| Lucky Cement Limited |
|
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| Annual Report 1999 |
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| CONTENTS |
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| Company Information |
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| Notice of Meeting |
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| Directors' Report |
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| Auditors' Report |
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| Balance Sheet |
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| Profit & Loss Account |
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| Statement
of Changes in Financial Position (Cash Flow) |
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| Notes to the Accounts |
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| Statement
and Report under Section 237 of the Companies Ordinance, 1984 |
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| Lucky Powertech Limited |
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| Consolidated Accounts |
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| Pattern of Shareholding |
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| COMPANY INFORMATION |
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| BOARD OF DIRECTORS |
|
| Abdul
Razzak Tabba (Chairman/Chief
Executive) |
|
| Muhammad Yunus Tabba |
|
| Samir Ahmed |
|
| Haji Abdul Razzak |
|
| Martyn S. Wells |
|
| Muhammad Sohail Tabba |
|
| Muhammad Ali Tabba |
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| Imran Yunus Tabba |
|
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| EXECUTIVE DIRECTOR |
|
| Abdur Razzaq Thaplawala |
|
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| COMPANY
SECRETARY &SR. MANAGER FINANCE |
|
| Muhammad Abid Ganatra |
|
| ACA. ACMA, ACIS |
|
|
| AUDITORS |
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| M. Yousuf Adil Saleem &
Co., |
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| Chartered Accountants |
|
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| BANKERS |
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| Metropolitan Bank Limited |
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| Muslim Commercial Bank Limited |
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| Soneri Bank Limited |
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| REGISTERED
OFFICE/FACTORY |
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| Pezu, District Lakki Marwat |
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| N . W. F. P. |
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| HEAD OFFICE |
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| 6-A
Muhammad Ali Housing Society, |
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| A.
Aziz Hashim Tabba Street, |
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| Karachi -75350. |
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| UAN (021) 111-786-555 |
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| SALES OFFICES |
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| 26-B, Aibak Block |
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Aptma House, |
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| New Garden Town, Lahore. |
|
Jamrud Road, Peshawar. |
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| UAN (042) 111-786-555 |
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UAN (091) 111-786-555 |
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| Gold Crest Plaza, 20 Azmat |
|
Saddar Bazar, Bannu Road, |
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| Wasti Road, Near Chowk |
|
Near Main Flying Coach
Adda, |
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| Dera Adda, Multan |
|
D.I. Khan. |
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| Tel · (061 ) 540021,510021 |
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UAN (0961) 111-786-555 |
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| 3rd Floor, Kulsum Plaza, |
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| 42 Blue Area, Islamabad. |
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| UAN (051 ) 111-786-555 |
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| SHARES DEPARTMENT |
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| 404, 4th Floor, Trade Tower |
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| Abdullah
Haroon Road, Karachi. |
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| Tel. No. 5685930-5687839 |
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| NOTICE
OF 6TH ANNUAL GENERAL MEETING |
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| Notice
is hereby given that the 6th Annual General Meeting of the members of Lucky
Cement |
|
| Limited
will be held on Wednesday, the 29th December, 1999 at 12:00 noon at the
registered |
|
| office
of the Company situated at factory premises Pezu, District Lakki Marwat,
N.W.F.P. to |
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| transact
the following business: |
|
|
| 1.
To confirm the minutes of 5th Annual General Meeting held on 30th December,
1998. |
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| 2.
To receive, consider and adopt the audited accounts for the year ended June
30, 1999 |
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| together with the Directors' and Auditors'
report thereon. |
|
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| 3.
To appoint Auditors and fix their remuneration for the year 1999-2000. The
present Auditors, |
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| Messrs M. Yousuf Adil Saleem & Co.,
Chartered Accountants, retire and being eligible, |
|
| offer themselves for reappointment. |
|
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| 4.
To transact any other business with the permission of the Chair. |
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| By order of the Board |
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|
|
Muhammad Abid Ganatra |
|
| Karachi: December 7, 1999 |
|
Company Secretary |
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| Notes: |
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| 1.
The share transfer books of the Company will be closed from 21st December,
1999 to 29th |
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| December,
1999 (both days inclusive) for the purpose of 6th Annual General Meeting. |
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|
| 2.
A member entitled to attend and vote may appoint another member as his/her
proxy to |
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| attend and vote instead of him/her. Proxies
must be received at the Registered Office of |
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| the Company not less than 48 hours before
the time of holding the meeting. |
|
|
| 3.
The members are requested to notify change in their address, if any, to the
Company's |
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| shares department at 404, 4th Floor, Trade
Tower, Abdullah Haroon Road, Karachi. |
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| DIRECTORS'
REPORT |
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|
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| We
have pleasure to present this Sixth Annual Report of the company alongwith
the annual accounts |
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| for
the year ended 30th June, 1999 and auditors report thereon. |
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| Demand Situation |
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| The
demand of the cement in the country showed a marginal improvement during the
year under |
|
| review.
The despatches of cement by the industry increased by about half a million
tons during the |
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| year
as compared to year ended on 30th June, 1998. As explained in our report for
the year 1997-98, |
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| the
consumption of cement per head of population in Pakistan is one of the lowest
in the world. Let |
|
| us
hope that present stagnation in our economy will not last longer and economic
development in the |
|
| country
will accelerate soon. |
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|
| Prices and Excise Duty |
|
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| The
prices of cement during the year were fairly stable. The Federal Government
converted the |
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| excise
duty leviable at 40% of retail price to a specific duty per ton in April,
1999. Prior to |
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| April,
1999, the incidence of excise duty worked out between Rs. 1,600/= to Rs.
1,800/= per ton |
|
| depending
upon the prevailing retail price. Under the changed basis, the excise duty is
now payable |
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| at
a fiat rate of Rs. 1,400/= per ton irrespective of the retail price. As a
consequence of the revision |
|
| in
the incidence of duty the ex-factory prices of cement were reduced by about
Rs. 200.00 per ton |
|
| under
pressure from the authorities. |
|
|
| Increase in Costs |
|
|
| The
price of Furnace Oil was increased from Rs. 5,520/= to Rs.6,090/= per ton in
May, 1999. In the |
|
| current
year, the price was further increased to Rs. 6,980.00 per ton with effect
from 16th August, |
|
| 1999
due to levy of sales tax. A recent announcement of the Government has said
that the electricity |
|
| supplies
will also be liable to 15% sales tax with effect from 16th August, 1999. The
levy of sales tax |
|
| on
furnace oil and electricity will have very little effect on those industries
whose end products are |
|
| liable
to .sales tax because of tax credit on inputs available to them. The cement
is not chargeable to |
|
| sales
tax and therefore the cement industry will not be able get any credit for
sales tax paid by it on |
|
| the
furnace oil & electricity. This will increase the cost of production by
about Rs. 150/= per ton of |
|
| cement.
Unless the cement manufacturers are allowed to increase their prices by
corresponding |
|
| amount,
the industry's financial performance will be adversely affected. On our part,
your company |
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| is
trying to reduce the cost of inputs by taking measures to reduce the
consumption of fuel oil and |
|
| electricity
on the one hand and increasing the production efficiency on the other hand. |
|
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| It
may not be out of place to remind the shareholders that your company had
decided to set-up it's |
|
| cement
plant in a remote area of the NWFP on the basis of Government's promise to
exempt |
|
| cement
produced by it from sales tax upto June, 2001. This promise was backed by
appropriate |
|
| notification
and the Protection of Economic Reforms Act 1992. Unfortunately, under
pressure of |
|
| some
competitors, the Government did not honour its promise and extended the
exemption from |
|
| sales
tax to the entire industry and increased excise duty simultaneously. This was
obviously meant |
|
| to
circumvent the law and nullify the benefit of sales tax available to your
company. This was also a |
|
| violation
of section '6' of Protection of Economic Reforms Act, 1992 which reads: |
|
|
| "The fiscal incentives for
investment provided by the government through statutory orders listed |
|
| in
the schedule OR OTHERWISE NOTIFIED shall continue in force for the term
specified thereon |
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| and
SHALL NOT BE ALTERED TO THE DISADVANTAGE OF THE INVESTORS" |
|
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| No
wonder that this and other ill-advised measures by the Government have shaken
the confidence |
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| of
investing public both in Pakistan & abroad. |
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|
| Operating Performance |
|
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| The
company produced 682,032 tons of clinker or 51.66% of its rated capacity
based on 330 days |
|
| operation.
In the preceding year, the clinker production was 526,184 tons or 39.86%. If
the rated |
|
| capacity
is calculated on the basis of 300 working days per year which is the industry
standard in |
|
| Pakistan,
our production in 1998-99 works out to 56.84% of the rated capacity. The
following are |
|
| the
figures of cement production & despatches during the year under review: |
|
|
| Cement
Production 691,445 Tons |
|
| Cement
Despatches 709,106 Tons |
|
|
| As
you will see from the attached profit & loss accounts, the company earned
a gross profit of |
|
| Rs.
262.6 million on a net sales of Rs. 1,474.9 million yielding a Gross Profit
percentage of 17.8% |
|
| against
6.56% earned in the preceding year. Because of the location of the company's
plant in a |
|
| .remote
area, the company's product had to bear higher transportation cost. However,
inspire of |
|
| higher
transportation costs, you will be pleased to know that after charging the
administration, selling |
|
| ,and
financial expenses, the year closed with a net profit of Rs. 55.4 million
against a net loss of |
|
| Rs.
119.2 million in the preceding year. The carry forward loss of Rs. 145.7
million has now been |
|
| reduced
to Rs. 90.33 million only. It is hoped that this loss will be wiped off
during the current year |
|
| if
there is no major changes in cost of inputs or prices of cement. |
|
|
| Balance Sheet |
|
|
|
| The
company's balance sheet is still quite robust. It's long term loans and
liabilities for financial |
|
| leases
amounted to Rs. 484.74 million as on 30th June, 1999 against the equity of
Rs. 3,349.67 |
|
| million
giving a debt equity ratio of 14.5:85.5. The break-up value of the company's
Rs. 10.00 equity |
|
| share
improved from Rs. 13.45 per share on 30th June, 1998 to Rs. 13.67 per share
on 30th June, |
|
| 1999.
The company continued to discharge its repayment obligations of long term
loans in time. |
|
|
| Year
2000 problems in Computer System |
|
|
| As
reported in our previous report, we have taken adequate measures to protect
the company |
|
| against Y2K problems. |
|
|
| Auditors |
|
|
| The
auditors, M. Yousuf Adil Saleem & Co, Chartered Accountants, retire and
being eligible offer |
|
| themselves
for reappointment. |
|
|
| Pattern of Shareholding |
|
|
| The
pattern of shareholding as on 30th June, 1999 is annexed to this report. |
|
|
| Subsidiary |
|
|
| The
audited accounts of the Lucky Powertech Limited, the company's wholly owned
subsidiary, for |
|
| the
year ended 30th June, 1999 are annexed to this report. |
|
|
| Acknowledgment |
|
|
| The
directors acknowledge the appreciation for the participation of Mr.
Razi-ur-Rahman Khan in |
|
| the
board of directors meeting during the period of his directorship. Mr. Khan
has resigned from the |
|
| directorship
and his place Mr. Samir Ahmed has been appointed for remaining period. |
|
|
| Your
directors acknowledge with appreciation, the efforts of company's managers,
technicians and |
|
| workers
and the support extended by the company's bankers, leasing companies, dealers
and stockists. |
|
|
| By order of the Board |
|
|
|
ABDUL RAZZAK TABBA |
|
| Karachi: December 7, 1999 |
|
Chairman & Chief
Executive |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of Lucky Cement Limited as at June 30,
1999 and |
|
| related
profit and loss account and the statement of changes in financial position
(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, 1'984; |
|
|
| 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 and profit and loss
account and the statement of changes in financial position |
|
| (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 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. |
|
|
|
|
M. YOUSUF ADIL SALEEM
& CO., |
|
| Karachi: December 7, 1999 |
|
Chartered Accountants |
|
|
| Annual Report 1999 |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1999 |
|
|
|
Note |
1999 |
1998 |
|
|
|
|
Amount in "000" |
|
|
|
| SHARE
CAPITAL AND RESERVE |
|
|
| Authorized capital |
|
|
| 300,000,000
Ordinary shares |
|
| of Rs. 10/= each |
|
3,000,000 |
3,000,000 |
|
|
=========== |
=========== |
|
| Issued,
subscribed and paid-up capital |
|
|
| 245,000,000
Ordinary shares of Rs. 10/= each |
|
| fully paid in cash |
|
2,450,000 |
2,450,000 |
|
|
| Capital reserve |
|
| Share premium |
|
990,000 |
990,000 |
|
| Accumulated loss |
|
(90,330) |
(145,761) |
|
|
-------------------- |
-------------------- |
|
|
3,349,670 |
3,294,239 |
|
| LONG TERM LOANS |
|
3 |
408,718 |
517,901 |
|
| LIABILITIES
AGAINST ASSETS SUBJECT |
|
|
|
| TO FINANCE LEASE |
|
4 |
76,022 |
106,709 |
|
| DEFERRED LIABILITIES |
|
5 |
75,994 |
124,589 |
|
| LONG TERM DEPOSITS |
|
6 |
16,139 |
19,234 |
|
| CURRENT LIABILITIES |
|
|
|
| Short term finance |
|
7 |
175,143 |
221,156 |
|
| Short
term loan - unsecured and interest free |
|
|
|
| Associated Undertaking |
|
|
45,000 |
|
| Current
portion of long term liabilities |
|
8 |
13 4,105 |
114,529 |
|
| Creditors,
accrued and other liabilities |
|
9 |
238,037 |
178,603 |
|
| Provision for taxation |
|
|
7,00 0 |
7,000 |
|
|
-------------------- |
-------------------- |
|
|
599,285 |
521,288 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
10 |
-- |
-- |
|
|
|
-------------------- |
-------------------- |
|
|
4,525,828 |
4,583,960 |
|
|
=========== |
=========== |
|
|
| FIXED
ASSETS - TANGIBLE |
|
|
| Operating assets |
|
11 |
3,779,285 |
3,886,494 |
|
| Capital work-in-progress |
|
12 |
5,5 91 |
17,805 |
|
|
-------------------- |
-------------------- |
|
|
3,784,876 |
3,904,299 |
|
|
| LONG
TERM INVESTMENT |
|
13 |
200,000 |
200,000 |
|
|
|
| LONG
TERM DEPOSITS AND |
|
| DEFERRED COSTS |
|
14 |
42,835 |
53,663 |
|
|
| CURRENT ASSETS |
|
|
| Stores and spares |
|
15 |
171,221 |
114,451 |
|
| S toc k- in- trade |
|
16 |
65,73 5 |
63,125 |
|
| Trade debtors - secured |
|
|
5,681 |
-- |
|
| Advances,
deposits, prepayments and |
|
|
|
|
| other receivables |
|
17 |
231,030 |
233,283 |
|
| Cash and bank balances |
|
18 |
24,450 |
15,139 |
|
|
|
-------------------- |
-------------------- |
|
|
498,117 |
425,998 |
|
|
-------------------- |
-------------------- |
|
|
4,525,828 |
4,583,960 |
|
|
=========== |
=========== |
|
|
|
|
| The
annexed notes from 1 to 33 form an integral part of these accounts. |
|
|
| Muhammad Yunus Tabba |
|
Abdul Razzak Tabba |
|
| Director |
|
Chief Executive |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
Note |
1999 |
1998 |
|
|
|
Amount in "000" |
|
|
|
| Sales - net |
|
19 |
1,474,964 |
1,010,006 |
|
| Cost of sales |
|
20 |
1,212,348 |
943,705 |
|
|
|
-------------------- |
-------------------- |
|
| Gross profit |
|
|
262,616 |
66,301 |
|
| Operating expenses |
|
|
|
| Administrative |
|
21 |
37,767 |
46,779 |
|
| Selling and distribution |
|
22 |
14,332 |
10,551 |
|
|
|
-------------------- |
-------------------- |
|
|
|
52,099 |
57,330 |
|
|
|
-------------------- |
-------------------- |
|
| Operating profit |
|
|
210,517 |
8,971 |
|
| Other income |
|
23 |
62 6 |
629 |
|
|
|
-------------------- |
-------------------- |
|
|
|
211,143 |
9,600 |
|
|
|
-------------------- |
-------------------- |
|
| Financial charges |
|
24 |
152,795 |
123,781 |
|
| Workers'
profit participation fund |
|
|
2,917 |
-- |
|
|
|
-------------------- |
-------------------- |
|
|
|
155,712 |
123,781 |
|
|
|
-------------------- |
-------------------- |
|
| Profit/(loss) before taxation |
|
|
55,431 |
(114,181) |
|
| Provision for taxation |
|
|
-- |
(5,000) |
|
|
|
-------------------- |
-------------------- |
|
| Net
profit / (loss) after taxation |
|
|
55,431 |
(119,181) |
|
| Accumulated
loss brought forward |
|
|
(145,7 61) |
(26,580) |
|
|
|
-------------------- |
-------------------- |
|
| Accumulated
loss carried forward |
|
|
(90,330) |
(145,761) |
|
|
|
=========== |
=========== |
|
| Earning per share |
|
29 |
Rs.0.22 |
|
|
| The
annexed notes from 1 to 33 form an integral part of these accounts |
|
|
| Muhammad Yunus Tabba |
|
Abdul Razzak Tabba |
|
| Director |
|
Chief Executive |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) FOR THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
1999 |
1998 |
|
|
Amount in "000" |
|
|
|
| A.
CASH FROM OPERATING ACTIVITIES |
|
|
| Profit
/ (loss) before taxation |
|
55,431 |
(114,181) |
|
| Adjustments for: |
|
|
|
| Depreciation |
|
157,453 |
135,523 |
|
| Amortization
of deferred cost |
|
11,838 |
11,636 |
|
| Gain
/ (loss) on disposal of fixed assets |
|
24 |
(232) |
|
| Provision for gratuity |
|
1,965 |
2,304 |
|
| Payment for gratuity |
|
(345) |
-- |
|
| Financial charges |
|
152,795 |
123,781 |
|
|
-------------------- |
-------------------- |
|
| Profit
before working capital changes |
|
379,161 |
158,831 |
|
| Working capital changes |
|
|
|
| Increase
/ (Decrease) in current assets |
|
|
|
| Stores and spares |
|
(56,770) |
17,364 |
|
| Stock in trade |
|
(2610) |
(28,847) |
|
| Trade debtors |
|
(5,681) |
37 |
|
| Advances,
deposits, prepayments |
|
|
|
| and other receivables |
|
2,253 |
(78,563) |
|
|
|
|
| Increase
/ (Decrease) in current liabilities |
|
|
|
|
|
|
| Creditors,
accrued and other liabilities |
|
8,656 |
45,111 |
|
|
-------------------- |
-------------------- |
|
| Cash
generated from operation |
|
325,009 |
113,933 |
|
| Financial charges paid |
|
(122,9 84) |
(160,535) |
|
|
-------------------- |
-------------------- |
|
| Net
cash from / (used in) operating activities |
|
202,025 |
(46,605) |
|
|
-------------------- |
-------------------- |
|
|
|
|
| B.
CASH FROM INVESTING ACTIVITIES |
|
|
|
| Fixed capital expenditure |
|
(38,093) |
(173,387) |
|
| Sales
proceed of fixed assets |
|
3 8 |
35,885 |
|
| Long term deposits |
|
-- |
(1,750) |
|
| Deferred costs |
|
(1,010) |
(122) |
|
|
-------------------- |
-------------------- |
|
| Net
cash used in investing activities |
|
(39,065) |
(139,374) |
|
|
-------------------- |
-------------------- |
|
|
| C.
CASH FROM FINANCING ACTIVITIES |
|
|
| Long term loan paid |
|
(64,060) |
(12,500) |
|
| Lease finance obtained |
|
-- |
35,000 |
|
| Lease finance paid |
|
(15,744) |
(446) |
|
| Deferred liabilities |
|
(24,738) |
53,578 |
|
| Long term deposits |
|
(3,095) |
(5,533) |
|
|
-------------------- |
-------------------- |
|
| Net
cash from investing activities |
|
(107,636) |
70,099 |
|
|
-------------------- |
-------------------- |
|
| Net
decrease in cash and cash equivalents (A+B+C) |
|
55,324 |
(115,880) |
|
| Cash
and cash equivalent at the beginning of the year |
|
(206,017) |
(90,137) |
|
|
-------------------- |
-------------------- |
|
| Cash
and cash equivalent at the end of the year |
|
150,693 |
(206,017) |
|
|
=========== |
=========== |
|
| Cash and cash equivalent |
|
|
| Cash and bank balances |
|
24,450 |
15,139 |
|
| Short term finance |
|
(175,143) |
(221,156) |
|
|
-------------------- |
-------------------- |
|
|
150,693 |
206,017 |
|
|
=========== |
=========== |
|
| Muhammad Yunus Tabba |
|
Abdul Razzak Tabba |
|
| Director |
|
Chief Executive |
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30,1999 |
|
|
| 1.
THE COMPANY AND ITS OPERATION |
|
|
| Lucky
Cement Limited was incorporated in Pakistan on September 18, 1993 under the
Companies |
|
| Ordinance,
1984. The shares of the Company are quoted on the Stock Exchanges of
Pakistan. |
|
| The
principal activity of the Company is manufacture and sale of Cement. The
project is located |
|
| at
District Lakki Marwar in North West Frontier Province. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1 Accounting convention |
|
| These accounts have been prepared under the
'historical cost convention'. |
|
| 2.2 Staff retirement benefit |
|
|
| The
C |
