| CHERAT CEMENT COMPANY LTD |
|
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|
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|
| ANNUAL
REPORT 1997 |
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|
| CONTENTS |
|
| COMPANY
INFORMATION |
|
| NOTICE
OF MEETING |
|
| DIRECTORS'
REPORT TO MEMBERS |
|
| YEARWISE
STATISTICAL SUMMARY |
|
| RATIO
ANALYSIS |
|
| AUDITORS'
REPORT TO MEMBERS |
|
| BALANCE
SHEET |
|
| PROFIT
& LOSS ACCOUNT |
|
| CASH
FLOW STATEMENT |
|
| NOTES
TO THE ACCOUNTS |
|
| PATTERN
OF SHAREHOLDING |
|
|
| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
| Mr.
Mohammed Faruque |
|
Chairman |
|
| Mr.
Zahid Faruque |
|
Chief Executive/Managing
Director |
|
| Mr.
Iqbal Faruque |
|
Director |
|
| Mr.
Ahmad Faruque |
|
Director |
|
| Mr.
Mahmood Faruque |
|
Director |
|
| Mr.
Akbarali Pesnani |
|
Director |
|
| Sahibzada Mirza Mubarak Ahmad |
Director |
|
| Mr.
Razi-ur-Rahman Khan |
|
Director |
|
| (Representing
NIT) |
|
|
| COMPANY
SECRETARY |
|
| Rauf
Jafrani |
|
|
| AUDITORS |
|
| Sidat
Hyder Qamar Maqbool & Co. |
|
|
| BANKERS |
|
| Muslim
Commercial Bank Ltd. |
|
| United
Bank Ltd. |
|
| ABN
Amro Bank |
|
| Citibank
N.A. |
|
| American
Express Bank Ltd. |
|
| ANZ
Grindlays Bank plc |
|
| Credit
Agricole Indosuez |
|
| Bank
of America |
|
| National
Bank of Pakistan |
|
| Allied
Bank of Pakistan Limited |
|
|
| REGISTERED
OFFICE |
|
| Modern
Motors House, |
|
| Beaumont
Road, |
|
| Karachi-75530. |
|
|
| FACTORY |
|
| Village
Lakrai, |
|
| P.O.
Box 28, |
|
| Nowshera. |
|
|
| SALES
OFFICE |
|
| 1st
Floor, Betani Arcade, |
|
| Jamrud
Road, |
|
| Peshawar. |
|
|
| REGIONAL
OFFICE |
|
| 3,
Sunderdas Road, |
|
| Lahore. |
|
|
| ISLAMABAD
OFFICE |
|
| No.
7, Mezzanine Level, |
|
| Razia
Sharif Plaza, |
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| 92,
Blue Area, |
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| Islamabad. |
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|
| NOTICE
OF MEETING |
|
| NOTICE
IS HEREBY GIVEN that the Sixteenth Annual General Meeting of this Company
will be held |
|
| on
Thursday, November 20, 1997 at 04.00 p.m at the Registered Office of the
Company at Modern |
|
| Motors
House, Beaumont Road, Karachi, to transact the following business: |
|
|
| 1.
To receive and consider audited accounts of the company for the year ended on |
|
| June
30, 1997, with the Directors' & the Auditors' Report thereon. |
|
|
| 2.
To declare dividend of Rs. 1.50 per share (@ 15%) for the financial year
ended on June 30, 1997 |
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| as
recommended by the Directors. |
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|
| 3.
To elect eight Directors of the Company as fixed by the Board u/s 178(1) of
the Companies |
|
| Ordinance,
1984. The retiring Directors namely (1) Mr. Mohammed Faruque (2) Mr. Zahid
Faruque |
|
| (3)
Mr. Iqbal Faruque (4) Mr. Ahmad Faruque (5) Mr. Mahmood Faruque (6) Mr.
Razi-ur-Rahman |
|
| Khan,
Chairman/Managing Director, N.I.T., representing the said institution (7)
Sahibzada Mirza |
|
| Mubarak
Ahmad and (8) Mr. Akbarali Pesnani all being eligible have notified their
intention to offer |
|
| themselves
to be re-elected. |
|
|
| 4.
To appoint auditors for the ensuing year and to fix their remuneration. |
|
|
| NOTE: |
|
| 1.
A member eligible to attend and vote at the Annual General Meeting may
appoint another member |
|
| as
his/her proxy to attend and vote in his/her stead. Proxies to be effective
must be in writing and |
|
| must
be received by the Company 48 hours before the Meeting. |
|
|
| 2.
The register of members will be closed from Wednesday, November 12, to
Thursday, November 20, |
|
| 1997,
inclusive, and no transfers will be registered during that time. Shares
received in order at the |
|
| registered
office of the Company at the close of business on Tuesday, November 11, |
|
| 1997
will be treated in time for entitlement of the above dividend. |
|
|
| 3.
The shareholders are requested to notify the Company immediately the change
in their address, |
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| if any. |
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|
| DIRECTORS'
REPORT TO THE MEMBERS |
|
| for
the year ended 30th June 1997 |
|
|
| Dear
Shareholders, |
|
|
| Your
directors have pleasure in presenting to you the 16th annual report on the
working results of the |
|
| company
together with the Audited Accounts for the year ended 30th June, 1997. |
|
|
| PRODUCTION: |
|
| Comparative
figures for production of clinker and cement are as under: |
|
|
|
1996-97 |
1995-96 |
% Change |
|
|
Tons |
Tons |
|
|
|
|
|
| Clinker |
741,750 |
712,492 |
4.11 |
|
| Cement |
798,454 |
715,744 |
11.56 |
|
|
| Smooth
running of plant coupled with uninterrupted power supply from Cherat Electric
resulted in higher |
|
| production
both for clinker and cement. |
|
|
| CEMENT
DESPATCHES: |
|
| Orders
for 798,246 tons of cement were received during the year 1996-97 and
despatches there against |
|
| totalled
797,880 tons. The corresponding figures for the 1995-96 were 713,647 tons and
721,055 tons, |
|
| respectively. |
|
|
| SALES
AND MARKETING: |
|
| The
gross sales during the year amounting to Rs. 2,830.422 million reflect a
growth of 28% compared to |
|
| last
year of Rs. 2,212.612 million. However, the increase in sales could not be
translated into improved |
|
| profitability
as both the gross and net profit from operation came under pressure due to
substantial increase |
|
| in
the input cost primarily on account of furnace oil. Due to overall slow down
in economic activities and |
|
| increase
in supply of cement on account of additional capacity and existing plants
expanding, it was difficult |
|
| to
pass on the increased input cost to the final consumer. As a matter of fact
the price of cement has been |
|
| continuously
on decline and if the present trend continues it may be difficult to make
both ends meet. |
|
|
| Besides,
the increase in the input cost, the heavy taxation for cement industry in the
form of excise duty |
|
| and
sales tax also has a negative effect on the industry. While the sales tax has
since been withdrawn from |
|
| July
01, 1997, the rate of excise duty has been further increased to 40% from 35%
prior to budget. |
|
|
| OPERATING
RESULTS: |
|
| The
sales revenues for the year amounted to Rs. 2,830.422 million. Out of this
Rs. 918.978 million was |
|
| paid
for excise duty and Rs. 415.433 million towards sales tax, and accordingly
net sales comes to |
|
| Rs.
1,496.011 million compared to Rs. 1,368.325 million for the last year. The
cost of sales comes to |
|
| Rs.
1,259.864 million which leaves us a gross profit of Rs. 236.147 million.
Deductions are made from the |
|
| gross
profit on account of administration expenses Rs. 34.549 million, selling and
distribution expenses |
|
| Rs.
27.299 million, financial charges Rs. 74.509 million, WPPF Rs. 6.313 million,
WWF Rs. 1.430 million |
|
| and
other charges Rs. 3.211 million. After accounting for other income amounting
to Rs. 29.689 million |
|
| the
net deductions from the gross profit comes to Rs. 117.622 million. This gives
us a net profit before tax |
|
| Rs.
118.525 million (7.92% of net sales) for the year. Provision has been made
for the taxation at Rs. |
|
| 10.386
million, thus leaving us a net profit after tax of Rs. 108.139 million (7.23%
of net sales) for the year. |
|
| The
total contribution to the exchequer on account of Excise Duty, Sales Tax and
Income Tax comes to |
|
| Rs.
1,344.80 million (47.51% of gross sales) compared to Rs. 951.913 million for
1995-96. Other |
|
| comparative
figures are reflected in the Financial Statements. |
|
|
| APPROPRIATION
OF PROFIT: |
|
| To
the current year's profit of Rs. 108.139 million addition has been made of
Rs. 28.873 million on account |
|
| of
profit brought forward from last year. The total profit thus available for
appropriation amounts to Rs. |
|
| 137.012
million. |
|
|
| Your
Directors propose following appropriation of profit: |
|
|
Rupees |
|
|
(Million) |
|
|
| - Net profit for the year |
|
108.139 |
|
| - Add: unappropriated
profit brought forward |
28.873 |
|
|
--------- |
|
|
137.012 |
|
|
========== |
|
| Appropriation: |
|
| - Proposed cash dividend
@15% (1996 @30%) |
72.199 |
|
| - Transfer to General Reserve |
|
25.000 |
|
| - Balance to be Carried forward |
|
39.813 |
|
|
--------- |
|
|
137.012 |
|
|
========== |
|
| FUTURE
PROSPECTS: |
|
| Considering
the installed capacity of the existing plants and the new ones coming on line
and with no |
|
| significant
improvement in the economic activities, it seems difficult that continuous
increase in input cost |
|
| can
be passed on to the final consumer in the foreseeable future. In order for
the industry to survive and |
|
| not
be classified as Sick, it is necessary that taxes imposed on the cement
industry be rationalized keeping |
|
| in
view the industry's capacity to carry this burden. This will not only ensure
continuous revenue for the |
|
| government
but also save colossal amount of foreign exchange and local resources that
have gone into |
|
| setting
up these highly capital intensive Cement Projects. |
|
|
| DEBT
OBLIGATION: |
|
| We
continue to meet our financial commitments and debt obligations as per agreed
schedule. |
|
|
| HUMAN
RESOURCE DEVELOPMENT: |
|
| Development
of human resources is given due recognition and accordingly a number of staff
members |
|
| including
executives were sent to various training courses/programmes and seminars to
acquire further |
|
| knowledge
in their respective fields. |
|
|
| AUDITORS: |
|
| The
present auditors M/s. Sidat Hyder Qamar Maqbool & Co., Chartered
Accountants, retire and being |
|
| eligible
offer themselves for reappointment. |
|
|
| ACKNOWLEDGMENT: |
|
| In
the end we wish to express our thanks to all the financial institutions
including the French Banks who |
|
| have
been associated with the project, for their support and cooperation. We would
also like to thank all |
|
| our
dealers and customers for their continued association and support. We thank
our team of dedicated |
|
| managers
and other executives, supervisors and workers, who continue to put in their
best efforts for |
|
| achieving
optimum results. |
|
|
| YEARWISE
STATISTICAL SUMMARY |
|
|
1997 |
1996 |
1995 |
1994 |
1993 |
1992 |
1991 |
1990 |
1989 |
1988 |
|
| ASSETS
EMPLOYED |
|
| Fixed
Assets |
1,260 |
1,378 |
1,471 |
1,453 |
1,236 |
1,059 |
861 |
614 |
564 |
594 |
|
| Investments
and |
|
| Long-term
Advances |
|
| & Deposits |
|
13 |
14 |
14 |
12 |
11 |
9 |
73 |
50 |
92 |
92 |
|
|
| Current
Assets |
589 |
638 |
0.43 |
376 |
357 |
242 |
154 |
225 |
153 |
102 |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
| Total
Assets Employed |
1,862 |
2,030 |
1,912 |
1,841 |
1,604 |
1,310 |
1,088 |
889 |
809 |
788 |
|
|
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
|
| FINANCED BY |
|
| Shareholders'
equity |
921 |
885 |
864 |
704 |
621 |
457 |
385 |
314 |
303 |
294 |
|
| Long-Term
Liabilities |
336 |
434 |
544 |
633 |
572 |
520 |
438 |
257 |
266 |
296 |
|
| Deferred
Liabilities |
191 |
206 |
165 |
42 |
40 |
31 |
2 |
- |
- |
- |
|
| Current
Liabilities |
414 |
505 |
339 |
462 |
371 |
302 |
263 |
318 |
240 |
198 |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
| Total
Funds Invested |
1,862 |
2,030 |
1,912 |
1,841 |
1,604 |
1,310 |
1,088 |
889 |
809 |
788 |
|
|
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
|
| TURNOVER
& PROFIT |
|
| Turnover
(Net) |
1,496 |
1,368 |
953 |
530 |
763 |
630 |
550 |
466 |
373 |
471 |
|
| Operating
Profit |
174 |
334 |
337 |
143 |
309 |
197 |
130 |
101 |
101 |
169 |
|
| Profit
before Taxation |
118 |
274 |
289 |
122 |
277 |
157 |
85 |
55 |
54 |
114 |
|
| Profit
after Taxation |
108 |
166 |
159 |
83 |
164 |
73 |
70 |
55 |
54 |
115 |
|
| Cash
Dividend |
72 |
144 |
|
45 |
45 |
50 |
|
| Stock
Dividend |
|
96 |
64 |
64 |
33 |
25 |
|
| Transfer
to Reserves |
25 |
25 |
55 |
15 |
100 |
40 |
40 |
20 |
15 |
50 |
|
| Profit c/f |
|
40 |
29 |
32 |
24 |
20 |
20 |
20 |
15 |
25 |
31 |
|
|
| RATIO
ANALYSIS ON ACCOUNTS |
|
| for
the year ended 30th June 1997 |
|
|
1997 |
1996 |
|
| PROFITABILITY: |
|
| Gross
Profit (percentage) |
|
15.79 |
28.54 |
|
| Operating
Profit (percentage) |
|
11.65 |
24.40 |
|
| Profit
Before Tax (percentage) |
|
7.92 |
20.00 |
|
| Net
Profit After Tax (percentage) |
|
7.23 |
12.13 |
|
| Growth
in Net Profit After Tax (percentage) |
|
-34.85 |
3.97 |
|
| Net
Profit to Share Holders' Equity (Average after tax) (percentage) |
11.97 |
18.98 |
|
| E.P.S
(Before Tax) |
|
2.46 |
5.68 |
|
| E.P.S
(After Tax) |
|
2.25 |
3.45 |
|
| Net
Profit to Total Assets (Average after tax) (percentage) |
5.56 |
8.42 |
|
| Increase
in Sales (Gross percentage) |
|
27.92 |
49.27 |
|
| Increase
in Sales (Net percentage) |
|
9.33 |
43.58 |
|
| Materials
% of Net Sales |
|
14.48 |
14.35 |
|
| Labour
% of Net Sales |
|
4.77 |
4.20 |
|
| Other
Cost of Sales Expenses % of Net Sales |
|
64.97 |
52.91 |
|
| Raw
& Packing Material as % of Cost of Sales |
|
17.19 |
20.08 |
|
| Administrative
Expenses % of Net Sales |
|
2.31 |
2.10 |
|
| Selling
Expenses % of Net Sales |
|
1.82 |
2.04 |
|
| Income
Tax % of Net Sales |
|
0.69 |
7.87 |
|
| Financial,
other charges, (other income) % of Net Sales |
3.21 |
4.40 |
|
|
| SHORT
TERM SOLVENCY: |
|
| Working
Capital Ratio |
|
1.85:1 |
1.6:1 |
|
| Acid
Test Ratio |
|
1.65:1 |
1.41:1 |
|
| Working
Capital Turn Over (Net Sales) times |
|
5.54 |
5.74 |
|
| Inventory
Turn Over/times |
|
21.40 |
21.18 |
|
|
| OVERALL
VALUATION AND ASSESSMENT: |
|
| Number
of Time Interest Earned |
|
2.59 |
4.19 |
|
| Return
on Capital Employed before tax (Average in percentage) |
13.13 |
18.05 |
|
| P.E
Ratio (Before tax) |
|
8.35 |
4.75 |
|
| Book
Value Per Share |
|
19.13 |
18.39 |
|
| Debt Ratio |
|
0.50:1 |
0.56:1 |
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| We
have audited the annexed balance sheet of CHERAT CEMENT COMPANY LIMITED as at |
|
| 30th
June 1997 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 Company 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 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 and the profit and loss account, 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 30th June
1997 and of the |
|
| profit
and the cash flow statement for the year then ended; and |
|
|
| d)
in our opinion, zakat deductible at source under the Zakat and Ushr
Ordinance, 1980 was deducted |
|
| by
the Company and deposited in the Central Zakat Fund established under Section
7 of that |
|
| Ordinance. |
|
|
| BALANCE
SHEET AS |
|
| AT
30TH JUNE 1997 |
|
|
Note |
1997 |
1996 |
|
|
(Rupees '000) |
|
| SHARE
CAPITAL |
|
| Authorised |
|
| 50,000,000
(1996: 50,000,000) ordinary |
|
| shares
of Rs. 10/- each |
|
500,000 |
500,000 |
|
|
|
========== |
========== |
|
|
|
|
|
| Issued,
subscribed and paid-up |
|
3 |
481,324 |
481,324 |
|
| RESERVES |
|
4 |
439,813 |
403,873 |
|
|
|
------------ |
------------ |
|
|
|
921,137 |
885,197 |
|
|
|
|
|
| REDEEMABLE
CAPITAL |
|
5 |
119,617 |
141,282 |
|
|
|
|
|
|
| LONG-TERM
LOANS |
|
6 |
165,336 |
211,578 |
|
|
|
|
|
|
| LIABILITIES
AGAINST ASSETS SUBJECT |
|
|
|
| TO
FINANCE LEASE |
|
7 |
20,458 |
43,001 |
|
|
|
|
|
|
| DEFERRED
LIABILITIES |
|
8 |
191,279 |
205,558 |
|
|
|
|
|
|
| LONG-TERM
DEPOSITS - unsecured |
|
9 |
30,448 |
41,626 |
|
|
| CURRENT
LIABILITIES |
|
| Short-term
finance |
|
10 |
91,138 |
65,021 |
|
| Current
maturity |
|
11 |
94,513 |
102,245 |
|
| Creditors,
accrued and other liabilities |
12 |
127,627 |
126,197 |
|
| Taxation |
|
|
24,386 |
63,500 |
|
| Proposed
dividend |
|
|
72,199 |
144,397 |
|
| Unclaimed
dividend |
|
|
3,750 |
472 |
|
|
|
---------- |
---------- |
|
|
|
413,613 |
501,832 |
|
| Contingencies
and commitments |
|
13 |
|
|
|
---------- |
---------- |
|
|
|
1,861,888 |
2,030,074 |
|
|
|
========== |
========== |
|
|
| FIXED
ASSETS - TANGIBLE |
|
| Operating
assets - at book value |
|
14 |
1,198,081 |
1,296,984 |
|
| Assets
subject to finance lease |
|
15 |
61,531 |
79,943 |
|
| Capital
work-in-progress |
|
|
- |
918 |
|
|
|
---------- |
---------- |
|
|
|
1,259,612 |
1,377,845 |
|
| INVESTMENTS
- at Cost |
|
16 |
7,300 |
6,500 |
|
| LONG-TERM
DEPOSITS |
|
|
6,117 |
7,959 |
|
| CURRENT
ASSETS |
|
|
|
| Stores,
spares and loose tools |
|
17 |
241,540 |
234,858 |
|
| Stock-in-trade |
|
18 |
61,534 |
72,530 |
|
| Advances,
deposits, prepayments and |
|
|
|
| other
receivables |
|
19 |
124,845 |
141,578 |
|
| Short-term
investments |
|
20 |
117,053 |
127,053 |
|
| Cash
and bank balances |
|
21 |
43,887 |
61,751 |
|
|
|
---------- |
---------- |
|
|
|
588,859 |
637,770 |
|
|
|
---------- |
---------- |
|
|
|
1,861,888 |
2,030,074 |
|
|
========== |
========== |
|
| These
accounts should be read with the annexed notes. |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| for
the year ended 30th June 1997 |
|
|
|
1997 |
1996 |
|
|
Note |
(Rupees '000) |
|
|
| Sales |
|
22 |
1,496,011 |
1,368,325 |
|
| Cost
of sales |
|
23 |
1,259,864 |
977,747 |
|
|
---------- |
---------- |
|
| Gross
profit |
|
236,147 |
390,578 |
|
|
---------- |
---------- |
|
| Administration
expenses |
|
24 |
34,549 |
28,817 |
|
| Selling
and distribution expenses |
|
25 |
27,299 |
27,919 |
|
|
---------- |
---------- |
|
|
61,848 |
56,736 |
|
|
---------- |
---------- |
|
| Operating
profit |
|
174,299 |
333,842 |
|
|
---------- |
---------- |
|
| Financial
charges |
|
26 |
74,509 |
85,753 |
|
| Other
charges |
|
27 |
3,211 |
3,159 |
|
| Other
income |
|
28 |
(29,689) |
(47,167) |
|
| Workers'
Profit Participation Fund |
|
|
6,313 |
14,405 |
|
| Workers'
Welfare Fund |
|
|
1,430 |
4,084 |
|
|
|
---------- |
---------- |
|
|
|
55,774 |
60,234 |
|
|
|
---------- |
---------- |
|
| Net
profit for the year before tax |
|
|
118,525 |
273,608 |
|
| Taxation |
|
29 |
10,386 |
107,626 |
|
|
|
---------- |
---------- |
|
| Net
profit after tax |
|
|
108,139 |
165,982 |
|
| Accumulated
profit brought forward |
|
|
28,873 |
32,288 |
|
|
|
---------- |
---------- |
|
| Profit
available for appropriation |
|
|
137,012 |
198,270 |
|
|
| Appropriations: |
|
| Transfer
to general reserve |
|
25,000 |
25,000 |
|
| Proposed
cash dividend @ 15% (1996 @ 30%) |
|
72,199 |
144,397 |
|
|
---------- |
---------- |
|
|
97,199 |
169,397 |
|
|
---------- |
---------- |
|
| Accumulated
profit carried forward |
|
39,813 |
28,873 |
|
|
========== |
========== |
|
| These
accounts should be read with the annexed notes. |
|
|
|
| CASH
FLOW STATEMENT |
|
| for
the year ended 30th June 1997 |
|
|
1997 |
1996 |
|
|
(Rupees '000) |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Profit
before taxation |
|
118,525 |
273,608 |
|
| Adjustments: |
|
|
|
| Depreciation |
|
145,182 |
158,109 |
|
| Gain
on sale of fixed assets |
|
(548) |
