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Pakistan National Shipping Corporation
Annual Report 1999
CONTENTS
MANAGEMENT, AUDITORS AND BANKERS
NOTICE FOR MEETING
REPORT OF THE BOARD OF DIRECTORS
AUDITORS' REPORT
BALANCE SHEET
PROFIT AND LOSS ACCOUNT
CASH FLOW STATEMENT
NOTES TO THE ACCOUNTS
PATTERN OF SHAREHOLDING
CONSOLIDATED REPORT AND ACCOUNTS OF PAKISTAN NATIONAL
SHIPPING CORPORATION AND ITS SUBSIDIARY COMPANY
STATEMENT UNDER SECTION 237 OF THE COMPANIES ORDINANCE, 1984
AUDITORS' REPORT
BALANCE SHEET
PROFIT & LOSS ACCOUNT
CASH FLOW STATEMENT
NOTES TO THE ACCOUNTS
SHAREHOLDERS STATISTICS
MANAGEMENT, AUDITORS
AND BANKERS
Board:	Vice Admiral Abaid Ullah Khan
	HI (M), SJ., S.Bt.
	Chairman
	Rear Admiral T.M. Khattak
	Member
	Mr. Abu Shamira M. Aarif
	Member
	Mr. G.R. Arshad
	Member
	Mr. Fazal-ur-Rehman
	Member
	Mr. Jahangir Siddiqui
	Shareholder Director
	Member
	Mr. Muhammad Khusrow Khowaja
	Shareholder Director
	Member
Secretary:	Mr. Arif Saeed
Registered Office:	PNSC Building, Moulvi Tamizuddin Khan Road,
	Karachi-74000.
Auditors:	A.F. Ferguson & Co.
	Chartered Accountants
	Taseer Hadi Khalid & Co.
	Chartered Accountants
Bankers:	National Bank of Pakistan
	Habib Bank Limited
	Muslim Commercial Bank Limited
	United Bank Limited
	Industrial Development Bank of Pakistan
NOTICE FOR MEETING
Notice is hereby given that the 21st Annual General Meeting of the shareholders of the Pakistan
National Shipping Corporation will be held at Navy Welfare Centre (Pakistan Navy Fleet Club)
near Lucky Star Hotel, Saddar, Karachi. on Tuesday 25th January, 2000 at 12.00 Noon to trans-
act the following business:
1. To confirm the Minutes of the 20th Annual General Meeting of the Shareholders of PNSC
held on 18th December, 1998.
2. To consider and adopt the Balance Sheet, the Profit and Loss Account and the Reports of
Auditors and Directors for the year ended 30th June, 1999.
3. To appoint auditors for the year 1999-2000 and to fix their remuneration.
4. To do any other business that may be placed before the meeting with permission of the
Chairman.
		By Order of the Board
Dated: 13th December, 1999		ARIF SAEED
		Secretary
Note:
1. A Shareholder entitled to attend and vote at this meeting is also entitled to appoint his/her
proxy to attend the meeting.
2. Proxy must be received at the Registered Office of the Corporation not less than 48 hours
before the time for holding the meeting.
3. Shareholders are requested to notify any change in their address immediately.
4. The share transfer books of the Corporation will remain closed from 18th January to 27th
January, 2000 (both days inclusive).
ANNUAL REPORT
FOR THE YEAR ENDED 30TH JUNE, 1999
The Board of Directors of the Pakistan National Shipping Corporation have pleasure in
presenting their report for the year ended 30th June, 1999.
The year 1998-99 has not been much different from the past few years. Inconsistent eco-
nomic policies have continued to make the climate unfavourable for the investors. An unabated
declining trend in the inflow of foreign direct investment, economic sanctions imposed on the
country after its nuclear test retarded the economic activity with the result that even the domestic
investment interest failed to show up during the period which made the year difficult not only
for business, industry and trade but also for shipping. Cargo availability for the ships continued
to remain scarce thereby maintaining freight rates at low level.
Even in such depressed market conditions, PNSC did not let its cargo liftings go down and .
lifted 3.271 million tons cargo as against almost the same i.e. 3.277 million tons in the previous
year.
Despite the above stated adverse factor's the Board of Directors is pleased to announce that
your Corporation still managed to earn an operating profit of Rs. 125.434 million during the
year.
BORROWINGS
The Corporation did not contract any long term loan during the year under review.
COMMERCIAL OPERATIONS
During the year under review the Corporation performed a total of 449 voyages (including
foreign chartered vessels) and lifted 3.271 million freight tons of cargo as compared to 467 voy-
ages and 3.277 million freight tons respectively, in the corresponding period of the previous
year, thus maintaining nearly the same level of cargo liftings. Due to the withdrawal of the
FIRST RIGHT OF REFUSAL by the Government, the carriage of Iron Ore, Wheat and Coal
dropped from 1.937 million tons during 1997-98 to 0.312 million tons in 1998-99 a decrease of
about 84 percent. Consequently, the total freight revenue during the year reduced to Rs. 3,711
millions as against Rs. 4,597 million in the previous year a decline of over 19 percent. Taking
the advantage of large volume or crude oil imports, in the country PNSC started lifting crude oil
with effect from 14th October 1998 by chartering foreign flag vessels and lifted 1.580 millions
tons of crude oil during the year under review.
The sector wise cargoliftings are as under:-
SECTOR	1998-99	1997-98
	FRT/TONS	FRT/TONS
DRY BULK	0.489 Million	2.122 Million
LIQUID BULK	1.580 Million	--
ASIA	0.844 Million	0.773 Million
EUROPE	0.218 Million	0.266 Million
USA/CANADA	0.140 Million	0.116 Million
The break-up of Dry/Liquid bulks is as follow:-
CARGO	1998-99	1997-98
	FRT/TONS	FRT/TONS
CRUDE OIL	1.580 Million	-- Million
WHEAT	--	0.297 Million
IRON ORE	0.051 Million	0.597 Million
COAL / COKE	0.261 Million	1.043 Million
PHOSPHATE	0.177 Million	0.161 Million
OTHERS (DRY)	--	0.024 Million
During the year 23,218 TEUS of containers were lifted as against 11,230 TEUS in the pre-
vious year.
Since there was no Bulk carrier in the PNSC fleet bulk cargo was handled through char-
tered vessels. The three container vessels in the fleet were deployed in the container feeder ser-
vice between,  Karachi - Colombo - Singapore, which has recently been restricted to Karachi -
Colombo only.
INSURANCE & CLAIMS
The high standard of performance of the PNSC Fleet was maintained round the year with a
view to negotiate PNSC Hull & Machinery Insurance for the year 1999. We have earned reduc-
tion in the Premium of 15% and overall reduction earned during the last 3 years amounts to over
62% which is a remarkable achievement.
The Corporation also succeeded in earning reduction in the Premium rate for P&I Cover
for the year 1998-99 from Messrs Steamship Mutual Underwriting Association Ltd. P&I Club
London.
It is evident that an effective control has been exercised during the year using best of pro-
fessional skill to retain the confidence of the Shippers/Consignees.
STORES & SUPPLIES
In order to remain cost effective, major and costly items of stores were either imported
from abroad or purchased directly from the manufacturers.
Self catering scheme has been very effective and continued to accrue financial benefits to
the Corporation.
BUNKER AND SPARES
The volume of bunker procured increased over the previous year as our container vessels
have joined our liner service and we now have to cater for their bunkering.
The ,average price of. bunker in the International market declined as compared to previous
year. However to contain cost maximum bunker was procured from the cheaper port on the oper-
ating route of the vessels.
Efforts were made to purchase spare parts through cheapest source from the equipment's
Maker to keep vessels sea worthy and reliable to maintain an uninterrupted operational schedule.
MAINTENANCE AND REPAIRS
Irrespective of constraints of ageing fleet and compliance of New Rules and Regulations of
Classification Societies and Port State Control, strict vigilance/checks were kept to control
expenditure on repairs. Dry-docking of the vessels were arranged at Chinese yards being cheap-
est in labour cost.
All available local resources were extensively utilized on maintenance and repairs of the
Corporation's vessels. PNSC workshop undertook maximum burden of this task.
Economy continued to be enforced in the procurement of Spares and Stores for the vessels.
Only essential spares/stores were provided to the vessels for meeting the operational require-
merits.
PLANNING AND DEVELOPMENT
a. A dedicated container service has been established between Karachi and Colombo. This
has been made possible after removal of taxes and duties from imported ships, thus
enabling PNSC to induct it's already acquired ships into the new service. After a gestation
period, the service has started to show signs of a turn around.
b. PNSC took over the transportation of Crude Oil requirements, which were earlier awarded
to foreign operators. Experience of the last nine months has been profitable and encourag-
ing. Case for acquisition of a second hand tanker is now under submission.
c. PNSC has responded to the trade by providing economical and efficient service to rice
trade in their endeavor to secure 200,000 metric tons rice export to Indonesia. We have
established economical market rates for them.
d. Regional Representatives and Agents of PNSC in various countries around the world have
been directed to secure cargo through innovative commercial means. It has resulted in slow
but steady increase in the lifting of cargo for import as well as export.
e. Introduction of Management Information System and computerization of essential ship-
ping data has helped in quick decision making and avoidance of delays in commercial
operation and financial transaction.
f. PNSC has expanded its ship repair relations with Peoples Republic of China and have
effected tremendous savings in Dry Docking of its vessels that were hitherto sent to other
shipyard'.
g. PNSC has enhanced its services to China for the imports of raw materials like Soda Ash
and Coke etc., by making regular calls at two Chinese Ports:
COMPUTERISATION / Y2K COMPLIANCE
Recently PNSC has replaced its outmoded Main Frame computers with new state-of-the-
art technology. All the equipment are Y2K compliant. Furthermore all in-housed developed
applications have also been converted to make them Y2K compliant. Also, the Management
Information System provides the requisite information to the Management on as  required basis.
PNSC has also launched its Web-Site on the Internet (www.pnsc.com.pk). It will facilitate
its clients in many ways including updated position of our vessels through the voyage schedules.
This will help PNSC in furthering its objectives of providing better services and securing more
business in the years ahead.
MANAGEMENT
Mr. Mohsin Manzoor relinquished the charge of Vice Chairman and Director
(Administration) on 18th January, 1999 and in his place Rear Admiral (Retd) Tanveer Ahmed
assumed the charge of Director (Administration) on 29th January, 1999.
On 12th April, 1999 the Board of Directors was re-constituted as under, and all existing
nominated Directors, except Chairman, ceased to hold office as Directors of the Board with
effect from 20th February, 1999, and they were re-designated as Executive Directors.
Vice Admiral Abaid Ullah Khan		-	Chairman
Mr. Abu Shamim M. Aarif		-	Member
Rear Admiral T.M. Khattak		-	Member
Mr. G.R. Arshad		-	Member
Mr. Zafar A. Khan		-	Member
Mr. Jahangir Siddique		-	Member
Mr. Muhammad Khusrow Khowaja		-	Member
Upon superannuation, Mr. K. Daud Shams retired from service and Mr. Arif Saeed took
over as Company Secretary with effect from 10th June, 1999.
Later, on 16th November, 1999 Mr. Fazal-ur-Rehman was nominated as Director of the
Board in place of Mr. Zafar A. Khan who had earlier regretted acceptance of his nomination as
Director.
AUDITORS
The Auditors M/s. A.F. Ferguson & Co., Chartered Accountants, and, M/s. Taseer Hadi
Khalid & Co., Chartered Accountants retired and offered themselves for re-appointment.
ACKNOWLEDGMENT
The Board wishes to place on record its appreciation of the efforts and services rendered
by the officers and staff of the Corporation, both ashore and afloat.
The Directors also thank the agents, the bankers and the auditors for their co-operation and
support. Our gratitude is also due to the Director General, Ports & Shipping, Ministry of
Communications and the Government of Pakistan for their guidance and support.
Karachi		VICE ADMIRAL ABAID ULLAH KHAN
13th December, 1999		H.I(M) SJ., S.Bt
		Chairman
FLEET AS ON JUNE 30, 1999
S.No./Vessel Name	Year of	Dead	G.R.T	N.R.T
	Built	Weight
		in Tons
1. m.v. Lalazar	1985	13,346	10,246	4,664
2. m.v. Swat	1983	14,355	10,917	5,758
3. m.v. Shalamar	1983	14,170	10,544	5,643
4. m.v. Islamabad	1983	18,257	12,395	6,747
5. m.v. Khairpur	1981	16,414	13,402	7,693
6. m.v. Sibi	1981	16,436	13,402	7,693
7. m.v. Kaghan	1981	18,050	12,030	6,686
8. m.v. Ayubia	1981	18,050	12,030	6.69
9. m.v. Sargodha	1980	18,242	12,395	6,747
10. m.v. Malakand	1980	18,224	12,395	6,747
11. m.v. Multan	1980	18,257	12,395	6,747
12. m.v. Bolan	1980	18,144	12,395	6,747
13. m.v. Hyderabad	1980	18,257	12,395	6,747
14. m.v. Chitral	1980	18,144	12,395	6,747
15. m.v. Makran	1979	23,490	16,199	8,184
		--------------------	--------------------	--------------------
	TOTAL	261,836	185,535	100,236
		============	============	============
AUDITORS' REPORT TO THE MEMBERS
We have audited the annexed Balance Sheet of Pakistan National Shipping Corporation
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 Corporation 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
Corporation's business; and
(iii) the business conducted, investments made and the expenditure incurred during
the year were in accordance with the objects of the Corporation;
(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 Corporation's affairs as at June 30, 1999 and of the
profit and cash flows for the year then ended; and
(d) in our opinion no zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980.
A.F. FERGUSON & CO.			TASEER HADI KHALID & CO.
Chartered Accountants			Chartered Accountants
Karachi: 13th December, 1999
BALANCE SHEET AS AT JUNE 30, 1999
		Note	1999	1998
			(Rupees '000)
SHARE CAPITAL AND RESERVES
Authorised Capital
200,000,000 ( 1998: 200,000,000)
ordinary shares of Rs. 10 each			2,000,000	2,000,000
			===========	===========
Issued, subscribed and paid-up capital		2	1,143,406	1,143,406
Capital reserves		3	126,843	126,843
			--------------------	--------------------
			1,270,249	1,270,249
ACCUMULATED LOSS			(469,250)	(353,077)
			--------------------	--------------------
			800,999	917,172
LONG-TERM LOAN		4	1,273,135	1,161,250
DEFERRED LIABILITY
Retirement gratuity		5. l	264.25	232,917
CURRENT LIABILITIES AND PROVISIONS
Current portion of: Long-term liability			--	406
Creditors, provisions and accruals		6	799,437	765,390
Unclaimed dividends			9,874	9,874
Short-term running finance utilised
under mark-up arrangement - secured			41,168	--
			--------------------	--------------------
		7	850,479	775,670
CONTINGENCIES		8
			--------------------	--------------------
			3,188,859	3,087,009
			===========	===========
FIXED ASSETS - TANGIBLE		9	1,843,857	2,046,037
LONG-TERM INVESTMENTS		10	4,711	4,711
LONG-TERM LOANS		11	34.44	44,435
CURRENT ASSETS
Stores and spares		12	134,779	137,804
Freight receivable		13	202,858	171,231
Agents' and owners' balances		14	103,689	119,513
Other debtors		15	117,436	145,236
Loans and advances		16	59,863	31.05
Deposits and prepayments		17	19,878	19,501
Incomplete voyages		18	107,466	70,191
Income taxes refundable			188,964	110,767
Insurance claims		19	73,172	60,273
Certificates of deposits with
financial institutions			3,000	3,000
Cash and bank balances		20	294,747	123,263
			--------------------	--------------------
			1,305,852	991,826
			--------------------	--------------------
			3,188,859	3,087,009
			===========	===========
The annexed notes form an integral part of these accounts.
VICE ADMIRAL ABAID ULLAH KHAN			FAZAL-UR-REHMAN
Chairman & Chief Executive			Director
PROFIT AND LOSS ACCOUNT
For the year ended June 30, 1999
		Note	1999	1998
			(Rupees '000)
OPERATING REVENUES
Freight (Net)			2,471,333	2,467,793
Chartering revenues		21	1,239,454	2,129,422
			--------------------	--------------------
			3,710,787	4,597,215
OPERATING EXPENSES
Fleet expenses - direct		22	3,241,978	4,084,987
- indirect		23	58,340	29,439
			--------------------	--------------------
			3,300,318	4,114,426
Administration and general expenses		24	285,046	279,011
			--------------------	--------------------
			3,585,364	4,393,437
			--------------------	--------------------
OPERATING PROFIT			125,423	203,778
INSURANCE CLAIMS		25	26,626	24,974
OTHER INCOME		26	83,740	127,385
			--------------------	--------------------
			235,789	356,137
OTHER EXPENSES		27	365,779	230,747
			--------------------	--------------------
(LOSS)/PROFIT BEFORE TAXATION			(129,990)	125,390
TAXATION		28	( 13,817)	23,579
			--------------------	--------------------
(LOSS)/PROFIT AFTER TAXATION			(l l6,173)	l 01,811
ACCUMULATED LOSS BROUGHT FORWARD			(353,077)	(454,888)