| Pakland 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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|
| Report of the Directors |
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|
| Auditors'
Report to the Members |
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| Balance
Sheet |
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|
| Profit and Loss Account |
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| Cash
Flow Statement |
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| Notes to the Accounts |
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| Pattern of Holding of Shares |
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| COMPANY
INFORMATION |
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| BOARD OF DIRECTORS |
Tariq Mohsin Siddiqui |
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|
(Chairman & Chief
Executive) |
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|
Shamim Mushtaq Siddiqui |
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|
Muhammad Salim Arif |
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|
Muhammad Aqueel Abbasi |
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|
Jameel Ahmed Siddiqui |
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|
Sadaf Khan |
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|
M. Afzalullah Siddiqui
(Nominee - NIT) |
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| COMPANY SECRETARY |
Mohammad Adil |
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| REGISTERED OFFICE |
Trade Centre, A-14 |
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Block 7/8, KCHS |
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|
Shahra-e-Faisal |
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|
Karachi-75350 |
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| FACTORY |
Deh Dhando, Dhabeji |
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| BANKERS |
Al Faysal Investment Bank
Limited |
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|
Allied Bank of Pakistan
Limited |
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|
ANZ Grindlays Bank |
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|
Askari Commercial Bank
Limited |
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Citibank N.A. |
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Crescent Investment Bank
Limited |
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Faysal Bank Limited |
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Habib Bank Limited |
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National Bank of Pakistan |
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National Development
Finance Corporation |
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Standard Chartered Bank |
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Union Bank Limited |
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| AUDITORS |
Ford, Rhodes, Robson,
Morrow |
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Chartered Accountants |
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Finlay House |
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|
I. I. Chundrigar Road |
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|
Karachi |
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|
Khan H.R. & Co. |
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|
Chartered Accountants |
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|
328, Muhammadi House |
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|
I. I. Chundrigar Road |
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| NOTICE
OF MEETING |
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| Notice
is hereby given that the 20th Annual General Meeting of Pakland Cement
Limited will be |
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| held
at Tipu Sultan Hall, Bangalore Town, Tipu Sultan Road, Karachi on Wednesday,
15th March |
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| 2000
at 2:00 p.m to transact the following business: |
|
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| 1.
To confirm the minutes of the 19th Annual General Meeting held on 15th May
1999. |
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|
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| 2.
To receive and consider the Audited Accounts for the year ended June 30, 1999
and the |
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| report
of the directors and auditors thereon. |
|
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| 3.
To appoint auditors and to fix their remuneration |
|
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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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| Karachi: |
|
Mohammad Adil |
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| February 22, 2000 |
|
Company Secretary |
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| Notes: |
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| 1.
Share Transfer Books of the company will be closed from 8th March 2000 to
15th March |
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| 2000, both days inclusive. |
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|
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| 2.
Any member of the company entitled to attend and vote may appoint another
member as |
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| his/her
proxy to attend and vote instead of him/her. |
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|
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| 3.
Proxies must be received at the Registered Office of the company at Trade
Centre, A- |
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| 14,
Block 7/8, K.C.H.S., Karachi, not less than 48 hours before the time of
holding the |
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| meeting. |
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|
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| 4.
Any individual Beneficial Owner of Central Depository Company, entitled to
vote at this |
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| meeting,
must bring his/her National Identity Card with him/her to prove his/her
identify, |
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| and
in case of proxy must enclose an attested copy of his/her National Identity
Card. |
|
| Representatives
of corporate members should bring the usual documents required for |
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| such purpose. |
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|
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| 5.
Members are requested to promptly notify the company of any change in their
addresses. |
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| REPORT
OF THE DIRECTORS |
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| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
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| The
Board of Directors of your company has pleasure in presenting the Annual
Report, together |
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| with
the audited accounts of your company, for the year ended June 30, 1999. |
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|
| Overview
of the Cement Industry |
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| In
the year under review a healthy and positive change has taken place in the
total cement market |
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| size,
which has shown an appropriate growth. This is a positive sign for the
industry. |
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| The
stiff competition in the market place has maintained a downward pressure on
prices of |
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| cement,
hence the cement manufacturers have not been able totally pass on the
increasing costs |
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| of
inputs in the form of a higher selling price. However, due to the increased
consumption, the |
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| capacity
utilization has improved, hence the industry as a whole is now showing better
results. |
|
|
| You
would be pleased to know that the company is back in profit and we expect it
to do better in |
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| the coming years. |
|
|
| Optimization
& Expansion Projects |
|
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| We
are pleased to share with you the good news, that the capacity optimization
of existing |
|
| production
line of our plant has been completed, and is presently under stabilization.
This is a |
|
| major
breakthrough and is expected to further improve the financial results of the
company. |
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|
| Sales & Production |
|
|
| Inspire
of the increase in consumption of cement in the country, the market remained
highly |
|
| competitive,
with a downward pressure on prices. However, the existing over capacity in
the |
|
| industry
has resulted in an industry wide lower capacity utilization. You would be
pleased to know |
|
| that,
by the grace of God, your company has maintained the premium position of its
products that |
|
| they
have always commanded. This premium pricing was made possible by the superior
quality of |
|
| products
and intensive marketing activities conducted at exceptionally economical
costs. The |
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| sales
for the year under review have been 331,899 tons. |
|
|
| Continued
cost-cutting methods have also resulted in a substantial reduction in
overhead costs, |
|
| which
have been contained at Rs 41.906 million compared to Rs.50.889 million last
year (which |
|
| was
in itself a reduction from the 1996-97 figure of Rs. 63.515 million). |
|
|
| To
control the inventory carrying costs, production was synchronized with sales.
Production of |
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| cement
and clinker in the year under review was 324,711 and 281,253 tons,
respectively. |
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|
| Appropriation of Profit |
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| The
appropriation of the available profit is recommended as under: |
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|
|
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|
(Rs.'000') |
|
|
| Net profit for the year |
|
|
2,832 |
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| Cumulated
loss brought forward |
|
(36,956) |
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|
------------------- |
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|
(34 ,124) |
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| Transfer to general reserve |
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|
-- |
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|
------------------- |
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| Accumulated
loss carried forward |
|
(34,124) |
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|
=========== |
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| Future Outlook |
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| With
the improved financial discipline and economic revival strategies being
introduced by the |
|
| government.
the country's economy is expected to start improving. This improvement in
economy |
|
| will
most likely further improve the growth rate of cement consumption. |
|
|
| On
the international scene, the South East Asian crisis has simmered down and
now the |
|
| economies
of the Asian Tigers are regaining health. So are their currencies, which are
recovering |
|
| the
much lost ground against the Dollar. This improvement in the currency parity
against the |
|
| Dollar
has started to rationalize the F.O.B. price of cement being exported from
these countries, |
|
| within
the region. The improved FOB price, coupled with the export rebate of
Rs.900/- per ton, on |
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| cement,
is making export of cement possible from Pakistan. As such, a few shipments
have |
|
| already
sailed out, and the tempo is expected to accelerate as the situation further
improves. |
|
|
| The
increasing rate of local consumption and the expected opening up of exports
will enhance the |
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| capacity
utilization ratio, and the gap in supply and demand caused by the temporary
over supply |
|
| position
is expected to further reduce in the coming years. |
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|
| Expansion Project |
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| Much
progress has been achieved towards completion of the expansion project.
However, in the |
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| year
under review efforts were focused on optimizing capacity of the present
operational line |
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| which
has, Masha Allah, been completed and is being stabilized. The completion
status of the |
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| expansion
project (second line) is as follows: |
|
|
|
| Civil Works |
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| More
than 85% of civil works have been achieved. In certain areas 100% of the
civil works |
|
| have been completed. |
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|
| Plant and Equipment |
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| Most
of the imported plant and machinery has arrived and fabrication, erection and |
|
| installation
activities are expected to start soon. |
|
|
| Investment
in Saadi Cement Limited |
|
| Your
company has invested Rs.800 million in the equity of Saadi Cement Limited
which is |
|
| establishing
a cement plant comprising of two lines capable of manufacturing 3,600 tons
per day |
|
| of
high quality cement using dry process suspension pre-heater with
pre-calcination technology. |
|
|
| You
may be aware that during the fast track implementation of the project,
various hurdles had |
|
| cropped
up due to reasons beyond the control of the management. By the grace of God,
all these |
|
| hurdles
have been surmounted, including the financial shortfall. As a result, the
project is now |
|
| fully
poised for commissioning and will now be in production in the next few
months. |
|
|
| Personnel |
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| We
can proudly claim, that our quality products are the outcome of a devoted,
committed, skilled |
|
| and
enterprising team of professionals who have actively participated and ensured
continuous |
|
| growth of the organization. |
|
|
| The
directors would like to place on record their appreciation for the efforts of
all the employees, |
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| and
welcome the new members of the team. |
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| Auditors |
|
| Messrs.
Ford, Rhodes, Robson, Morrow, Chartered Accountants and Messrs. Khan H.R.
& Co., |
|
| Chartered
Accountants, retire and offer themselves for reappointment. |
|
|
| Acknowledgments |
|
| The
Board of Directors wishes to place on record its thanks to our customers who
patronize our |
|
| products
and appreciates the help and support from the vendors and contractors because
of |
|
| whose
prompt service we have made good progress on our projects. |
|
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| We
specially thank the financial institutions who have stood by us and extended
their support and |
|
| cooperation in difficult
times. |
|
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| We
are confident of a long-term and mutually beneficial business relationship
with all our |
|
| associates. |
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|
|
By Order of the Board |
|
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| Karachi: |
|
Tariq Mohsin Siddiqui |
|
| February: 22, 2000 |
|
Chairman |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
|
| We
have audited the annexed balance sheet of Pakland Cement Limited as at June
30, 1999, |
|
| and
the related profit and loss account and 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, 1984; |
|
|
| (b) in our opinion; |
|
|
|
| (i)
the balance sheet and profit and loss account, together with notes thereon
have |
|
| been
drawn up in conformity with 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 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
(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 (cash flow statement)
for the |
|
| year then ended; |
|
|
|
| (d)
in our opinion no Zakat was deductible at source under the Zakat and Ushr
Ordinance, |
|
| 1980, and |
|
|
|
| (e)
without qualifying our opinion, we draw attention to the following matters: |
|
|
| (i)
certain liabilities have been treated as long-term loans on the basis of the
reasons |
|
| given
in note 3 to the accounts; |
|
|
|
| (ii)
for the reasons given in the note 6.2 and pending the outcome of the
litigation in this |
|
| matter,
no provision has been made against the diminution in the value of Rs.600 |
|
| million
in the shares of Saadi Cement Limited; |
|
|
|
| (iii)
amounts receivable in respect of other charges paid to KPT Rs.146.087 million
as |
|
| shown in note 13 and octroi refundable
Rs.5.481 million, excise duty recoverable |
|
| Rs.8.995 million and sales tax Rs.18.77
million as shown in note 14 to the financial |
|
| statements are subject to the successful
outcome of the efforts being made by the |
|
| company to recover the same. Pending the
outcome of these efforts no provision |
|
| for the same has been made in these
accounts. |
|
|
| (iv)
the ultimate outcome of the contingencies disclosed in note 30.1(a), (e) and
(g) to |
|
| the
financial statements, cannot presently be determined and therefore no
provision |
|
| thereof
has been made in these financial statements. |
|
|
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1999 |
|
|
|
June 30 |
June 30 |
|
|
1999 |
1998 |
|
|
Note: |
Rs.'000' |
Rs.'000' |
|
|
|
|
|
| Operating fixed assets |
|
4 |
5,845,621 |
641,879 |
|
| Capital work-in-progress |
|
5 |
3,510,459 |
2,892,481 |
|
|
|
---------------------- |
---------------------- |
|
|
|
|
4,095,021 |
3,534,360 |
|
| LONG-TERM INVESTMENT |
|
6 |
800,000 |
800,000 |
|
| LONG-TERM LOANS |
|
7 |
607 |
406 |
|
| LONG-TERM DEPOSITS |
|
8 |
133,398 |
104,189 |
|
| DEFERRED COSTS |
|
9 |
556 |
1,114 |
|
|
|
|
|
|
| CURRENT ASSETS |
|
| Stores and spares |
|
10 |
164,038 |
171,564 |
|
| Stock-in-trade |
|
11 |
118,109 |
167,326 |
|
| Trade debts |
|
12 |
56,456 |
45,970 |
|
| Loans and advances |
|
13 |
321,654 |
252,767 |
|
| Deposits,
prepayments and other receivables |
14 |
74,430 |
142,814 |
|
| Shod-term investments |
|
15 |
1,368 |
1,205 |
|
| Cash and bank balances |
|
16 |
16,708 |
50,456 |
|
|
|
|
---------------------- |
---------------------- |
|
|
|
|
752,763 |
832,102 |
|
|
---------------------- |
---------------------- |
|
|
5,782,345 |
5,272,171 |
|
|
============= |
============= |
|
| SHARE
CAPITAL AND RESERVES |
|
| Authorized capital |
|
|
| 150,000,000
(1998: 150,000,000) |
|
| ordinary
shares of Rs. 10/- each |
|
1,500,000 |
1,500,000 |
|
|
============= |
============= |
|
| Issued,
subscribed and paid-up capital |
17 |
825,000 |
825,000 |
|
|
| Revenue reserve |
|
18 |
360,876 |
358,044 |
|
|
|
---------------------- |
---------------------- |
|
|
|
|
1,185,876 |
1,183,044 |
|
| LOANS
FROM DIRECTOR AND OTHERS |
19 |
358,699 |
221,004 |
|
| REDEEMABLE CAPITAL |
|
20 |
76,871 |
62,416 |
|
| LONG-TERM LOANS |
|
21 |
1,449,359 |
1,006,870 |
|
| LONG-TERM
DEPOSITS AND RETENTION MONEY |
22 |
36,603 |
36,150 |
|
| OBLIGATIONS
UNDER FINANCE LEASES |
23 |
1,633,537 |
863,324 |
|
| DEFERRED INCOME |
|
24 |
-- |
323 |
|
| IMPORT BILLS PAYABLE |
|
25 |
42,964 |
42,964 |
|
|
|
|
|
|
| CURRENT LIABILITIES |
|
| Short-term loans |
|
26 |
25,540 |
52,000 |
|
| Short-term finances |
|
27 |
415,837 |
408,199 |
|
| Current
portion of long term liabilities |
28 |
50,000 |
907,936 |
|
| Creditors,
accrued and other liabilities |
29 |
501,121 |
470,324 |
|
| Income tax payable |
|
|
5,938 |
17,617 |
|
|
|
|
---------------------- |
---------------------- |
|
|
|
|
998,436 |
1,856,076 |
|
| CONTINGENCIES
& COMMITMENTS |
30 |
|
|
|
|
---------------------- |
---------------------- |
|
|
|
|
5,782,345 |
5,272,171 |
|
|
============= |
============= |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Chairman & Chief
Executive |
|
Director |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
June 30 |
June 30 |
|
|
|
1999 |
1998 |
|
|
Note |
Rs.'000' |
Rs.'000' |
|
|
| NET SALES |
|
31 |
732,359 |
922,291 |
|
| COST OF GOODS SOLD |
|
32 |
650,090 |
849,793 |
|
|
|
|
---------------------- |
---------------------- |
|
| GROSS PROFIT |
|
|
82,269 |
72,498 |
|
| General
and administrative expenses |
33 |
35,846 |
41,010 |
|
| Selling
and distribution expenses |
34 |
4,526 |
5,914 |
|
| Other charges |
|
35 |
1,534 |
3,965 |
|
| Other income |
|
36 |
(24,018) |
(24,350)' |
|
|
|
|
---------------------- |
---------------------- |
|
|
|
|
17,888 |
26,539 |
|
|
|
---------------------- |
---------------------- |
|
| OPERATING PROFIT |
|
|
64,381 |
45,959 |
|
| FINANCIAL CHARGES |
|
37 |
57,887 |
71,166 |
|
|
|
|
---------------------- |
---------------------- |
|
| PROFIT/(LOSS)
BEFORE TAXATION |
|
6,494 |
(25,207) |
|
| Taxation - Current |
|
38 |
3,662 |
4,611 |
|
| Prior |
|
|
-- |
8,235 |
|
|
|
|
---------------------- |
---------------------- |
|
|
3,662 |
12,846 |
|
|
---------------------- |
---------------------- |
|
| PROFIT/(LOSS)
AFTER TAXATION |
|
2,832 |
(38,053) |
|
|
| (ACCUMULATED
Loss)/UNAPPROPRIATED PROFIT |
|
| BROUGHT FORWARD |
|
|
(36,956) |
1,097 |
|
|
|
---------------------- |
---------------------- |
|
| (ACCUMULATED
Loss) CARRIED FORWARD |
|
(34,124) |
(36,956) |
|
|
|
============= |
============= |
|
| EARNING PER SHARE |
|
39 |
0.03 |
(0.46) |
|
|
============= |
============= |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
June 30, |
June 30, |
|
|
|
1999 |
1998 |
|
|
|
Rs. ' 000' |
Rs.' 000' |
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Net
profit / (loss) before taxation |
|
6,494 |
(25,207) |
|
| Adjustments for: |
|
|
|
| Depreciation |
|
|
58,845 |
64,292 |
|
| Profit on sale and lease back |
|
|
(323) |
(646) |
|
| (Write
back)/Provision for diminution in value of |
|
|
|
| investments |
|
|
(163)' |
989 |
|
| Profit on sale of investments |
|
|
|
(106) |
|
| Gain on sale of fixed assets |
|
|
(3,325) |
|
|
| Financial charges |
|
|
57,887 |
71,166 |
|
| Liabilities written back |
|
|
(10,593 |
(2,202) |
|
| Amortization of deferred cost |
|
|
558 |
558 |
|
|
---------------------- |
---------------------- |
|
|
102,886 |
134,051 |
|
|
| Operating
profit before working capital |
|
| changes |
|
|
109,380 |
108,844 |
|
|
| Working capital changes |
|
|
| (Increase)
/ decrease in current assets |
|
| Stores and spares |
|
|
7,526 |
2,411 |
|
| Stock-in-trade |
|
|
49,217 |
45,954 |
|
| Trade debts |
|
|
(10,486) |
44,266 |
|
| Loans and advances |
|
|
(1,332) |
(5,866) |
|
| Deposits,
prepayments and other receivable |
40,956 |
(52,534) |
|
|
---------------------- |
---------------------- |
|
|
|
85,881 |
34.23 |
|
| Increase
/ (decrease) in current Liabilities |
|
| Short-term
loans and finances |
|
(18,822) |
102,648 |
|
| Creditors,
accrued and other liabilities |
|
108,753 |
(85,226) |
|
|
---------------------- |
---------------------- |
|
|
|
89,931 |
17,422 |
|
|
|
---------------------- |
---------------------- |
|
| Net
cash generated from operations |
|
285,192 |
160,497 |
|
| Financial charges paid |
|
(88,221) |
(80,824) |
|
| Income taxes paid |
|
(15,341 ) |
(21,497) |
|
|
---------------------- |
---------------------- |
|
| Net
cash from operating activities |
|
181,630 |
58,176 |
|
| (Total carried forward) |
|
|
|
| Total brought forward |
|
|
181,630 |
58,176 |
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
|
| Fixed capital expenditure |
|
(94,575) |
(129,065) |
|
| Sale proceeds of fixed assets |
|
4,140 |
-- |
|
| Long term deposits |
|
(8,087) |
(11,997) |
|
| Payment to contractors |
|
|
(87,725)' |
(251,779) |
|
| Repayment
by associated company |
|
22,319 |
185,258 |
|
| Sale
proceed of short term investments |
|
-- |
2,790 |
|
|
|
|
---------------------- |
---------------------- |
|
|
| Net
cash used in investing activities |
|
(163,928) |
(204,793) |
|
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
|
| Proceeds
from redeemable capital, |
|
|
|
| long-term
loans and lease finance-net |
|
(51,903) |
150,455 |
|
| Deposits
from dealers and retention money |
|
453 |
388 |
|
|
---------------------- |
---------------------- |
|
| Net
cash (used in)/from financing activities |
|
(51,450) |
150,843 |
|
|
---------------------- |
---------------------- |
|
| Net
(Decrease)/Increase in cash and cash |
|
| equivalent |
|
|
(33,748) |
4,226 |
|
|
| Cash
and cash equivalent at beginning |
|
| of the year |
|
|
50,456 |
46,230 |
|
|
---------------------- |
---------------------- |
|
| Cash
and cash equivalent at the end of the year |
|
16,708 |
50,456 |
|
|
|
============= |
============= |
|
