
============ |
============ |
|
| Share capital |
|
| Authorized |
|
|
| 150,000,000
Ordinary shares of Rs. 10/- each |
|
1,500,000,000 |
1,500,000,000 |
|
|
============ |
============ |
|
| Issued,
subscribed and paid-up |
|
| 133,200,000
Ordinary shares of Rs. 10/- each |
|
1,332,000,000 |
1,332,000,000 |
|
|
| Long term loans |
|
|
8 |
3,068,423,961 |
2,270,718,965 |
|
| Sponsors'
interest free loan - unsecured |
|
|
108,585,226 |
-- |
|
| Liabilities
against assets |
|
| subject
to finance lease |
|
9 |
2,427,755 |
3,960,148 |
|
|
|
| Deferred
liabilities - gratuity |
|
|
1,851,300 |
1,438,900 |
|
|
|
| Current liabilities |
|
| Finance
Against Dishonoured Bill (FADB) |
|
10 |
18,492,787 I |
- |
|
| Current
portion of long term liabilities |
|
11 |
7,059,024,011 |
500,283,500 |
|
| Creditors,
accrued and other liabilities |
|
12 |
403,956,502 |
214,221,074 |
|
|
|
|
---------------------- |
---------------------- |
|
|
|
|
1,128,351,690 |
714,504,574 |
|
| Contingencies
and commitments |
|
13 |
-- |
-- |
|
|
|
|
---------------------- |
---------------------- |
|
|
|
5,641,639,932 |
4,322,622,587 |
|
|
|
============ |
============ |
|
|
| The
annexed notes form an integral part of this balance sheet. |
|
|
| CHIEF
EXECUTIVE |
DIRECTOR |
|
DIRECTOR |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1999 |
1998 |
|
|
|
Note |
Rupees |
Rupees |
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
| (Increase)/decrease
in current assets |
|
| Advances,
deposits, prepayments and other receivables |
|
(3,855,894) |
6,406,435 |
|
|
| Stocks and stores |
|
|
(39,648,983) |
(20,158,387) |
|
|
|
| Increase/(decrease)
in current liabilities |
|
| Finance
Against Dishonored Bill (FADB) |
|
18,492,787 |
- |
|
| Current
portion of long term liabilities |
|
205,618,901 |
499,470,583 |
|
| Creditors,
accrued and other liabilities |
|
189,735,428 |
173,642,070 |
|
|
|
---------------------- |
---------------------- |
|
|
|
370,342,239 |
659,360,701 |
|
|
| Fixed
capital expenditure |
|
(1,305,552,732) |
(351,380,264) |
|
|
|
---------------------- |
---------------------- |
|
| Net
cash inflow/(outflow) from investing activities |
A |
(935,210,493) |
307,980,437 |
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
| Long term loans |
|
|
797,704,996 |
(370,467,765) |
|
| Sponsors'
interest free loan |
|
108,585,226 |
-- |
|
| Lease finance |
|
|
(1,532,393) |
(947,425) |
|
| Gratuity |
|
|
412,400 |
827,900 |
|
|
|
---------------------- |
---------------------- |
|
| Net
cash inflow/(outflow) from financing activities |
B |
905,170,229 |
(370,587,290) |
|
|
|
---------------------- |
---------------------- |
|
| Net
increase/(decrease) in cash and cash equivalents (A+B) |
|
(30,040,264) |
(62,606,853) |
|
| Cash
and cash equivalents at the beginning of the year |
|
90,005,173 |
152,612,026 |
|
|
|
---------------------- |
---------------------- |
|
| Cash
and cash equivalents at the end of the year |
|
59,964,909 |
90,005,173 |
|
|
============ |
============ |
|
|
|
|
| CHIEF
EXECUTIVE |
DIRECTOR |
|
DIRECTOR |
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
| 1.
STATUS AND ACTIVITIES |
|
|
| Japan
Power Generation Limited is a Public Company, incorporated on September 29,
1994 under the |
|
| Companies
Ordinance, 1984 and its shares are quoted on Lahore and Karachi Stock
Exchanges. The |
|
| principal
business of the company is to generate and supply electric power to WAPDA. |
|
|
|
|
| The
company's original Required Commercial Operation Date "RCOD" was
January 23, 1998 but due to |
|
| certain
unavoidable circumstances it was delayed. On July 29, 1999 a MOU was signed
between WAPDA and |
|
| the
company which Stipulates that the RCOD will now be extended to actual
Commercial Operation Date. |
|
|
|
|
| In
the absence of any operational activity during the year under review, no
profit and loss account has been |
|
| prepared. |
|
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
Accounting convention |
|
| These accounts have been prepared under the
historical cost convention. |
|
|
| 2.2
Staff retirement benefits |
|
| The
company operates an unfunded gratuity scheme covering all its permanent
employees. Provision |
|
| is
made annually to cover the liability under the scheme. |
|
|
|
|
| 2.3 Taxation |
|
| The
company's profit and gains from Power Generation are exempted from tax under
clause 176 of |
|
| Part
1 of the Second Schedule of the Income Tax Ordinance, 1979. The company is
also exempted |
|
| from
minimum tax on turnover under clause 20 of Part IV of the Second Schedule of
the Income Tax |
|
| Ordinance,
1979. Tax on income from sources not covered under the above clauses is
determined in |
|
| accordance
with the normal provisions of the Income Tax Ordinance, 1979. |
|
|
| 2.4 Fixed assets |
|
|
| All
fixed assets are stated at cost and no depreciation has been charged as yet.
Depreciation will be |
|
| provided
on commencement of the company's commercial operations. |
|
|
|
|
| 2.5
Capital work-in-progress |
|
| All
costs/expenditure related to specific assets incurred during the project
implementation period are |
|
| carried
under this head including foreign exchange rate variances. These costs will
be transferred to |
|
| specific
assets as and when these assets are available for use. |
|
|
|
|
| 2.6
Stocks and stores |
|
| These
are valued at the lower of cost and net realizable value. Cost is determined
on average basis. |
|
|
|
|
| 2.7
Pre-operational cost |
|
| All
costs/expenditure not directly related to specific assets incurred before the
commencement of |
|
| operational
activities are charged under this head. These will be allocated to building
and plant and |
|
| machinery
at the time of commencement of commercial operation. |
|
|
| 2.8 Deferred cost |
|
|
| Deferred
cost consists of expenses incurred in connection with the company's formation
and public |
|
| issue
of shares including brokerage and commission etc. These will be amortized
over a period of |
|
| five
years starting from the year of commercial operations. |
|
|
|
|
| 2.9
Foreign currency translation |
|
| Foreign
currency transactions are converted into Pak Rupees at the rates prevailing
on the date of |
|
| transaction.
Assets and liabilities in foreign currencies at the year-end are translated
into Pak Rupees |
|
| at
the rates of exchange prevailing at the balance sheet date. |
|
|
|
|
| Since
the company has not yet commenced commercial operations, exchange gains and
losses on |
|
| conversion
are accounted for in pre-operational cost. Exchange differences on
translation of foreign |
|
| currency
loans utilized for the acquisition of fixed assets are capitalized and
incorporated in the cost |
|
| of such assets. |
|
|
|
|
|
| 2.10
Accounting for leases |
|
| The
company accounts for assets acquired under finance lease by recording the
assets and related |
|
| liability.
The amounts are determined on the basis of discounted value of total minimum
lease |
|
| payments
and residual value of the assets at the end of the lease period in a manner
so as to provide a |
|
| constant
periodic charge on the outstanding liabilities. Financial charges are
allocated to |
|
| pre-operational
cost in a manner so as to provide a constant periodic rate of charge on the
outstanding |
|
| liability.
No depreciation has been charged on leased assets as the company has not yet
commenced |
|
| its
operational activities. |
|
|
|
|
|
1999 |
1998 |
|
|
|
Note |
Rupees |
Rupees |
|
|
|
|
| 3. Fixed assets |
|
|
| Freehold land |
|
|
16,046,645 |
16,046,645 |
|
| Furniture
& fixtures |
|
|
1,938,326 |
2,454,459 |
|
| Office equipment |
|
|
1,410,450 |
1,347,905 |
|
| Tubewell at site |
|
|
1,723,760 |
1,723,760 |
|
| Railway sidings |
|
|
6,650,000 |
6,650,000 |
|
|
|
---------------------- |
---------------------- |
|
| Motor vehicles |
|
|
6,940,516 |
6,940,516 |
|
| Less: disposals |
|
3.1 |
(2,600,000) |
-- |
|
|
---------------------- |
---------------------- |
|
|
|
4,340,516 |
6,940,516 |
|
| Leasehold |
|
| Office premises |
|
|
775,000 |
775,000 |
|
| Vehicles |
|
|
6,044,000 |
6,044,000 |
|
| Less: disposals |
|
3.2 |
(1,344,000) |
-- |
|
|
|
|
---------------------- |
---------------------- |
|
|
|
4,700,000 |
6,044,000 |
|
|
---------------------- |
---------------------- |
|
|
|
37,584,697 |
41,982,285 |
|
|
============= |
============= |
|
|
|
|
| 3.1
A Land Cruiser with registration No. LOW 3355 model 1991 was totally damaged
in an accident and |
|
| was sold for Rs. 150,000 by negotiation as
scrap, on 16 January 1999, to Mr. Khalid Mahmood Chohan |
|
| s/o M. Sharif Chohan r/o 370-B Tajpura
Scheme, Mughalpura, Lahore. |
|
|
| 3.2
Two vehicles bearing registration Nos. LXA 2021 ( Toyota Corolla ) and LXB
5019 ( Suzuki Margalla) |
|
| were repossessed by the leasing company due
to non-payment of lease rentals. |
|
|
| 4.
Capital work-in-progress |
|
|
| Building |
|
| Civil works |
|
|
281,090,908 |
241,126,570 |
|
| Advances
to contractors |
|
1,869,228 |
3,013,723 |
|
|
|
|
| Machinery |
|
|
4,483,464,993 |
3,669,564,213 |
|
| Advances
to contractors |
|
1,137,608 |
1,320,586 |
|
| Letters of credit |
|
|
340,234 |
280,425 |
|
|
|
|
| Advance for land |
|
1,072,500 |
1,072,500 |
|
|
|
---------------------- |
---------------------- |
|
|
|
4,768,975,471 |
3,916,378,017 |
|
|
|
============= |
============= |
|
|
| 5.
Pre-operational cost |
|
|
|
|
| Directors'
remuneration |
|
1,140,000 |
1,140,000 |
|
| Travelling
and conveyance |
|
14,596,671 |
14,139,263 |
|
| Staff
salaries and benefits |
|
32,348,305 |
22,215,879 |
|
| Rent,
rates and taxes |
|
4,817,930 |
2,428,689 |
|
| Postage
and telegrams |
|
361,523 |
279,618 |
|
| Telephone
and telex |
|
4,792,016 |
4,038,539 |
|
| Printing
and stationery. |
|
1,408,475 |
1,114,851 |
|
| Newspapers
and periodicals |
|
40,523 |
30,099 |
|
| Independent
engineer fee |
|
3,599,413 |
-- |
|
| Financial charges |
|
|
5.1 |
613,315,212 |
179,559,847 |
|
| Auditors'
remuneration |
|
5.2 |
910,700 |
615,700 |
|
| Fee
and subscription |
|
|
681,736 |
438,556 |
|
| Insurance |
|
|
|
1,520,702 |
1,237,271 |
|
| Vehicle
running expenses |
|
|
2,979,764 |
2,356,289 |
|
| Entertainment |
|
|
|
1,408,494 |
1,206,947 |
|
| Charity
and donation |
|
5.3 |
182,784 |
182,784 |
|
| Legal,
professional and consultancy charges |
5.4 |
33,462,666 |
30,187,499 |
|
| Utilities |
|
|
1,430,339 |
765,122 |
|
| Repair
and maintenance |
|
984,287 |
991,342 |
|
| Publicity
and advertisement |
|
832,675 |
792,775 |
|
| Loss
on disposal of fixed assets |
|
2,450,000 |
-- |
|
| Taxation
on interest income |
|
9,794,018 |
-- |
|
| Loss
on repossession of leased vehicles |
|
465,705 |
-- |
|
| Miscellaneous
expenses |
|
443,970 |
392,598 |
|
|
|
|
---------------------- |
---------------------- |
|
|
|
|
733,967,908 |
264,113,668 |
|
| Less:
Interest received on saving accounts |
|
53,586,039 |
50,591,761 |
|
| Exchange gain |
|
|
|
33,520,280 |
27,940,917 |
|
| Scrap sale |
|
|
|
7,564,414 |
3,636,681 |
|
|
|
|
---------------------- |
---------------------- |
|
|
94,670,733 |
82,169,359 |
|
|
---------------------- |
---------------------- |
|
|
|
639,297,175 |
181,944,309 |
|
|
|
============= |
============= |
|
|
|
|
|
| 5.1
Financial charges |
|
| Bank
charges and excise duty |
|
381,870 |
369,620 |
|
| Interest
on long term loans |
|
523,572,914 |
