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D.G. KHAN ELECTRIC COMPANY LIMITED
ANNUAL REPORT 1997
CONTENTS
COMPANY INFORMATION
NOTICE OF ANNUAL GENERAL MEETING
DIRECTORS REPORT
PATTERN OF SHAREHOLDING
AUDITORS REPORT
BALANCE SHEET
PROFIT AND LOSS ACCOUNT
STATEMENT OF CHANGES IN FINANCIAL POSITION
NOTES TO THE ACCOUNT
Company Information
Registered Office
53-A, Lawrence Road, Lahore
Phone: 6367812
Fax: 6367414
Board of Directors
Mrs. Akhtar Jehan Begum
Mrs. Farhat Saleem
Mr. Raza Mansha Chief Executive / Director
Mr. Muhammad Ali Anwar
Mr. Khalid Qadeer Oureshi
Mr. Aftab Ahmad Khan
Mr. Muhammad Azam
Company Secretary
Mr. A. Aziz Shahid
Auditors
M/s Riaz Ahmad & Company,
Chartered Accountants
Lahore.
Bankers
ABN Amro Bank
Faysal Bank Ltd.
Mashreq Bank Psc
Muslim Commercial Bank Ltd.
National Bank of Pakistan
Schon Bank Ltd.
United Bank Ltd.
Legal Advisor
Mr. Imtiaz Rasheed Siddiqui
Nawa-i-Waqt Building,
Fatima Jinnah Road,
Lahore.
Power Generation Project
KHOFLI SATTI
Distt. Dera Ghazi Khan
Notice of Annual General Meeting
Notice is hereby given that 3rd Annual General Meeting of the Shareholders of D.G. Khan Electric Company
Limited ("the Company") will be held on Wednesday the 31st December 1997 at 3:30 p.m. at NJshat House,
53-A, Lawrence Road, Lahore to transact the following business:
1 to confirm the minutes of the last meeting.
2 to receive, and adopt the audited accounts of the Company for the financial year ended June 30, 1997
together with the Directors and Auditors reports thereon.
3 to appoint Auditors for the year 1997-98 and fix their remuneration. The present Auditors M/s Riaz
Ahmad & Company, Chartered Accountants, Lahore retire and being eligible offer themselves for
re-appointment.
4 Any other matter with the permission of the Chair.
Notes:
1. Share Transfer Books of the Company will remain closed from 31st December, 1997 to 6th
January, 1998 (both days inclusive). Transfers received in order at NJshat House, 53-A, Lawrence Road,
Lahore upto the close of business on 30th December, 1997 will be considered Jn time.
2. A member eligible to attend and vote at this meeting may appoint another member his/her proxy to
attend and vote instead of him/her. Proxies in order to be effective must reach the company's registered
office not less than 48 hours before the time for holding the meeting.
3. Shareholders are requested to immediately notify the change in address if any.
Directors' Report
The Directors of your Company feel pleasure Jn presenting to the members this Annual Report for the
year ended June 30, 1997 and the Auditors report thereon.
1. OPERATING RESULTS AND APPROPRIATIONS
Your Company earned a net profit of Rs. 24.969 million. In 1996, the project operated for three and half
month and earned Rs. 8.528 million. The preceding year's figures are therefore not comparable. The
profit for the year under review is after charging all expenses including depreciation. The appropriation
of the available profit is recommendable as under:
        (Rs 000)
1997 1996
(Three and
half months)
Profit for the year ended June, 30 24,969 8,528
Unappropriated profit brought forward 1 0
---------- ----------
Profit for appropriation 24,970 8,528
Transferred to General Reserve 24,000 8,527
---------- ----------
Unappropriated Profit 970 1
========== ==========
During the year the net sales revenue was Rs. 188.549 million and the cost of sales remained 72.68%.
Although the cost of furnace oil had recorded increase from Rs. 4,515 to Rs. 6,296 per ton from June
1996 to February 1997 but there was no corresponding increase Jn the electric sale tariff by Wapda. This
caused an adverse impact on the profitability of the Company.
2. GENERATION AND DISTRIBUTION
These figures are tabulated as below:
       (Kwh 000)
1997 1996
Generation 64,462 17,767
Aux Load 1,482 403
---------- ----------
Distribution 62,980 17,364
========== ==========
The capacity utilization remained low as the Consumer Company's expansion project could not com-
mence commercial production up to June 1997 as envisaged.
3. PERFORMANCE
Your Company is operating 23.840 MWH Power Generation Plant consisting of four Niigata Stationary
Generating sets of 5.960 MWH capacity each. The Project Js complete according to the plan of the
Company. Two sets operated during the whole year to meet the running load requirements of the
customer Company. The third set was added Jn commercial Generation on February 01, 1997 and the
Fourth on July 01, 1997. The project launching remained trouble free.
4. FUTURE OUTLOOK
Inspite of the increase in the cost of basic inputs. Private power generation projects continue to be
profitable entities. In the wake of Pak Rupees devaluation, the established Power Generation Projects
have positive edge over the new units. The Company have better infra structure facilities therefore the
cost of the capacity expansion would be less and the Directors further foresee that there would be def-
inite increase in electricity tariff by Wapda to which the Company is following. Demand of the consumer
also exists for more electricity. The Directors intend to add one more Generating Set in future.
5. EARNING PER SHARE
In the light of the financial results for the year, earning per share came to Rs. 1.25 before taking into
account the prior year adjustments.
6. SHAREHOLDING
The pattern of holding of shares in the prescribed form is annexed to this report.
7. AUDITORS
The retiring Auditors M/S Riaz Ahmad and Company Chartered Accountants Lahore being eligible have
offered for reappointment for the year 1997-98.
9. ACKNOWLEDGMENT
The Directors record their appreciation for the services rendered by the employees of the Company dur-
ing erection and operating and hope that the same spirit of devotion and co-operation will continue in
future.
Form 34
The Companies Ordinance, 1984
(Section 236)
Pattern of Holding of the Shares
Held by the Share holders of D.G. Khan Electric Company
as at 30th June, 1997
No of Shareholding Total shares
Shareholders From To held
1 1 100 Shares 100
763 101 5OO Shares 381,500
3 501 1000 Shares 3,000
10 1001 5000 Shares 40,500
10 5001 10000 Shares 91,200
3 10001 15000 Shares 41,500
4 15001 20000 Shares 74,127
2 20001 25000 Shares 49,000
1 25001 30000 Shares 30,000
2 30001 35000 Shares 66,800
1 35001 40000 Shares 40,000
4 45001 50000 Shares 200,000
2 70001 75000 Shares 150,000
4 95001 100000 Shares 400,000
1 115001 120000 Shares 120,000
1 155001 160000 Shares 158,000
1 195001 200000 Shares 200,000
1 850001 855000 Shares 853,500
2 865001 870000 Shares 1,731,250
1 950001 955000 Shares 950,525
1 955001 960000 Shares 960,000
1 1000001 1005000 Shares 1,001,000
1 3805001 3810000 Shares 3,805,625
1 3895001 3900000 Shares 3,900,000
1 4750001 4755000 Shares 4,752,373
---------- ---------- ---------- ---------- ----------
822 Total 20,000,000
========== ========== ========== ========== ==========
Classification of shares by categories at  30 June 1997
CATEGORIES OF SHAREHOLDERS NUMBER SHARES HELD PERCENTAGE
OF SHAREHOLDERS OF CAPITAL
Individuals 807 1387727 6.94
Investment Companies 0 0 0.00
Insurance Companies 2 150000 0.75
Joint Stock Companies 2 7705625 38.53
Financial Institutions 5 3799775 19.00
Foreign Investors 5 6836873 34.18
Corporations 0 0 0.00
Modaraba Companies 1 120000 0.60
Others 0 0 0.00
---------- ---------- ----------
Total 822 20000000 100
========== ========== ==========
Auditors' Report to the Members
We have audited the annexed balance sheet of D.G KHAN ELECTRIC COMPANY LIMITED as at 30 June, 1997
and the related profit and loss account and statement of changes in financial position, 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 accounts 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 Jn 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 Jn
accordance with the objects of the Company;
c) in our opinion and to the best of our information and according to the explanations given to us, the
balance sheet, profit and loss account and the statement of changes Jn financial position, 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 30 June, 1997 and of the profit and the changes Jn financial position for the year then ended; and
d) in our opinion, no Zakat was deductible at source under the Zakat and Ushar Ordinance, 1980.
Riaz Ahmad and Company
Lahore: December 1, 1997 Chartered Accountants
Balance Sheet as at 30 June, 1997
1997 1996
Note Rupees Rupees
SHARE CAPITAL AND RESERVES
Authorized Share Capital
30,000,000 ordinary shares of
Rupees 10 each 300,000,000 300,000,000
Issued, subscribed and paid up
share capital
20,000,000 ordinary shares of
Rupees 10 each fully paid up in cash 200,000,000 200,000,000
Capital reserve-Premium on issue
of shares 120,000,000 120,000,000
Revenue reserves 3 33,497,015 8,527,883
---------- ----------
353,497,015 328,527,883
LIABILITIES AGAINST ASSETS
SUBJECT TO FINANCE LEASE 4 147,472,278 -
LONG TERM MORABAHA FINANCE 5 - 33,333,333
CURRENT LIABILITIES
---------- ----------
Current portion of long term liabilities 6 62,985,139 16,666,667
Short term finances 7 48,069,208 50,000,000
Creditors, accrued and other Liabilities 8 48,365,060 8,178,999
---------- ----------
159,419,407 74,845,666
CONTINGENCIES AND COMMITMENTS 9 - -
---------- ----------
660,388,700 436,706,882
========== ==========
The annexed notes form an integral part of these accounts
TANGIBLE FIXED ASSETS
Operating fixed assets 10 500,439,179 286,168,028
Capital work-in-progress - 7,067,749
---------- ----------
500,439,179 293,235,777
EQUITY INVESTMENTS 11 90,272,350 95,993,725
LONG TERM DEPOSITS AND
DEFERRED COSTS 12 24,617,763 5,147,204
CURRENT ASSETS
Stores and spares 13 19,849,007 18,338,069
Trade debt 14 18,879,671 15,262,437
Advances, prepayments and
other receivables 15 5,603,211 5,623,858
Cash and bank balances 16 727,519 3,105,812
---------- ----------
45,059,408 42,330,176
---------- ----------
660,388,700 436,706,882
========== ==========
Profit and loss account for the
year ended June 30, 1997
Twelve Months Three and 
Ended on Half Months 
30th June ended on 
1997  30 June 1996
Note Rupees Rupees
SALES 188,548,663 45,877,332
COST OF SALES 17 137,049,340 33,920,033
---------- ----------
GROSS PROFIT 51,499,323 11,957,299
ADMINISTRATIVE AND GENERAL EXPENSES 18 2,469,029 569,937
---------- ----------
OPERATING PROFIT 49,030,294 11,387,362
OTHER INCOME 19 1,846,805 386,967
---------- ----------
50,877,099 11,774,329
FINANCIAL AND OTHER CHARGES 20 25,907,967 3,246,446
---------- ----------
24,969,132 8,527,883
UNAPPROPRIATED PROFIT
BROUGHT FORWARD 883 -
---------- ----------
PROFIT AVAILABLE FOR
APPROPRIATION 24,970,015 8,527,883
Transfer to general reserve 24,000,000 8,527,000
---------- ----------
UNAPPROPRIATED PROFIT 970,015 883
========== ==========
The annexed notes form an integral part of these accounts.
Statement of Changes in Financial Position
for the year ended 30 June, 1997
1997 1996
Rupees Rupees
CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the year 24,969,132 8,527,883
Add/(Less): Adjustments to reconcile profit to net cash
provided by operating activities
Depreciation and amortization 34,086,896 8,807,842
Financial charges 23,555,407 2,470,610
Zakat 6,737 -
Deferred cost amortized 1,029,441 327,000
Gain on sale of equity investment (208,370) -
---------- ----------
Cash flows from operating activities
before working capital changes 83,439,243 20,133,335
(Increase) / decrease in current assets
Stores and spares (1,510,938) (18,338,069)
Trade debt (3,617,234) (15,262,437)
Advances, prepayments and other receivables 20,647 (5,623,8.58)
Short term investments - 217,000,000
Increase in current liabilities
Creditors, accrued and other liabilities 37,002,099 4,312,678
Effect on cash flows due to
working capital changes 31,894,574 182,088,314
---------- ----------
Cash flows from operating activities 115,333,817 202,221,649
Financial charges paid 16,353,804 101,661
Zakat paid 6,737 -
---------- ----------
98,973,276 202,119,988
========== ==========
CASH FLOWS FROM INVESTING ACTIVITIES
Long term deposits (20,500,000} -
Tangible fixed assets (10,005,183) (278,361,399)
Equity investments 5,929,745 (95,993,725)
Deferred cost - (5,006,720)
Sale proceeds of fixed assets 34,000 -
---------- ----------
NET CASH FLOWS FROM INVESTING ACTIVITIES (24,541,438) (379,361,844)
CASH FLOWS FROM FINANCING ACTIVITIES
---------- ----------
Issued, subscribed and paid up share capital - 40,000,000
Premium on issue of shares - 40,000,000
Lease rentals paid (58,212,672) -
Long term morabaha finance (16,666,667) 50,000,000
Short term finances (1,930,792) 50,000,000
---------- ----------
NET CASH FLOWS FROM FINANCING ACTIVITIES (76,810,131) 180,000,000
---------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS (2,378,293) 2,758,144
CASH AND CASH EQUIVALENTS
AT THE BEGINNING OF THE YEAR 3,105,812 347,668
CASH AND CASH EQUIVALENTS ---------- ----------
AT THE END OF THE YEAR 727,519 3,105,812
========== ==========
Notes to the accounts
for the year ended 30 June, 1997
1. STATUS AND OPERATIONS
The company was incorporated in Pakistan on 26 July 1994 as a public company limited by shares
under Companies Ordinance, 1984. Its shares are quoted on all three stock exchanges of Pakistan. The
sole object of the company is to set-up and operate power generation protect for generation, sale and
distribution of electricity to its associated undertakings.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Overall valuation policy
These accounts have been prepared under the historical cost convention.
2.2 Tangible fixed assets
Operating fixed assets are stated, at cost less accumulated depreciation. Capital work-in-progress
is stated at cost.
C