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Dandot Cement Company Limited
Annual Report 2002
Contents
Company Information
Notice of Annual General Meeting
Vision and Mission Statement
Statement of Ethics and Business Practices
Directors'Report to the Shareholders
Financial Highlights of Last Ten Years
Pattern of Shareholding
Statement and Review Report of Compliance with Best Practices
of Code of Corporate Governance
Auditors'Report to the Members
Balance Sheet
Profit and Loss Account
Cash Flow Statement
Statement of Changes in Equity
Notes to the Accounts
Company Information
Board of Directors;
Mr. Abdur Rafique Khan	(Chairman)
Mr. M. Tousif Peracha
Mr. A. Shoeb Piracha	(Managing Director)
Mr. Farooq Zaman
Mr. Jawaid A. Peracha
Mr. Ali Rashid Khan
Mr. Mohammad Asif	(NomineeofN.l.T.)
Audit Committe;
Abdur Rafique Khan	(Chairman)
Jawaid A. Peracha
Ali Rashid Khan
Company Secretary &
Chief Financial Officer
ZulfiqarA. Choudhry (ACA. ACMA.)
Statutory Auditors:
Khalid Majid Rahman Sarfaraz
Rahim Iqbal Rafiq
Chartered Accountants
Legal Advisor
Walker Martineau Saleem
Bankers:
Habib Bank Limited
Citibank N.A.
ABN Amro Bank
The Bank of Punjab
Saudi Pak Commercial Bank Limited
United Bank Limited
National Bank of Pakistan
Bolan Bank Limited
Muslim Commercial Bank Limited
Registered Office:
3-A/3 Gulberg - III, Lahore.
Telephone: 5871057-58, Fax: 5871056
Factory:
DANDOT R.S., Distt. Jhelum.
Telephone:(0458) 211371,211491 Fax: (0458) 211490
Shares Department: 3-A/3 Gulberg - III, Lahore.
Notice of Annual General Meeting
NOTICE   is   hereby  given   that  22nd  Annual   General   Meeting  of  the  shareholders  of
Dandot Cement Company Limited for the financial year ended June 30, 2002 will be held on Wednesday,
October 30, 2002 at its registered office 3-A/3, Gulberg-III, Lahore at 3:30 p.m., to transact the following business:
ORDINARY BUSINESS
1.      To confirm the minutes of the last Annual General Meeting held on December 26, 2001.
2.      To receive, consider and adopt the audited accounts together with the Directors' report and Auditors' report
for the year ended June 30, 2002.
3.      To appoint Auditors for the year 2002-2003 and fix their remuneration. Khalid Majid Rahman Sarfraz Rahim Iqbal
Rafiq, Chartered Accountants, the retiring Auditors, being eligible, offer themselves for reappointment as Auditors
of the Company.
SPECIAL BUSINESS
4.      To authorize short term advance to M/s. Gharibwal Cement Limited and for this purpose, to consider and if
thought fit to pass the following resolution as special resolution.
"RESOLVED that the company is hereby authorized to advance a short term credit facility to Gharibwal Cement
Limited upto a maximum sum aggregating at any one time to Rs. 100 million."
"FURTHER RESOLVED that the Chief Executive of the company is hereby authorized to give effect to the above
resolution, take all the necessary steps, including seeking permission (where necessary) from the Securities &
Exchange Commission of Pakistan as required by the Companies Ordinance, 1984 and to sign and execute any
paper, document, application, etc. for and on behalf of the company with respect thereto."
5.      To adopt, consider and if thought fit to adopt a new Article No. 78A and substitute Article Nos. 66, 67, 68 & 80
of existing Articles of Association of the Company (Resolution relating to amendments in existing Articles of
Association of the Company proposed to be moved at the Annual General Meeting is being sent to the
members alongwith notice of the meeting).
6.      To transact any other business with the permission of the Chair.
By Order of the Board
ZULFIQAR A. CHOUDHRY
Company Secretary
Lahore: September 25, 2002
STATEMENT U/S 160(l)(b) OF THE COMPANIES ORDINANCE, 1984
A statement U/S 160(l)(b) of the Companies Ordinance, 1984 setting forth all material facts concerning the above
special resolutions annexed to this notice of meeting is being sent to the members.
NOTES:
1.      The Register of Members and the Share Transfer Books of the Company will remain closed from 24-10-2002 to
30-10-2002 (both days inclusive) for the purposes of the Annual General Meeting.
2.      A member entitled to attend and vote at the Meeting may appoint another member as his/her proxy to attend
and vote on his/her behalf. Proxies, in order to be effective, must be received at the Registered Office of the
Company 48 hours before the time of the holding of the Meeting.
3.      Members are requested to notify immediately changes, if any, in their registered addresses.
4.      CDC Account Holders are requested to bring their National Identity Card, Account and Participant's Numbers
and will further have to follow the guidelines as laid down in Securities & Exchange Commission of Pakistan
Circular No.l dated 26th January 2000 while attending the Meeting for identification.
Changes in Articles of Association of the Company
SPECIAL BUSINESS (relating to Articles of Association of the Company)
ITEM NO. 5 - To consider and if thought fit to pass the following resolution as special resolution approving the addition
of Article No. 78A and substitution of Article Nos. 66, 67, 68 and 80.
"RESOLVED that the following clauses of the Articles of Association of the Company are hereby added/substituted as
follows:
66.     The remuneration of directors for attending a meeting of the Board of Directors shall be Rs.5,000 or such other
sum as may be approved by the Directors, subject to the prevailing laws, rules and regulations.
67.    The Director/Chairman who serves on any committee or who devotes special attention to the business of the
company or who performs extra services, may be paid such remuneration as the Directors may determine from
time to time.
68.    The Director of the company may, in addition to any remuneration receivable by him, be entitled to be reimbursed
all travelling and other expenses incurred in attending the meetings of the Directors or otherwise incurred whilst
employed for the business of the company.
78A.   The Directors may from time to time delegate any of their powers to committees consisting of such members
of their body as they think fit, and may from time to time revoke such delegation. Any committee so formed
shall, in the exercise of the powers so delegated, conform to any regulations that may from time to time be
imposed upon it by the Directors.
80.    A resolution, passed without any meeting of the Directors or of a committee of Directors and evidenced in
writing under their hands (or in their absence their Alternate Directors), being not less than the quorum
required for meetings of the Directors or their committee, as the case may be, shall be valid and effectual as if
it had been passed at the meeting of the Directors, or as the case may be of such committee, duly called or
constituted".
Statement U/S 160 of the Companies Ordinance, 1984
ITEM NO. 4 - TO AUTHORIZE SHORT TERM ADVANCE TO GHARIBWAL CEMENT LIMITED
Gharibwal Cement Limited (GCL) is an associated company of Dandot Cement Company Limited (DCCL). In order to
provide access to funds for immediate cash requirements, the Board of Directors of DCCL has recommended that it is
necessary to provide a short term advance facility to GCL upto a maximum sum aggregating at any one time of
Rs. 100 million. Mark up on the outstanding amounts would be charged @ 15% per annum. This facility would remain till
it is rescinded by the Board of DCCL.
On availing the above facility, the investment in GCL would exceed 30% of the paid up capital and free reserves of the
company. Hence, necessary approval under the proviso of Section 208(1) of the Companies Ordinance, 1984 is also
sought.
It is essential to provide GCL access to short term funds to enable it to tide over its immediate cash requirements
whenever the need so arises. The directors of DCCL are interested in the business to the extent of their shareholding
and that some of the directors of DCCL are also directors of GCL.
ITEM NO. 5 - CHANGES IN THE EXISTING ARTICLES OF ASSOCIATION OF THE COMPANY
The proposed alterations to the Articles of Association of the Company are necessary in order to implement the Code of
Corporate Governance effectively. Shareholders' approval to the proposed alterations is sought accordingly. None of the
directors have any special interest in the said business other than to the extent of their remuneration and as ordinary
shareholders of the company.
Vision
DANDOT, as one of the leading dry-process cement plant of Pakistan, strives to
continue its path of market consolidation and improvement, spanning the areas
of north and central Punjab and Azad Kashmir. Our vision is to establish a strong
market presence, focused on customer brand loyalty and satisfaction, a long-
term basis.
DANDOT envisions to maintain quality, keep abreast with technology as well as
up-date our capabilities in a competitive business environment, and accomplish
furhter improvement in the market share.
Mission
DANDOT'S mission is to perform to the highest levels of professional excellence
within the industry and the national economy, while catering to the needs of our
ever dedicated workforce, ensuring reasonable return to the stakeholders while
delivering our product to the end consumer at competitive prices to accelerate
the sustained development of Pakistan.
Statement of Ethics and Business Practices
Introduction: Dandot Cement Company Limited is one of the premier dry-process cement plant of the country. We aim
fo r a high standard of professionalism and ethics in the entire spectrum of business transactions of our Company. In
addition, Dandot Cement Company Limited affirms to observe the applicable laws and regulations of Pakistan.
Code of Conduct: Dandot Cement Company Limited commits itself to adhere to all professional, legal, and ethical codes
of conduct which are pertinent in our business dealings with the agencies of the Government, financial institutions,
cement industry, stockists and retailers, suppliers and shareholders, etc.
Employees: Under the present management, Dandot Cement Company Limited's employee-management relations
remain cordial, marked by mutual respect and co-operation in the larger interests of the Company. The Company
appreciates the services of all employees and strives to provide a safe, secure and congenial working environment,
regardless of rank, caste, or creed.
The Factory's social, educational, and transport facilities are accessible to the staff based in the Factory's residential area.
The employees are provided with a reasonable number of annual leaves to ensure their motivation and fitness. In
general, the employees discharge their functions with integrity and diligence.
Community: Dandot Cement Company Limited wishes to pursue good relations with the local communities.
Quality Assurance: Dandot Cement Company Limited produces durable "ordinary portland cement" which conforms
with the high international standards in quality. We strive to combine techology with quality to deliver exceptional
results. The ISO 9001: 2000 Certification was accomplished during the year under review. In the context of marketing,
we expect a fair price for our brand of cement and pursue a competitive and equitable relationship with our stockists and
retailers.
Public Relations; Dandot Cement Company Limited is an independent corporate enterprise. We are not affiliated with
any political, regional, or other vested interests. We may interact with other corporate concerns at the relevant business
and industry forums.
Financial Reporting: Our policies with reference to accounting, finance and corporate matters are governed by
prevalent corporate regulations, Companies' Ordinance, 1984, and the Code of Corporate Governance. We are resolved
to comply with International Accounting Standards for the preparation of financial statements with any departure
therefrom being adequately disclosed. An internal audit department is in-process of being set-up.
Conclusion: Dandot Cement Company Limited seeks to implement the Statement of Ethics & Business Practices by all
concerned in practical terms.
Directors' Report to the Shareholders
Your directors are pleased to present the annual report alongwith the audited financial statements for the year ended
June 30, 2002.
Operational Performance - During the year under review, production and despatch of cement increased by 18.6%
and 16.6% respectively, whereas the production of clinker registered a slight shortfall due to the curtailment of gas
supply during the winter from December 07, 2001, uptil March 14, 2002. During this period, the Company procured
42,241 tonnes of clinker to meet its requirements.
The operation of the cement plant remained satisfactory and its normal maintenance has been carried out throughout
the year. The comparative data for production of clinker & cement and despatches of cement is summarised hereunder:-
				2001-2002	2000-2001
				Tonnes	Tonnes
Clinker Production				225,629	260,589
Cement Production				306,667	258,549
Cement Despatches				306,900	263,174
In view of the prevailing recession in the cement industry in which your Company alongwith other cement units continue
to suffer a large surplus operating capacity of about 36% on average throughout the year, the above growth rate
attained by the Company is a positive development, indicating a return to favourable conditions in the days ahead.
Sales and marketing performance - During the year under review, the Company posted gross sales of Rs. 1,247
million (2001: Rs.1,016 million) and net sales of Rs.747 million (2001: Rs.610 million) reflecting an increase of 23% as
compared to the preceding year.
The increase in sales was brought about by continued market consolidation as well as increased acceptability of the
Company's brand of cement in the market.
Financial Results — The financial results for the vear ended June 30. 2002. are as follows:
				(Rs. In thousand)
Loss before taxation					(246,549)
Provision for taxation :
Current year				3,877
Deferred - Current				(12,029)
Prior years				-	(8,152)
Loss after taxation					(238,397)
Loss per share - Basic					(8.56)
The Company has suffered net loss before tax of Rs.247 million for the year under review compared to net loss before
tax of Rs.213 million for the preceding year. This loss is attributed mainly to the following factors:-
(i)      The impact of production loss due to the above-referred suspension of gas supply.
(ii)     Increase in gas tariff by 22% during the year, from Rs.616.40 per HM3 of gas on June 30, 2001, to
Rs.751.31 per HM3 of gas on June 30, 2002, therefore, increasing the fuel costs of the Company.
(ill)     An excess depredation charge of Rs.46 million on account of "revaluation of the fixed assets".
Dividends - No dividend and no bonus share has been declared by the Company during the year due to accumulated
losses.
Future Prospects - The cement industry has managed to survive another year in a state of depression due to the
factors of heavy excess capacity, over-taxation, stagnant construction activities and the rising fuel costs of furnace oil
and Sui Gas. In the prevailing economic scenario, the cement demand is expected to inch slowly towards recovery.
Significant plans & decisions
Technological improvement - Coal Firing Project - The Directors are pleased to announce the conversion of
the Company's cement plant to the Coal Firing System in order to effectively overcome the problems associated
with frequent disconnection of the Company's gas supply and the increasing tariffs of Sui Gas. The Coal Firing
System is in full process of installation and we are confident that production losses shall be definitely averted once
the Coal Firing System becomes operational. The Company has made arrangements for the procurement of high
quality coal from local and foreign sources to ensure optimum value at competitive prices.
By switch-over to the Coal Firing System, considerable savings shall accrue to the Company due to reduction in
fuel and direct cost of production alongwith related benefits. The Coal Firing System is expected to be in full
operation during the month of October 2002.
Financial restructuring — In order to revamp the Company's borrowing structure and reduce the burden of
heavy mark-up based running finance facilities & overdrafts, the sponsors have advanced foreign currency loans to
the Company amounting to US Dollars 2 million and Pound Sterling 3 million at highly favourable terms which will
substantially reduce the burden of mark-up and add to the profitability of the Company. These foreign currency
loans and the accrual of interest thereon stand subordinated to the Company's borrowings from financial institutions.
In addition to the above, an interest-free loan amounting to Rs.27.3 million has been provided to the Company by
the sponsors and their associates, thus, resulting in further saving in financial charges. This interest-free advance
has expedited the process of development of the Coal Firing System.
As of June 30, 2002, a total amount of Rs.429 million (both rupee and foreign currency) has been injected by the
sponsors which indicates their commitment to the Company to employ aggressive financial and physical re-
engineering.
It is therefore noteworthy that the present management is taking all preventive measures to reduce the controllable
cost (fuel and financial) of the Company which comprise around 55% of the Company's operating costs.
In summary, due to the factors of : -
•     Growth in the Company's production and despatches of cement by 18.6% and 16.6% respectively and
persistent market consolidation.
•      Commissioning of the Coal Firing System which will lead to continuous production (no production losses)
and reduction in fuel & direct cost of production.
•      Financial restructuring involving injection of subordinated loans by the sponsors at highly favourable terms
that would substantially reduce the burden of mark-up.
A return to profitability is indicated in the near term ahead.
Revaluation of fixed assets - The Directors are pleased to report that the "revaluation of the fixed assets" of
the Company was carried out and completed during the year under review by M/s. Rahim Iqbal Rafiq & CO.,
Chartered Accountants. As a result, the Company has posted "revaluation surplus" of Rs.1,843.8 million as of June
30, 2002, alongwith a corresponding excess depreciation charge of Rs.46 million for the year due to revaluation.
The Company's assets of land, buildings, plant & machinery and vehicles were included in the revaluation process.
I.S.O Certification - We announce with satisfaction that the I.S.O 9001:2000 Certification of your Company
was achieved during the year in May 2002, as per our broad vision to maintain quality and keep abreast with
technology in a rapidly changing business world.
Contribution to the National Exchequer - During the year under review, your Company contributed Rs.510 million
to the Nation's exchequer in the form of excise duty, sales tax, royalty, and income tax, which is calculated at around
41% of our gross sales.
Auditors' Observation - The auditors have emphasised the matter of going concern, payments to Provident Fund
Trust and Actuarial Valuation as required under IAS-19.
The directors have resolved to work towards alleviating the observations of the Auditors.
Compliance with the Code of Corporate Governance - The management is fully aware of the compliance with the
Code of Corporate Governance and steps are being taken for its effective implementation within allowed time-frame.
The various statements, as required by the Code, are given below: -
Presentation of Financial Statements - The financial statements prepared by the management present fairly
the Company's state of affairs, the result of its operations, cash flows and changes in equity;
Books of Account - Proper books of account of the Company have been maintained;
Accounting Policies - Appropriate accounting policies have been consistently applied in preparation of financial
statements and accounting estimates are based on reasonable and prudent judgement;
Compliance with International Accounting Standards (IAS) - International Accounting Standards, as
applicable in Pakistan except for IAS-19 as explained in Note 2.1(b) to the annexed audited accounts, have been
followed in preparation of financial statements;
Internal Control System - The system of internal control is sound in design and has been effectively implemented
and is being monitored continuously. The review will continue in future for the improvements in controls;
Going Concern - There are no significant doubts upon the Company's ability to continue as a going concern as
the directors have reasonable expectation that the Company would be able to generate adequate resources to
continue in operational existence for the foreseeable future -refer to Note 1.2 to the annexed audited accounts;
Best Practices of Corporate Governance - There has been no material departure from the Best Practices of
Corporate Governance, as detailed in the listing regulations wherever applicable to the Company for the year
ended June 30, 2002. The remaining provisions of the Code are in the process of compliance.
Financial Highlights - Key operating and financial data of last ten years are annexed.
Outstanding statutory dues - The outstanding statutory dues on account of taxes, duties, levies and charges are
disclosed in the annexed audited accounts.
Statement on value of staff retirement funds - As of June 30, 2002, the value of investement of the provident
fund are Rs. 42 million (based on un-audited accounts).
Board Meetings - During the year, 4 meetings of the Board of Directors were held. Attendance by each director at the
Board meeting is as under:
			No. of meetings attended
Mr. A. Rafique Khan			4
Mr. M. Tousif Peracha			1
Mr. A. Shoeb Piracha			4
Mr. Farooq Zaman			3
Mr. Jawaid Aziz Peracha			1
Mr. Ali Rashid Khan			3
Mr. Muhammad Asif (Nominated by N.I.T)			4
Note:   The Directors who could not attend the Board Meeting were duly granted leave of absence from the Board in
accordance with the law.
Trading in Company's shares - No trading in the shares of the Company were carried out by the Directors, CEO, CFO,
Company Secretary and their spouses and minor children.
Pattern of Shareholding - The Pattern of Shareholding and additional information regarding pattern of shareholding
is annexed.
External Auditors -The present auditors, M/s. Khalid Majid Rahman Sarfaraz Rahim Iqbal Rafiq, Chartered Accountants,
retire and being eligible, offer themselves for re-appointment for the year ended June 30, 2003.
Acknowledgement - The Board of Directors appreciated the efforts and devotion of the employees and the entire
team of management and anticipate that they will contribute for the enhancement of the productivity and well being of
the Company in future with greater zeal and spirit.
Further, the Board extends its gratitude to the banks & financial institutions, leasing companies, shareholders, distributors
and suppliers for their valued support and co-operation for the Company's prosperity.
For and on behalf of the Board
A. SHOEB PIRACHA
CHIEF EXECUTIVE
Lahore: September 25, 2002
Summary of Last Ten Years' Financial Results
Description		2002	2001	2000	1999	1998	1997	1996	1995	1994	1993
Trading Results
Turnover		747,191	610,498	102,573		171,283	502,781	391,259	725,682	761,974	705,014
Gross Profit / (Loss)		(64,479)	(27,695)	(61,389)	(119,708)	(95,100)	(143,511)	(84,117)	148,344	315,785	312,015
Operating Profit / (Loss)		(79,633)	(48,933)	(71,284)	(144,495)	(125,754)	(181,837)	(127,982)	105,309	277,305	290,853
Profit / (Loss) Before Taxation		(246,549)	(212,533)	(186,436)	(268,576)	(159,653)	(202,203)	(169,963)	54,980	231,385	244,055
Profit / (Loss) After Taxation		(238,397)	(264,281)	(186,948)	(311,253)	(160,509)	(204,717)	(172,755)	41,080	186,079	210,192
Balance Sheet
Shareholders' Equity		(1,283,427)	(1,045,030)	(780,748)	(593,800)	(1,814)	158,695	363,412	525,818	447,386	322,557
Operating Fixed Assets		2,135,904	372,971	417,905	459,653	460,783	515,544	575,640	637,008	377,850	411,897
Net current assets / (liabilities)		(532,406)	(423,228)	(508,934)	(649,533)	(310,476)	157,922	(121,769)	75,622	45,664	85,731
Long term liabilities		1,045,197	890,406	633,663	367,262	144,916	206,086	246,451	360,164	422,617	339,481
Significiant ratios
Gross Profit Ratio %		-8.63	-4.54	-59.58		-55.52	-28.54	-21.5	20.44	41.44	44.26
Net Profit Ratio %		-31.91	-43.29	-182.26	-	-93.71	-40.72	-44.15	5.66	24.42	29.81
Fixed Assets Turnover Ratio		0.35	1.64	0.25		0.37	0.98	0.68	1.14	2.02	1.71
Debt: Equity Ratio					-		1.3	0.68	0.68	0.94	1.05
Current Ratio		0.28	0.35	0.35	0.24	0.56	0.74	0.79	1.19	1.11	1.23
Interest Cover Ratio		-0.64	-0.49	-0.94	-1.16	-2.59	-2.87	-1.29	1.62	4.52	5.41
Pattern of Shareholding as at June 30, 2002
Sr.	No. of		Share Holding	No. of	Percentage
No.	Share Holders	From	To	Shares Held	of Capital
1	69	1	100	3,993	0.014
2	212	101	500	77,003	0.277
3	226	501	1000	210,019	0.754
4	250	1001	5000	706,055	2.536
5	59	5001	10000	436,254	1.567
6	27	10001	15000	350,979	1.261
7	15	15001	20000	273,187	0.981
8	6	20001	25000	133,550	0.48
9	4	25001	30000	110,200	0.396
10	1	30001	35000	33,389	0.12
11	4	35001	40000	150,225	0.54
12	1	45001	50000	45,750	0.164
13	1	50001	55000	54,500	0.196
14	2	55001	60000	115,825	0.416
15	1	60001	65000	62,000	0.223
16	1	65001	70000	68,000	0.244
17	4	70001	75000	288,370	1.035
18	2	75001	80000	153,600	0.552
19	1	95001	100000	96,600	0.347
20	2	105001	110000	212,668	0.764
21	1	115001	120000	115,027	0.413
22	2	145001	150000	297,606	1.069
23	1	155001	160000	160,000	0.575
24	1	175001	180000	176,528	0.634
25	1	180001	185000	183,125	0.658
26	1	195001	200000	198,500	0.713
27	1	215001	220000	217,600	0.782
28	1	225001	230000	229,000	0.823
29	1	285001	290000	289,500	1.04
30	1	310001	315000	314,800	1.131
31	1	340001	345000	345,000	1.239
32	1	365001	370000	367,586	1.32
33	1	1055001	1060000	1,058,812	3.803
34	1	2625001	2630000	2,625,375	9.43
35	1	3090001	3095000	3,094,950	11.117
36	1	3150001	3155000	3,154,653	11.331
37	1	11425001	11430000	11,429,751	41.055
	906			27,839,980	100
	Categories of	Number of	Number of	Percentage of
	Shareholders	Shareholders	Shares Held	Shareholding
i.	Individuals	849	5,001,404	17.96%
ii	Investment Companies	7	672,293	2.42%
iii	Insurance Companies	1	183,125	0.66%
iv.	Leasing Companies	2	3,154,678	11.33%
V.	Joint Stock Companies	41	14,635,468	52.57%
vi.	Financial Institutions	4	3,126,700	11.23%
vii	Others
	Punjab Cooperative Board for Liquidation	1	7,500	0.03%
	Employees Welfare Trust DCCL	1	1,058,812	3.80%
	Total	906	27,839,980	100%
Pattern of Shareholding as at June 30, 2002
Additional Information as Required by
the Code of Corporate Governance
Categories of				Number of	Number of
Shareholders				Share Holders	Shares Held
1. ASSOCIATED COMPANIES, UNDERTAKINGS & RELATED PARTIES				3	14,375,355
i. Gharibwal Cement Limited				1	11,429,751
ii. Employees Welfare Trust DCCL (Note)				1	1,058,812
ill. Saudi Pak Leasing Company Limited (Note)				1	1,886,792
2. NITANDICP				2	465,612
i. National Investment Trust				1	64,706
11. Investment Corporation of Pakistan				1	400,906
3. DIRECTORS, CHIEF EXECUTIVE OFFICER,
THEIR SPOUSES AND MINOR CHILDREN				7	29,500
Directors				5	2,500
i. Mr. A. Rafique Khan				1	500
11. Mr. M. Tousif Peracha				1	500
ill. Mr. Farooq Zaman				1	500
iv. Mr. Jawaid Aziz Peracha				1	500
v. Mr. Ali Rashid Khan				1	500
Chief Executive				1	500
Mr. A. Shoeb Piracha				1	500
Director's Spouse				1	26,500
Mrs. Salma Khan w/o A. Rafique Khan				1	26,500
4. EXECUTIVES				NIL	NIL
5. PUBLIC SECTOR COMPANIES AND CORPORATIONS				1	2,625,375
State Cement Corporation of Pakistan				1	2,625,375
6. BANKS, DEVELOPMENT FINANCE INSTITUTIONS, NON-BANKING
FINANCE INSTITUTIONS, INSURANCE COMPANIES,
MODARABAS AND MUTUAL FUNDS				12	4,784,392
7. SHAREHOLDERS HOLDING TEN PERCENT
OR MORE VOTING INTERESTS				3	17,679,354
i. Gharibwal Cement Limited				1	11,429,751
ii. Saudi Pak Leasing Company Limited (Note)				1	3,154,653
ill. National Bank of Pakistan - Trustee Department				1	3,094,950
Note: Gharibwal Cement Limited holds irrevocable proxies and control over voting rights of 1,058,812 and 1,886,792
(out of total shareholding of 3,154,653 shares) shares held by Employees Welfare Trust DCCL and Saudi Pak
Leasing Company Limited respectively. Therefore, these shareholdings have been grouped under category No. 1.
Statement of Compliance with Best Practices of Corporate Governance
The Board of Directors of DANDOT CEMENT COMPANY LIMITED feels pleasure in stating that the Company has
complied with all the provisions, relevant for the year ended June 30, 2002, of the Code of Corporate Governance as
contained in the Listing Regulations of the Karachi and Lahore Stock Exchanges. Moreover, the implementation of
other provisions of the Code is currently in process.
Lahore: September 25, 2002
Review Report to the Members on Statement of Compliance with Best
Practices of Code of Corporate Governance
We have reviewed the statement of compliance with the best practices contained in the Code of Corporate Governance
prepared by the Board of Directors of Dandot Cement Company Ltd. to comply with listing regulation No. 37 and
Chapter XIII of the Karachi and Lahore stock exchanges respectively where the company is listed.
The responsibility for compliance with Code of Corporate Governance is that of the Board of Directors of the
Company. Our responsibility is to review, to the extent where such compliance can be objectively verified, whether
the Statement of Compliance reflects the status of the Company's compliance with the provision of the Code of
Corporate Governance and report if it does not. A review is limited primarily to the inquiries of the Company
personnel and review of various documents prepared by the Company to comply with the Code.
As part of our audit of financial statements we are required to obtain an understanding of the accounting and
internal control systems sufficient to plan the audit and develop an effective audit approach. We have not carried out
any special review of the internal control system to enable us to express an opinion as to whether the Board's
statement on internal control covers all controls and the effectiveness of such internal controls.
Based on our review nothing has come to our attention which causes us to believe that the Statement of Compliance
does not appropriately reflect the Company's compliance, in all material respects, with the best practices contained
in the Code of Corporate Governance.
Khalid Majid Rahman Sarfaraz
Rahimlqbal Rafiq
Chartered Accountants
Lahore: September 25, 2002
Auditors' Report to the Members
We have audited the annexed balance sheet of DANDOT CEMENT COMPANY LIMITED as at 30 June, 2002 and the
related profit & loss account, cash flow statement and statement of changes in equity, 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.
It is the responsibility of the company's management to establish and maintain a system of internal control, and prepare
and present the above said statements in conformity with the approved accounting standards and the requirements of
the Companies Ordinance, 1984. Our responsibility is to express an opinion on these statements based on our audit.
We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards require
that we plan and perform the audit to obtain reasonable assurance about whether the above said statements are free
of any material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the above said statements. An audit also includes assessing the accounting policies and significant estimates
made by management, as well as, evaluating the overall presentation of the above said statements. We believe that our
audit provides a reasonable basis for our opinion and, after due verification. We report that:
a)    in our opinion, proper books of accounts have been kept by the company as required by the Companies
Ordinance, 1984;
b)    In our opinion:-
i)     the balance sheet and profit & loss account together with the notes forming part thereof 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, profit & loss account, cash flow statement and statement of changes in equity together with the notes
forming part thereof conform with approved accounting standards as applicable in Pakistan except IAS 19 as
explained in note 2.1(b), and give the information required by the Companies Ordinance, 1984, in the manner so
required and respectively give a true and fair view of state of the company's affairs as at 30 June, 2002 and of the
loss, its cash flows & changes in equity for the year then ended; and
d)    in our opinion no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980)
We without qualifying our opinion, draw attention to the following matters:-
The company has net after tax loss for the year of Rs. 238.397 million accumulated losses of Rs. 1,593.628 million and its
current liabilities exceed the current assets by Rs. 509.151 million. The going concern assumption used in the preparation
of these accounts is based on matters referred in Note 1.2 and the company has not been able to make payments to
provident fund within stipulated time due to reasons as explained in note 6.7.
Khalid Majid Rahman Sarfaraz
Rahim Iqbal Rafiq
Chartered Accountants
Lahore: September 25, 2002
Balance Sheet
				2002	2001
CAPITAL AND LIABILITIES			NOTE	RUPEES	RUPEES
SHARE CAPITAL AND RESERVES
Authorized capital
50,000,000 ordinary shares
of Rs. 10/- each				500,000,000	500,000,000
Issued, subscribed and paid up capital			3	278,399,800	278,399,800
Share premium reserve				31,800,740	31,800,740
Accumulated loss				(1,593,627,515)	(1,355,230,285)
				(1,283,426,975)	(1,045,029,745)
SURPLUS ON REVALUATION OF
FIXED ASSETS			4	1,843,757,876	-
SPONSORS LOANS			5	400,118,640	-
LONG TERM LOANS AND LIABILITIES			6	475,557,903	692,323,579
LIABILITIES AGAINST ASSETS SUBJECT
TO FINANCE LEASE			7	188,466,163	206,483,917
DEFERRED LIABILITIES			8	129,306,471	125,302,642
LONG TERM ADVANCES AND DEPOSITS			9	4,309,059	5,163,227
CURRENT LIABILITIES
Current maturity of long term
loans and liabilities			10	220,573,817	109,361,165
Short term borrowings			11	62,389,269	285,244,087
Creditors, accrued and other liabilities			12	404,937,810	223,044,979
Unclaimed dividend				782,699	782,699
Taxation				24,497,892	20,620,764
				713,181,487	639,053,694
CONTINGENCIES AND COMMITMENTS			13
				2,471,270,624	623,297,314
The annexed notes form an integral part of these accounts
as at June 30, 2002
				2002	2001
PROPERTY AND ASSETS			NOTE	RUPEES	RUPEES
FIXED ASSETS - Tangible
Operating fixed assets			14	2,135,904,048	372,970,827
Capital work in progress			15	114,187,412	66,453
				2,250,091,460	373,037,280
LONG TERM LOANS AND DEPOSITS			16	12,515,593	12,530,293
DEFERRED COST			17	4,633,298	8,339,942
CURRENT ASSETS
Stores, spares and loose tools			18	97,490,581	88,522,448
Stock in trade			19	23,392,018	57,067,183
Trade debtors			20	2,168,120	5,007,420
Advances, deposits, prepayments and
other receivables			21	78,340,267	67,996,712
Cash and bank balances			22	2,639,287	10,796,036
				204,030,273	229,389,799
				2,471,270,624	623,297,314
Profit & Loss Account for the Year Ended June 30, 2002
				2002	2001
			NOTE	RUPEES	RUPEES
SALES (Net)			23	747,190,825	(620,497,634)
COST OF SALES			24	811,670,067	638,192,472
GROSS LOSS				(64,479,242)	(27,694,838)
OPERATING EXPENSES
Administration and general			25	11,754,069	16,863,300
Selling and distribution			26	3,399,502	4,375,195
				(15,153,571)	(21,238,495)
OPERATING LOSS				(79,632,813)	(48,933,333)
Financial Charges			27	(150,621,838)	(143,142,732)
Provision against doubtful advances				-	(18,248,968)
Abnormal item 1			2.2(b)	4,764,605	(3,080,387)
Other income / (charges)			28	(21,059,027)	672,503
LOSS BEFORE TAXATION				(246,549,073)	(212,732,917)
TAXATION			29
- Current				3,877,128	3,242,484
- Deferred - Current				(12,028,971)	(2,508,000)
- Prior				-	50,814,000
				(8,151,843)	51,548,484
NET LOSS AFTER TAXATION				(238,397,230)	(264,281,401)
Accumulated loss brought forward				(1,355,230,285)	(1,090,948,884)
Accumulated loss carried to balance sheet				(1,593,627,515)	(1,355,230,285)
Loss per share - Basic			30	(8.56)	(9.63)
The annexed notes form an integral part of these accounts
Cash Flow Statement for the Year Ended June 30, 2002
				2002	2001
			NOTE	RUPEES	RUPEES
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before taxation				(246,549,073)	(212,732,917)
Adjustments of items not involving movement of cash:
Provision against doubtful advances				-	18,248,968
Abnormal item				(4,764,605)	3,080,387
Depreciation				84,407,861	42,862,132
Provision for Gratuity				16,855,841	4,162,452
Exchange fluctuations				21,283,320	-
Gain on disposal of Fixed Assets				(95,299)	(550,278)
Amortization of deferred cost				3,706,644	2,779,980
Financial charges				150,621,838	143,142,732
				272,015,600	213,726,373
Operating cash flows before working capital changes				25,466,527	993,456
(Increase)/Decrease in operating assets :
Stores, spares and loose tools				(8,968,133)	(11,028,551)
Stock in trade				33,675,165	19,403,430
Trade debtors				2,839,300	(722,300)
Advances, deposits, prepayments
and other receivables				(5,783,208)	9,162,524
Increase/(Decrease) in creditors, accrued and
other liabilities				182,831,043	(296,072,543)
				204,594,167	(279,257,440)
				230,060,694	(278,263,984)
Long term advances and deposits				(854,168)	(1,492,950)
Gratuity paid				(823,041)	(105,125)
Financial charges paid				(115,050,707)	(65,779,268)
Income tax paid				(4,560,347)	(7,873,509)
Net Cash Flows From Operating Activities				108,772,431	(353,514,836)
CASH FLOWS FROM INVESTING ACTIVITIES
Fixed assets - Tangible				(117,708,865)	(1,003,235)
Sale proceeds of Fixed assets				100,000	3,600,000
Long term loans and deposits				14,700	4,310,855
Deferred cost				-	(11,119,922)
Net Cash Flows From Investing Activities				(117,594,165)	(4,212,302)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of lease liability (Net)				(8,899,482)	(25,381,392)
Past dues - CBA				(29,876,975)	(25,652,769)
Sponsors loans				378,835,320	-
Short term borrowings				(222,854,818)	285,244,087
Long term loans and liabilities				(116,539,060)	129,640,429
Net Cash Flows From Financing Activities				664,985	363,850,355
Net Increase /(Decrease) in Cash and Cash Equivalents				(8,156,749)	6,123,217
Cash and cash equivalents at beginning of the year				10,796,036	4,672,819
Cash and cash equivalents at end of the year •X/-				2,639,287	10,796,036
Statement of Changes in Equity as at June 30, 2002
		Share	Share Deposit	Share premium	Accumulated
		Capital	Money	Reserve	Loss	Total
		RUPEES
Balance as at 30 June, 2000		262,500,000	47,700,540	-	(1,090,948,884)	(780,748,344)
Right shares issue		15,899,800	(47,700,540)	31,800,740	-	-
Loss for the year		-	-		(264,281,401)	(264,281,401)
Balance as at 30 June, 2001		278,399,800	-	31,800,740	(1,355,230,285)	(1,045,029,745)
Loss for the year		-	-	-	(238,397,230)	(238,397,230)
Balance as at 30 June, 2002		278,399,800		31,800,740	(1,593,627,515)	(1,283,426,975)
Notes to the Accounts for the Year Ended June 30, 2002
1.   THE COMPANY AND ITS OPERATIONS
1.1    The Company is a public limited Company incorporated in Pakistan and is listed on Karachi and Lahore
Stock Exchanges. The Company started its production on March 01, 1983 and has been engaged in
manufacturing and marketing of cement.
1.2    The plant remained closed from December 1997 till March 2000, resulting in the accumulation of a huge
loss of Rs.1,091 million by the Company upto the year ended June 30, 2000.
The new management took over the control and management of the Company in March 2000 and
succeeded in recommencement of production by the end of April, 2000, Thereafter, settlement with all
major financial institutions for restructuring/rescheduling of the financial facilities were arrived at and the
Plant maintained smooth production schedule with no stoppages due to technical reasons. Working
capital requirements were fulfilled and commitments with the financial institutions were honoured.
The new management continues to pursue of its best efforts in order to improve the technological and
financial structure of the Company during the year under review. First and foremost the management
has started to convert the existing gas firing system to the Coal-Firing-System. This process of installation
is nearing completion and the mills are undergoing operation on test and trial basis. It is anticipated that
once the Coal Firing System is fully installed and operational, the Company shall save Rs. 376 per tone of
cement over gas firing as per the feasibility report.
Secondly, the sponsors of the Company and their associates have contributed a sum of Rs. 400.119
million as long-term loan by the encashment of their overseas Standby Letter of Credit facilities amounting
to GBP 3.016 million and US$ 2.00 million. This sponsors' loan of Rs. 400.119 million carries interest @ 1%
above six-months LIBOR and stands subordinated, thus, carrying an additional benefit to the Company.
In addition, the sponsors have arranged a Pak Rupee loan of Rs. 27.346 million for the Company. This
loan has been utilized in capitalisation and for the erection and installation of the Coal-Firing System.
Overall, the sponsors loans of Rs. 427.465 million will save the Company, mark-up costs of Rs. 32 million
per annum approximately.
The revaluation of fixed assets of the Company resulted in surplus on revaluation of fixed
assets of Rs. 1,843.8 million, thereby converting the net capital deficiency of Rs. 1,283.4 million to a
positive balance of Rs. 560.4 million at the date of the balance sheet.
The depreciation charge during the current year has also been increased by Rs. 46.254 million due to the
revaluation of the fixed assets.
The relationship between the management and the employees (CBA) remains very cordial.
In view of the above mentioned facts, the sponsors have well-demonstrated their commitment to the
Company by injection of Rs. 427.465 million as mentioned above alongwith expertise and full support for
completion of the Coal-Firing System. Further, the sponsors give their full commitment and determination
to promote the Company's objectives in the long-run, thereby, ensuring that the Company continues its
operation as a going concern.
2.   SIGNIFICANT ACCOUNTING POLICIES
2.1(a) Accounting convention
These accounts have been prepared under historical cost convention except for freehold land, buildings,
plant & machinery and vehicles which are stated at revalued amounts and certain exchange differences
as referred to in Note 2.11 are incorporated in the cost of relevant assets.
(b) Statement of Compliance
These accounts have been prepared in accordance with the requirements of the Companies Ordinance,
1984 and International Accounting Standards, as applicable in Pakistan, except for IAS 19 (Employee
Benefits) as regards determination and disclosure of the liability for gratuity as explained in note 8.1.
2.2    Employees retirement benefits
(a) The Company operates a gratuity scheme covering all its permanent employees. Such gratuity is payable
on cessation of employment subject to a minimum qualifying period of five years service with the Company.
Provision for gratuity is made annually in the accounts to cover full obligation under the scheme.
(b) The Company also operates a funded contributory provident fund scheme for all eligible employees and
contribution based on the salaries of the employees are made to the fund monthly.
2.3    Taxation
Current
Provision for taxation is based on the taxable income and the rates of taxes applicable after taking into
account tax credits and rebates available, if any or under Section 80-D of the Income Tax Ordinance,
1979 @ 0.5% of the turnover whichever is higher.
Deferred
The Company accounts for deferred taxation using the liability method on all major temporary differences.
2.4    Tangible fixed assets and depreciation
Operating fixed assets are stated at cost or revalued amounts less accumulated depreciation except for
freehold land which is stated at revalued amount.
Depreciation charge is based on reducing balance method at the rates specified in note 14. Leasehold
land for quarries are amortized over a period of 15 - 20 years.
No depreciation is provided on assets in the year of sale, while full year's depreciation is charged in the
year of purchase. Maintenance and normal repairs are charged to income as and when incurred. Major
renewals and improvements are capitalized.
Gains and losses on disposal of assets, if any are included in profit and loss account.
2.5    Assets subject to finance lease
These are stated at the lower of present value of minimum lease payments under the lease agreements
and the fair value of the assets. The related obligation of lease are accounted for as liabilities. Financial
charges are allocated to accounting periods in a manner so as to provide a constant periodic rate of
financial cost on the remaining balance of principal liability for each period. Financial charges and depreciation
on leased assets are charged to income currently.
2.6    Capital work in progress
Capital work in progress is stated at cost and represents expenditure incurred on fixed assets during their
construction and installation. Transfers are made to relevant fixed assets category as and when assets are
available for use.
2.7    Long term investments
These are stated at cost.
2.p    Stores, spares and loose tools
These are valued at moving average cost except items in transit which are valued at cost accumulated
upto the Balance Sheet date.
2.9    Stock in trade
These are valued at lower of cost and net realizable value applying the following method:
Raw Materials                                   -   at weighted average cost.
Work in process and
finished goods                                 -   at average cost covering direct material, labour
and manufacturing overheads.
2.10   Deferred cost
This is amortized over a maximum period of five years.
2.11   Foreign currency transactions
Assets and liabilities in foreign currencies are translated at the rates of exchange prevalent on the balance
sheet date. Exchange differences arising from translation and repayment of foreign currency loans are
capitalized as part of cost of Plant & Machinery acquired out of the proceeds of such loans. All other
exchange differences are taken to profit and loss account.
2.12   Trade debtors
Known bad debts are written off and provision is made for debts considered doubtful.
2.13   Revenue recognition
Sales are recorded on dispatch of goods to customers.
2.14   Figures
Figures in these accounts have been rounded off to the nearest rupee.
Figures of the previous year have been re-arranged wherever necessary to facilitate the comparison.
3. ISSUED, SUBSCRIBED AND PAID-UP CAPITAL				2002	2001
19,089,980 (2001: 19,089,980) ordinary shares of				RUPEES	RUPEES
Rs. 10/- each fully paid in cash.
8,750,000 (2001: 8,750,000) ordinary shares of				190,899,800	190,899,800
Rs. 10/- each issued as fully paid bonus shares
				87,500,000	87,500,000
				278,399,800	278,399,800
Gharibwal Cement limited holds 11,429,751 (June, 2001:11,429,751) shares of the Company which represent:
41.06% of the Company's issued, subscribed and paid-up capital. However Gharibwal hold proxies of 2,945,60'
shares which make its voting right to 14,375,355 shares constituting 51.64% of the Company's issued, subscribe
and paid-up capital. Accordingly Gharibwal Cement Ltd. has been treated as a Holding Company in these accounts
4.   SURPLUS ON REVALUATION OF FIXED ASSETS
Revaluation of freehold land, buildings, plant & machinery and vehicles referred to in note 14 has produced i
surplus of Rs. 1,843.8 million. This amount has been credited to surplus on revaluation of fixed assets account t(
comply with the requirements of Section 235 of the Companies Ordinance, 1984.
5. SPONSORS LOANS- Unsecured
Foreign currency loan-GBP			279,318,640	-
Foreign currency loan-US$			120,800,000	-
			400,118,640	-
			GBP-I	GBp-n	US$
Principal amount			GBP: 1,000,000	GBP: 2,016,400	US$: 2,000,000
Proceeds received			28-Jan-02	ll-Apr-02	8-Feb-02
No. of installment for repayment			8	8	8
1st installment due on			28-Jan-04	ll-Apr-04	8-Feb-04
Last installment due on			28-Jan-08	ll-Apr-08	8-Feb-08
Interest rate for all loans				1% Above six months LIBOR
Interest payment term			Biannually	Biannually	Biannually
These represent loans extended by Sponsoring Directors and their foreign associates by encashment of
Stand-By Letters of Credit for repayment of Pak Rupee Loans obtained from Financial Institutions. These are
repatriable in original currency.
				2002	2001
6. LONG TERM LOANS AND LIABILITIES			NOTE	RUPEES	RUPEES
Long term loans -Secured
Economic Affairs Division,Government
of Pakistan ( EAD )
Principal				53,554,646	53,554,646
Mark up payable from
Jan.2000 to Jun.2002				32,356,759	24,859,109
			6.1	85,911,405	78,413,755
Mark up payable upto Dec.99			6.2	87,506,520	87,506,520
				173,417,925	165,920,275
Habib Bank Limited			6.3
Demand finance - I (DF-I)				187,972,470	193,900,000
Demand finance - II (DF-II)				46,858,914	47,381,444
Demand finance - III (DF-III)				5,403,624	10,808,250
Abn Amro Bank N.V			6.4	36,222,350	143,300,000
Saudi Pak Commercial Bank Ltd.			6.5	33,005,374	45,912,782
				309,462,732	441,302,476
				482,880,657	607,222,751
Past dues - CBA			6.6
Salaries and benefits				94,093,731	121,539,706
Provident fund				31,632,952	34,063,952
One day deduction				2,119,349	2,119,349
Legal expenses				9,783,000	9,783,000
				137,629,032	167,506,007
Provident Fund Trust			6.7
Payable to trust since change of management				21,367,484	13,564,450
Add: Interest on unpaid balance				1,887,280	-
				23,254,764	13,564,450
				643,764,453	788,293,208
Less: Current maturity:
Long term loans			10	114,878,550	56,009,629
Past dues - CBA			10	53,328,000	39,960,000
				168,206,550	95,969,629
				475,557,903	692,323,579
6.1     This represents the balance of Pak Rupee loan of Rs. 340.841 million originally advanced in 1984 in
Japanese Yen to the State Cement Corporation of Pakistan (Private) Limited (SCCP). The loan was taken
over by the Company under the clause 14 of the Sale Agreement dated May 23, 1992 as payable in local
currency to the EAD. The Company provided Bank Guarantee from Habib Bank Limited (HBL) to cover
the outstanding liability at the time of sale.
The amount of the original loan was Japanese Yen 5,199,457,960 carrying interest @ 8.5% p.a. and was
payable in 37 bi-annual installments on March 20 and September 20 with effect from March 10, 1984.
Effective April 21, 1987 the Yen loan was converted into Pak Rupee loan at exchange rate of
lYen = 0.122111 Pak Rupee carrying interest @ 11% and exchange risk fee @ 3% per annum payable
to the EAD in 30 equal half yearly installments commencing from September 10, 1987, to be settled by
March 20, 2002.
After taking over the control and management, the new management arranged payment of
Rs.133.908 million to the EAD, through Habib Bank Ltd. for payment of outstanding principal and requested
for restructuring of this loan on the terms that Principal including mark up is to be repaid in installments of
Rs.5.0 million commencing from January 01, 2003 and mark up is to be charged @ 14%. The approval
from EAD is awaited in this regard. Please also refer note 13(a).
6.2     It represents mark up accrued upto December 31, 1999 on the loan from EAD. It is proposed in the
restructuring proposal to repay it in installments of Rs.5.0 million commencing from July 01, 2005.No mark
up is to be charged on this amount as it represents accrued mark up.
6.3     The new management reached negotiated settlement with Habib Bank Limited for restructuring of the
Company's outstanding liabilities. Consequently on April 26, 2000 a demand finance (DF-I) facility was
created against payments made by Habib Bank Limited directly to Economic Affairs Division, Government
of Pakistan from March, 1995 to September, 1996 in part settlement of its Bank Guarantee of .
Rs. 364.700 million issued on behalf of the Company. The principal amount of this credit facility is repayable
in 8 equal bi annual installments commenced from 31st March 2002. The mark up rate is 15% on this
credit facility payable quarterly.
Demand finance (DF-II) facility was created by capitalizing all outstanding mark up charged on payments
made by H.B.L. to Economic Affairs Division against its bank guarantee. The principal amount of this credit
facility is repayable in 8 equal bi annual installments commenced from 31st March 2002. The mark-up
rate is 13% on this credit facility payable quarterly.
Demand Finance (DF-III ) facility was created by capitalizing outstanding mark up on DF-I and DF-II for
December 2000 and March 2001 quarters. It is repayable in 2 equal bi-annual installments commenced
from March 31, 2002 of Rs.5.405 million each. The mark up rate is 16% on this finance facility payable
quarterly.
DF-I, DF-II and DF-III are secured as under :-
First equitable mortgage charge on all the present and future fixed and current assets of the Company
for Rs. 364.7 million. Floating charge on entire moveable and immovable property and assets of the
Company, personal guarantees of two sponsoring directors and cross corporate guarantees of
Rs.391.471 million(2001; Rs.419.652 million) issued by the Holding Company on behalf of the Company.
6.4     This loan was obtained from Abn Amro Bank N.V. It is repayable by a bullet payment at the maturity on
February 2003. The management intends to keep the loans for long term and will have it renewed at
expiry. It carries mark up at the rate ranging from 10.5% to 13.5 % per annum payable quarterly. This
facility is secured against standby letters of credit by foreign banks.
6.5     The principal amount of this finance facility amounting to Rs.46.0 million is payable in 27 monthly installments
commenced from July, 2001. The mark up on such finance facility is 18% per annum payable on quarterly
basis. The facility is secured against hypothecation of Company's stock in trade, stores and spares, book
debts, machinery and receivables, and registered a second floating charge with the registrar of Joint
Stock Companies to the extent of Rs. 62.0 million.
6.6     This represents the amounts payable for the closure period of the factory on account of accumulated
salaries and benefits, provident fund, one day deduction and legal expenses payable to the employees
and CBA for which a mutual agreement had been executed between the management and the CBA at
the time of take over of the factory by the new management. It is payable in equal monthly installments
of Rs. 3.333 million each commenced in September, 2000.
6.7     Owing to payments of monthly installments towards settlement of unpaid staff benefits of period prior of
April 2000 as well as management's strategy of maintaining its cash flows so as to be able to keep the
factory operational and to meet its obligations on time with financial institutions. Government departments
and other creditors. Contributions and interest provided @9% p.a due to Provident Fund Trust have
been deferred till its liquidity improves.
7. LIABILITIES AGAINST ASSETS SUBJECT				2002	2001
TO FINANCE LEASE			NOTE	RUPEES	RUPEES
Opening balance				219,875,453	208,318,207
Addition during the year				1,245,000	-
Adjustment during the year				29,857,459	36,938,638
				250,977,912	245,256,845
Less:
Payments during the year				10,144,482	25,381,392
Present value of minimum lease payments				240,833,430	219,875,453
Less:
Transfer to Current maturity			10	52,367,267	13,391,536
				188,466,163	206,483,917
7.1     The Company has acquired assets under lease finance arrangements from various leasing companies.
These lease finances are payable in various monthly installments depending upon the terms of each lease
agreement. The Company intends to excercise its option to purchase the leased assets upon completion
of the respective lease term. Taxes, repairs and insurance costs are to be born by the lessee. There are
no financial restrictions in the lease agreements.
7.2     The present value of minimum lease payments have been discounted at an implicit interest rate of 18%
to arrive at their present value.
7.3     The amounts of future payments and period in which these payments will become due are : -
		Upto one	From one year
		Year	to five years	2002	2001
		R U P E E S
Minimum lease payments		94,965,912	230,162,979	325,128,891	338,923,552
Less:
Future finance charges		(42,598,645)	(41,696,816)	(84,295,461)	(119,048,099)
Present value of minimum
lease payments		52,367,267	188,466,163	240,833,430	219,875,453
8. DEFERRED LIABILITIES				2002	2001
			NOTE	RUPEES	RUPEES
Gratuity			8.1
Opening balance				76,996,642	72,939,315
Add: Contribution for the year				16,855,841	4,162,452
				93,852,483	77,101,767
Less: Payments made during the year				823,041	105,125
				93,029,442	76,996,642
Deferred Taxation
Deferred Liability				84,943,611	93,988,820
Less: Deferred debits				(48,666,582)	(45,682,820)
				36,277,029	48,306,000
				129,306,471	125,302,642
8.1     The liability in respect of gratuity has been provided as per existing policy. There had been a curtailment
of define benefit plan caused by the closure of plant from 1997 to 2000 followed by settlement as
referred in note 6.6 actuarial valuation as per projected unit credit method has therefore, been deferred
till next year so that the resultant change in the present value of define benefit obligation could be fairly
determined as well as past history of three year's is available for the purposes of actuarial assumptions.
				2002	2001
			NOTE	RUPEES	RUPEES
9. LONG TERM ADVANCES AND DEPOSITS
Un-secured - Interest free
Advances from suppliers			9.1	23,325	23,325
Securities and retention money			9.2	4,285,734	5,139,902
				4,309,059	5,163,227
9.1     These represent interest free security deposits received from the suppliers and contractors payable after
the satisfactory execution of the agreement.
9.2     These represent interest free security deposits received from agency holders payable on cancellation or
withdrawal of agency subject to adjustment of balances outstanding against sales to them.
10. CURRENT MATURITY OF LONG
TERM LOANS AND LIABILITIES
Long term loans			6	114,878,550	56,009,629
Past dues - CBA			6	53,328,000	39,960,000
Liabilities against assets subject to
finance lease			7	52,367,267	13,391,536
				220,573,817	109,361,165
11. SHORT TERM BORROWINGS
Running finance- secured			11.1	30,000,000	285,244,087
Bank Overdraft-unsecured			11.2	5,043,539	-
Others- unsecured			11.3	27,345,730	-
				62,389,269	285,244,087
11.1   This running finance obtained from Habib Bank Limited under mark up arrangements aggregate
Rs. 30.0 million (2001: Rs.314.0 million from Citibank N.A. supported by standby letter of credit).
			2002	2001
The interest rate payable on quaterly basis:
Habib Bank Limited			16%	-
Citibank N. A.			-	13.50%
This facility is secured against hypothecation of current assets of the Company upto Rs. 40.0 million.
11.2   This overdraft balance of a bank is due to issuance of cheques near to the Balance Sheet date. However
the bank statement shows a favourable balance of Rs.0.001 million.
11.3   This represents interest free unsecured loans arranged by the sponsoring directors and their
associates.These are repayable by June 2003.
12. CREDITORS, ACCRUED AND OTHER LIABILITIES
Trade creditors			12.1	160,352,436	54,101,244
Accrued expenses				117,018,643	69,757,534
Interest accrued on secured loans				20,006,947	23,524,332
Interest accrued on Un-secured loans				5,685,875	-
Excise duty				95,441	120,403
Royalty				3,704,141	7,880,306
Sales tax				10,383,936	15,761,063
Workers profit participation fund			12.2	28,413,782	31,520,485
Workers' welfare fund				1,390,989	1,278,373
Advances from customers				49,584,663	12,431,615
Others				8,300,957	6,669,624
				404,937,810	223,044,979
12.1   It includes balance payable to Gharibwal Cement Limited of Rs.79.572 million ( 2001:Nill ) on account of
purchase of Clinker.
				2002	2001
			NOTE	RUPEES	RUPEES
12.2(a) Workers' Profit Participation Fund
Contribution payable				15,071,839	15,071,839
Interest on unpaid contribution:
interest accrued upto June, 2001				16,448,646	16,448,646
Interest for the year				1,657,902	-
Reversal of interest on interest			12.2(b)	(4,764,605)	-
				13,341,943	16,448,646
				28,413,782	31,520,485
12.2(b)As per the advice received from the legal counsel, the provisions of the Workers' profit participation fund
does not provide the charging of interest on interest, accordingly the interest on interest charged upto
the year ended June 30, 2001 has been reversed in these accounts.
13. CONTINGENCIES AND COMMITMENTS
a)      The Company arranged payment to EAD of Rs. 133.908 million as disclosed in note 6.1 and adjusted the
same in the Principal amount outstanding. However EAD adjusted Rs.105.123 million towards accrued
mark up and Rs. 28.785 million in respect of Principal outstanding.This results in an excessive claim of
mark up of Rs. 24.687 million by EAD. The Company has not provided this excessive mark up as it
considers to have a strong case that when it had deposited the payment under head of account No.
2242005 for principal amount maintained by State Bank of Pakistan relating to Principal, it should be
adjusted accordingly.
b) Islamic Investment Bank limited has issued
Bank Guarantee in favour of
Director Industries and Mineral development.				3,631,676	3,631,676
c) PICIC Commercial Bank limited has issued
Bank Guarantee in favour of
Sui Northern Gas Pipelines Limited.				27,022,000	27,022,000
d) Saudi Pak Commercial Bank limited has issued
Bank Guarantee in favour of
Sui Northern Gas Pipelines Limited.				245,800	245,800
e) Islamic Investment Bank limited has issued
Bank Guarantee in favour of
Sui Northern Gas Pipelines Limited.				14,098,164	14,098,164
14. OPERATING FIXED ASSETS
		COST/REVALUATION					DEPRECIATION
											Book
PARTICULARS		As at			As at	Rate	As at	For	On	As at	Value As
		June 30,	Additions	Deletions	June 30,	%	June 30,	the	disposals	June 30,	at June 30,
		2001			2002		2001	year		2002	2002
OWNED
Free hold land
Cost		9,618,448	56,600		9,675,048			-	-		9,675,048
Revaluation			20,389,552		20,389,552	-		-	-	-	20,389,552
		9,618,448	20,446,152		30,064,600					-	30,064,600
Quarry - Lease hold land		9,497,369	1,248,560	992,757	9,753,172	15-20	9,497,369	249,712	992,757	8,754,324	998,848
						Years
Buildings
Cost		150,956,820			150,956,820	10	123,190,786	2,724,542		125,915,328	25,041,492
Revaluation			86,898,282	-	86,898,282	10		2,172,457	-	2,172,457	84,725,825
		150,956,820	86,898,282		237,855,102		123,190,786	4,896,999	-	128,087,785	109,767,317
Office
Cost		17,527,908			17,527,908	5	10,491,107	348,542		10,839,649	6,688,259
Revaluation			13,645,216		13,645,216	5		170,565		170,565	13,474,651
Residential		17,527,908	13,645,216		31,173,124		10,491,107	519,107		11,010,214	20,162,910
Cost		37,882,056			37,882,056	10	30,363,371	737,771		31,101,142	6,780,914
Revaluation			27,545,216		27,545,216	10		688,630		688,630	26,856,586
		37,882,056	27,545,216		65,427,272		30,363,371	1,426,401		31,789,772	33,637,500
Cost		897,511,020	170,000	-	897,681,020	10	692,983,788	20,085,916		713,069,704	184,611,316
Revaluation			1,661,655,060		1,661,655,060	10		41,541,377		41,541,377	1,620,113,683
		897,511,020	1,661,825,060		2,559,336,080		692,983,788	61,627,293		754,611,081	1,804,724,999
Office Equipment		4,594,797	363,400		4,958,197	10	2,719,856	223,834		2,943,690	2,014,507
Furniture & Fixture		6,795,949			6,795,949	10	4,716,974	207,898		4,924,872	1,871,077
Heavy Vehicles
Cost		54,851,222			54,851,222	20	52,086,816	532,148		52,618,964	2,232,258
Revaluation			28,750,255	-	28,750,255	20		1,437,513		1,437,513	27,312,742
		54,851,222	28,750,255		83,601,477		52,086,816	1,969,661		54,056,477	29,545,000
Cost		16,434,391		133,600	16,300,791	20	10,993,414	1,046,483	128,899	11,910,998	4,389,793
Revaluation			4,874,295		4,874,295	20		243,715		243,715	4,630,580
		16,434,391	4,874,295	133,600	21,175,086		10,993,414	1,290,198	128,899	12,154,713	9,020,373
Railway Sidings		1,726,574	-	-	1,726,574	5	1,042,287	34,214		1,076,501	650,073
Electric Installation		38,452,264	504,348		38,956,612	10	29,641,537	931,508		30,573,045	8,383,567
Weighing Scales		80,958			80,958	10	62,081	1,888		63,969	16,989
Library Books		72,403			72,403	10	54,862	1,754		56,616	15,787
		1,246,002,179	1,846,100,784	1,126,357	3,090,976,606		967,844,248	73,380,467	1,121,656	1,040,103,059	2,050,873,547
LEASED
Plant & Machinery		171,110,963	-		171,110,963	10	89,269,119	8,184,184		97,453,303	73,657,660
Quarry Equipments		61,850,793			61,850,793	20	48,879,742	2,594,210		51,473,952	10,376,841
Light Vehicles		-	1,245,000	-	1,245,000	20	-	249,000		249,000	996,000
		232,961,756	1,245,000		234,206,756		138,148,861	11,027,394		149,176,255	85,030,501
Rupees 2002		1,478,963,935	1,847,345,784	1,126,357	3,325,183,362		1,105,993,109	84,407,861	1,121,656	1,189,279,314	2,135,904,048
Rupees 2001		1,482,566,358	978,231	4,580,653	1,478,963,936		1,064,661,908	42,862,132	1,530,931	1,105,993,109	372,970,827
				2002	2001
14.1 Depreciation for the year has been allocated as under :-				RUPEES	RUPEES
- Cost of goods sold				81,914,903	40,868,821
- Administration				2,372,397	1,801,875
- Selling & Distribution				120,561	191,436
				84,407,861	42,862,132
The assets were revalued at 1st April, 2002, therefore depreciation has been charged for three mont
from April to June, 2002, on revalued amounts.
14.2. DISPOSAL OF FIXED ASSETS
Particulars		Cost	Accumulated	Book	Sale Proceeds	Gain	Mode of	Particulars of Purchaser
			Depreciation	Value			Disposal
Leasehold Land		992,757	992,757				Expiry of
							Lease Period
Suzuki Jeep JMA-7784		133,600	128,899	4,701	100,000	95,299	Insurance Claim	Adamjee Insurance Co. Ltd.
								Lahore.
Rupees 2002		1,126,357	1,121,656	4,701	100,000	95,299
Rupees 2001		4,580,653	1,530,931	3,049,722	3,600,000	550,278
14.3   Revaluation of Land, Buildings, Plant & Machinery and Vehicles of the Company was carried out as on April
01, 2002 by M/s Iqbal A. Nanjee & Co. recognised valuation consultant and their report was verified by
M/s Rahim Iqbal Rafiq & Co., Chartered Accountants. Valuations were carried out on the basis of Depreciated
Replacement Value except Freehold Land on reassessed replacement value, which created a surplus of
Rs. 1,843.8 million.
14.4   The revalued assets have been appropriately adjusted by the amount of the depreciation to the date of
valuation.
14.5   Surplus on revaluation undertaken as at April 01, 2002 has been arrived at as follows:
		Cost	Accumulated	Written down	Depreciated	Revaluation
Particulars		as at	Depreciation upto	Value As on	Replacement value	Surplus
		April 01, 2002	April 01,2002	April 01,2002	As at April 01,2002
		RUPEES
Freehold Land		9,618,448	-	9,618,448	30,008,000	20,389,552
Buildings		-	-	-
Factory		150,956,820	125,273,240	25,683,580	112,581,863	86,898,283
Office		17,527,908	10,754,987	6,772,921	20,418,137	13,645,216
Residential		37,882,056	30,927,272	6,954,784	34,500,000	27,545,216
Plant and Machinery		897,681,020	708,336,078	189,344,942	1,851,000,000	1,661,655,058
^eavy Vehicles		54,851,222	52,501,477	2,349,745	31,100,000	28,750,255
Light Vehicles		16,300,791	11,679,957	4,620,834	9,495,130	4,874,296
		1,184,818,265	939,473,011	245,345,254	2,089,103,130	1,843,757,876
14.6   Had there been no revaluation the related figures of Freehold Land, Buildings, Plant & Machinery and
Vehicles at June 30, 2002 would have been as follows :
			Cost	Accumulated	Net Book
Particulars			as at	Depreciation upto	Value As on
			June 30, 2002	June 30, 2002	June 30, 2002
			RUPEES
Freehold Land			9,618,448	-	9,618,448
Buildings