| FAUJI FERTILIZER COMPANY LIMITED |
|
|
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|
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|
| Annual
Report 1997 |
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| C
0 N T E N T S |
|
| Ten
Years at a Glance |
|
| Company
Information |
|
| Notice
of Meeting |
|
| Report
of the Directors |
|
| Auditors'
Report to the Members |
|
| Balance
Sheet |
|
| Profit
And Loss Account |
|
| Cash
Flow Statement |
|
| Notes
to the Accounts |
|
| Pattern
of Shareholding |
|
|
| COMPANY
INFORMATION |
|
|
| Board
of Directors |
|
| Lt
Gen Khalid Latif Moghal (Retd), HI(M), S Bt |
|
| Chairman |
|
| Lt
Gen Zia Ullah Khan (Retd), HI(M), |
|
| Chief
Executive & Managing Director |
|
| Dr
Haldor Topsoe |
|
| Mr
Iltifat Rasul Khan |
|
| Brig
Riaz Ahmed Qureshi (Retd) |
|
| Brig
Ashfaq Ahmad (Retd) |
|
| Brig
Muhammad Saeed Baig (Retd) |
|
| Mr
Razi-ur-Rehman Khan |
|
| Mr
Mian Mumtaz Abdullah |
|
| Mr
Adnan Ahmad All |
|
| Mr
Asadullah Khawaja |
|
| Brig
Sayyed Ifzal Hussain (Retd), SI (M) |
|
| Mr
M Tahsin Khan Iqbal |
|
|
| Secretary |
|
|
| Brig
Muhammad Akram Khan (Retd) |
|
|
| Registered
Office |
|
| 93-Harley
Street, |
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| Rawalpindi
Cantt. |
|
|
| Plantsite |
|
|
| Goth
Machhi, Sadikabad, |
|
| Rahim
Yar Khan |
|
|
| Marketing
Division |
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| Lahore
Trade Centre, |
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| 11
Shahrah-e-Aiwan-e-Tijarat, |
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| Lahore. |
|
|
| Karachi
Office |
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| D-143,
Block-4, KDA Scheme-5, |
|
| Kehkashan
Clifton, |
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| Karachi. |
|
|
| Auditors |
|
|
| A.F.
Ferguson & Co., |
|
| Chartered
Accountants |
|
|
| NOTICE
OF MEETING |
|
| Notice
is hereby given that the 20th Annual General Meeting of the Shareholders of
Fauji Fertilizer |
|
| Company
Limited will be held at Pearl Continental Hotel, The Mall, Rawalpindi, on
Monday June 29, 1998 |
|
| at
1100 hours to transact the following business:-- |
|
|
| Ordinary
Business |
|
| 1.
To confirm the minutes of the 19th Annual General Meeting held on June 23,
1997 |
|
|
| 2.
To receive, consider and adopt the Audited Accounts of the Company together
with the |
|
| Directors'
and Auditors' Reports for the year ended December 31, 1997. |
|
|
| 3.
To appoint Auditors for the year 1998 and to fix their remuneration. |
|
|
| 4.
To approve payment of Final Dividend for the year ended December 31, 1997 as
recommended |
|
| by
the Board of Directors. |
|
|
| 5.
To transact any other business with the permission of the Chairman. |
|
|
| By
Order of the Board, |
|
|
| NOTES: |
|
| 1.
The share transfer books of the Company will remain closed from June 16, to
June 29, 1998 |
|
| (both
days inclusive). |
|
|
| 2.
A member of the Company entitled to attend and vote at the Annual General
Meeting may appoint |
|
| a
person/representative as proxy to attend and vote in place of the member at
the Meeting. Proxies |
|
| in
order to be effective must be received at the Company's Registered Office,
93-Harley Street, |
|
| Rawalpindi
not later than 48 hours before the time of holding the Meeting. |
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|
|
|
| REPORT
OF THE DIRECTORS FOR THE YEAR ENDED DECEMBER 31, 1997 |
|
| The
Directors of Fauji Fertilizer Company Limited take pleasure in presenting the
20th Annual Report |
|
| together
with the Company's Financial Statements for the year ended December 31, 1997
and the |
|
| Auditors'
Report thereon. |
|
|
| ACHIEVEMENTS |
|
| Despite
decline in fertilizer offtake in the country due to suppressed demand, the
Company achieved |
|
| excellent
results in 1997 as compared with the previous years and maintained its growth
momentum. The |
|
| results
are summarized below: |
|
|
| Achieved
the highest 'Sona' production of 1,507 thousand tonnes and also the highest
'Sona' sales of 1,483 thousand tonnes; this represented an improvement over
the previous years; |
|
| Earned
record net profit after tax of Rs 3,370 |
|
|
|
| million,
which was 37% higher as compared to |
|
|
|
| 1996. |
|
|
|
|
|
|
| Contributed
Rs 3.2 billion for the Government |
|
|
|
|
| revenues
in 1997, which was 95% of the |
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|
|
| Company's
profit of Rs 3.4 billion. |
|
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|
|
|
|
| PRODUCTION |
|
| 1997
was a landmark year for production. The operation of both plants remained
smooth and these |
|
| continued
to operate without annual maintenance turnaround and any major repairs.
Production of |
|
| 1,507
thousand tonnes 'Sona' urea surpassed previous record of 1996 by a
significant margin of |
|
| 100
thousand tonnes. Annual production efficiency achieved by the original unit
was 1 1 1%, while it |
|
| was
1 16% for the expansion unit. Overall efficiency was 1 13% as compared to
106% for last year. |
|
|
|
|
| Achieved
ISO-9002 certification for quality management system of the production
division. The |
|
| Company
was the first to achieve this distinction in the fertilizer industry. |
|
|
|
|
| Safety
performance was maintained at a high level with no lost time injury during
the year and 6.58 |
|
| million
man hours of safe operations were completed. |
|
|
| The
Company's Technical Training Centre conducted 3 management courses and 9
skill |
|
| improvement
courses were also conducted in plant operation and maintenance. Besides,
specific |
|
| training
on DCS control systems was imparted to 7 instructors of Pak-German Technical
Training |
|
| Centre,
Lahore. Technical facilities were also extended to apprentices of an
associated Company |
|
| FFC-Jordan
Fertilizer Company Limited. |
|
|
| MARKETING |
|
| Domestic
urea market demand in the earlier months significantly declined due to
depressed market |
|
| and
liquidity crunch in the country but revived in the second half of the year as
a result of attractive |
|
| support
price announced by the Government for wheat, loan package announced for
farmers, |
|
| favourable
weather conditions and better agro economic environment. |
|
|
| The
urea price, however, remained |
|
| unchanged
during this trying period |
|
| although the value of rupee
diclined and |
|
| inflationary
pressures intensified. |
|
|
| During
the year 1997, the Company |
|
| achieved
46% urea market participation |
|
| as
compared to 42% last Year. |
|
|
| Total
fertilizers sales volume was 1,711 |
|
| thousand
tonnes, including 81 thousand |
|
| tonnes
of phosphatic fertilizer and 147 |
|
| thousand
tonnes of imported urea. |
|
|
| FINANCIAL
RESULTS |
|
| The
growth in net profit by 37% over the previous year is mainly attributable to
higher 'Sona' sales |
|
| volume
and lower trading in high priced imported urea. |
|
|
| The
Earning Per Share in 1997 was Rs. 13.14 compared to Rs. 9.57 achieved last
year. |
|
|
| Excellent
liquidity, debt service cover and operating ratios contributed to the
financial strength of |
|
| the
Company to honour contractual commitments and contemplate expansion. |
|
|
| The
Company has given an undertaking to a lender of an associated Company through
an |
|
| agreement
to provide funding in the form of loan or additional equity equal to the
deficiency notified |
|
| by
the lender. |
|
|
| Feasibility
of investment in different projects is being considered. In order to meet
this requirement, |
|
| and
for balanced distribution of dividend, Rs. 1,400 million are being proposed
to be transferred to |
|
| general
reserve. |
|
|
| The
Company's ranking in the Karachi Stock Exchange list of top 25 companies
improved from fifth |
|
| position
in 1995 to second position in 1996. |
|
|
| APPROPRIATION
OF PROFIT |
|
| The
net profit for the year is recommended to be appropriated as follows: |
|
|
|
|
Rupees |
|
|
|
Thousand |
|
|
| Net
profit after taxation |
|
|
3,370,201 |
|
| Unappropriated
profit brought forward |
|
432,869 |
|
|
|
|
|
---------- |
|
| Total
available for appropriation |
|
3,803,070 |
|
| Appropriations |
|
|
|
| Transfer
to general reserve |
|
1,400,000 |
|
|
| Dividends
on ordinary shares |
|
| First
interim @ 20% |
|
512,992 |
|
| Second
interim @ 20% |
|
512,992 |
|
| Proposed
final @ 40% |
|
1,025,984 |
|
|
---------- |
|
|
|
2,051,968 |
|
|
|
---------- |
|
|
|
3,451,968 |
|
|
|
---------- |
|
| Unappropriated
profit carried forward |
|
351,102 |
|
|
========= |
|
|
|
| OUTLOOK
1998 |
|
| The
fertilizer demand has shown a significant increase in first quarter as
compared to previous year |
|
| and
earlier estimates due to better Rabi crop, favourable weather conditions and
better liquidity |
|
| position.
However, there has been a sharp decline during April. Off take is expected to
improve |
|
| marginally
in the year due to Government's incentives given to farmers. |
|
|
|
| Turnaround
of both plants has been planned for 1998. Production level is thus expected
to decline |
|
| as
compared to the previous year. Due to higher demand in 1998 urea is also
being imported. |
|
|
| Recent
reports regarding changes in pricing policy for natural gas have created
uncertainty. There |
|
| is
a need for clarification in view of prior commitments. In line with the
Government's announced |
|
| policy
of continued support to the agriculture sector it is expected that the
situation would be |
|
| clarified
soon to allay such apprehensions. In case of increase in gas price the
operating results |
|
| could
be affected. |
|
|
| Barring
any unforeseen constraints, prospects for the current year are positive. |
|
|
| EMPLOYEE
RELATIONS AND SOCIAL WELFARE |
|
| During
1997 employees' relationship with management was conducive. Contributions of
the |
|
| employees
( the most valuable assets of the Company) were instrumental in generating
good .. |
|
| operating
results throughout the year. |
|
|
| The
Company is extending full medical facilities to its employees and their
families at Plant in fully |
|
| equipped
medical centre having specialist doctors, and also extending full medical
facilities to its |
|
| employee
at other locations. |
|
|
| Schooling
facilities are being extended to the children of all employees working at
Plantsite. |
|
| Scholarship
scheme for children studying in higher classes is also available. The Company |
|
| continued
to financially support the Government school adjacent to the Plant for the
children of |
|
| surrounding
localities. |
|
|
| PATTERN
OF SHARE HOLDING |
|
| As
of December 31, 1997 there were 3,054 shareholders including individuals and
numerous institutions, |
|
| as
described in the appended pattern of share holding. |
|
|
| DIRECTORS |
|
| The
Board places on record its appreciation for the advice and valuable services
rendered by Brig. |
|
| Muneeb-ur-Rehman
Farooqui (Retd.) the retiring director. The Board also takes the opportunity
to welcome |
|
| Brig.
Muhammad Saeed Baig (Retd.) who has replaced him on the Board of FFC. |
|
|
| AUDITORS |
|
| A.
E Ferguson & Co., Chartered Accountants retire at the conclusion of the
20th Annual General Meeting |
|
| and
being eligible, have offered themselves for reappointment. |
|
|
| ACKNOWLEDGE EM |
|
| The
directors also express their appreciation for the contributions by the
customers, suppliers, employees, |
|
| shareholders
and the Government and its agencies during the year. |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| We
have audited the annexed balance sheet of Fauji Fertilizer Company Limited as
at December 31, |
|
| 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 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, investment made and the expenditure incurred during
the year |
|
| were
in accordance with the objects of the Company; |
|
|
| (c)
in our opinion and to the best of our information and according to the
explanations given to us, the |
|
| balance
sheet, profit and loss account and the cash flow statement, together with the
notes forming |
|
| part
thereof give the information required by the Companies Ordinance, 1984, in
the manner so |
|
| required
and respectively give a true and fair view of the state of the Company's
affairs as at |
|
| December
31, 1997 and of the profit and cash flows 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. |
|
|
|
|
| Islamabad |
|
|
A.F Ferguson & Co. |
|
| 21-May-98 |
|
Chartered Accountants |
|
|
|
|
|
| BALANCE
SHEET AS AT DECEMBER 31, 1997 |
|
|
|
|
|
|
1997 |
1996 |
|
|
|
Note |
(Rupees '000) |
|
|
| SHARE
CAPITAL AND RESERVES |
|
| Share capital |
|
| Authorised |
|
|
|
3 |
3,000,000 |
3,000,000 |
|
|
======== |
======== |
|
| Issued,
subscribed and fully paid |
|
3 |
2,564,959 |
2,564,959 |
|
| Capital
reserve |
|
4 |
160,000 |
160,000 |
|
| General
reserve |
|
|
3,000,000 |
1,600,000 |
|
| Unappropriated
profit |
|
|
351,102 |
432,869 |
|
|
|
---------- |
---------- |
|
|
|
6,076,061 |
4,757,828 |
|
|
| LONG
TERM LOANS |
|
5 |
2,323,159 |
2,901,274 |
|
|
|
|
|
| DEFERRED
TAXATION |
|
6 |
727,000 |
942,000 |
|
|
|
| CURRENT
LIABILITIES AND PROVISIONS |
|
| Current
maturity of long term loans |
|
5 |
530,204 |
536,003 |
|
| Creditors,
accrued and other liabilities |
|
7 |
1,638,523 |
1,634,418 |
|
| Taxation
- net |
|
|
602,586 |
247,479 |
|
| Dividend payable |
|
-- |
512,992 |
|
|
| Proposed
dividend |
|
|
1,025,984 |
641,240 |
|
|
|
|
----------- |
----------- |
|
|
|
|
3,797,297 |
3,572,132 |
|
| CONTINGENT
LIABILITIES AND COMMITMENTS |
|
|
8 |
|
|
|
|
----------- |
----------- |
|
|
12,923,517 |
12,173,234 |
|
| The
annexed notes form an integral part of these accounts. |
|
|
| FIXED
CAPITAL EXPENDITURE |
|
| Fixed assets |
|
|
|
9 |
4,473,762 |
5,222,191 |
|
| Capital
work in progress |
|
|
10 |
21,013 |
6,201 |
|
|
|
4,494,775 |
5,228,392 |
|
| LONG
TERM INVESTMENTS |
|
11 |
2,322,330 |
1,373,330 |
|
| LONG
TERM LOANS AND ADVANCES |
12 |
35,090 |
66,603 |
|
| LONG
TERM DEPOSITS, PREPAYMENTS |
|
| AND
DEFERRED COSTS |
|
13 |
14,008 |
29,888 |
|
|
|
| CURRENT
ASSETS |
|
| Stores
and spares |
|
14 |
801,338 |
716,439 |
|
| Stock
in trade |
|
15 |
307,587 |
278,389 |
|
| Trade debts |
|
16 |
745,789 |
419,305 |
|
| Loans,
advances, deposits, prepayments |
|
| and
other receivables |
|
17 |
362,370 |
205,982 |
|
| Short
term investments |
|
18 |
3,509,064 |
3,686,500 |
|
| Cash
and bank balances |
|
19 |
331,166 |
168,406 |
|
|
|
|
----------- |
----------- |
|
|
|
|
6,057,314 |
5,475,021 |
|
|
|
|
|
|
|
|
|
----------- |
----------- |
|
|
|
|
12,923,517 |
12,173,234 |
|
|
========= |
========= |
|
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR ENDED DECEMBER 31, 1997 |
|
|
|
|
|
|
|
1997 |
1996 |
|
|
|
Note |
(Rupees '000) |
|
|
|
|
| Sales |
|
|
20 |
12,055,669 |
11,739,116 |
|
| Less:
Cost of goods sold |
|
21 |
6,001,005 |
7,023,150 |
|
|
|
|
----------- |
----------- |
|
| GROSS
PROFIT |
|
|
6,054,664 |
4,715,966 |
|
|
|
|
|
|
|
| Less:
Selling and distribution expenses |
|
22 |
856,106 |
695,886 |
|
| Financial
charges |
|
23 |
413,770 |
495,163 |
|
|
----------- |
----------- |
|
|
|
1,269,876 |
1,191,049 |
|
|
|
|
|
|
----------- |
----------- |
|
|
|
4,784,788 |
3,524,917 |
|
| Other
income |
|
24 |
623,518 |
718,572 |
|
|
----------- |
----------- |
|
|
|
5,408,306 |
4,243,489 |
|
|
| Other
charges |
|
25 |
385,105 |
296,780 |
|
|
|
|
----------- |
----------- |
|
| NET
PROFIT BEFORE TAXATION |
|
5,023,201 |
3,946,709 |
|
|
| Provision
for taxation |
|
26 |
1,653,000 |
1,493,000 |
|
|
----------- |
----------- |
|
| NET
PROFIT AFTER TAXATION |
|
3,370,201 |
2,453,709 |
|
|
| Unappropriated
profit brought forward |
|
432,869 |
246,384 |
|
|
----------- |
----------- |
|
| Profit
available for appropriation |
|
3,803,070 |
2,700,093 |
|
|
| APPROPRIATIONS: |
|
| Transfer
to general reserve |
|
1,400,000 |
600,000 |
|
|
|
|
|
| Dividends: |
|
| First
interim @ 20% (1996: 20%) |
|
512,992 |
512,992 |
|
| Second
interim @ 20% (1996: 20%) |
|
512,992 |
512,992 |
|
| Proposed
final @ 40% (1996: 25%) |
|
1,025,984 |
641,240 |
|
|
----------- |
----------- |
|
|
|
2,051,968 |
1,667,224 |
|
|
|
|
|
|
|
----------- |
----------- |
|
|
|
3,451,968 |
2,267,224 |
|
|
|
|
|
|
----------- |
----------- |
|
| UNAPPROPRIATED
PROFIT CARRIED FORWARD |
351,102 |
432,869 |
|
|
|
========= |
========= |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
| CASH
FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31, 1997 |
|
|
|
|
1997 |
1996 |
|
|
|
Note |
(Rupees '000) |
|
|
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
|
| Cash
generated from operations |
|
29 |
5,239,417 |
3,922,870 |
|
| Payments
for: |
|
|
| Financial
charges |
|
|
(479,598) |
(488,572) |
|
| Income tax |
|
|
(1,512,893) |
(1,451,248) |
|
|
|
|
----------- |
----------- |
|
| Net
cash provided by operating activities |
|
3,246,926 |
1,983,050 |
|
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
|
| Fixed
capital expenditure |
|
|
(149,779) |
(217,522) |
|
| Sale
proceeds of fixed assets |
|
24,035 |
12,214 |
|
| Income
received on loans, deposits and investments |
|
563,388 |
552,273 |
|
| Increase
in investments |
|
|
(753,913) |
(715,859) |
|
| (lncrease)/decrease
in balance due from associated company |
(55,490) |
592 |
|
|
----------- |
----------- |
|
| Net
cash used in investing activities |
|
(371,759) |
(368,302) |
|
|
| CASH
FLOWS FROM FINANCING ACTIVITIES |
|
| Redemption
of preference shares |
|
-- |
(120,000) |
|
| Repayment
of redeemable capital |
|
-- |
(43,800) |
|
| Repayment
of long term loans |
|
(535,608) |
(566,758) |
|
| Dividends
paid |
|
|
(2,176,878) |
(1,097,641) |
|
|
|
|
----------- |
----------- |
|
|
|
|
|
|
| Net
cash used in financing activities |
|
(2,712,486) |
(1,828,199) |
|
|
|
|
----------- |
----------- |
|
| Net
increase/(decrease)in cash and cash equivalents |
162,681 |
(213,451) |
|
| Cash
and cash equivalents at beginning of the year |
|
168,406 |
381,857 |
|
| Effect
of exchange rate changes |
|
79 |
-- |
|
|
|
|
| Cash
and cash equivalents at close of the year, |
|
----------- |
----------- |
|
| representing
cash and bank balances |
|
19 |
331,166 |
168,406 |
|
|
========= |
========= |
|
|
|
|
|
| NOTES
TO THE ACCOUNTS FOR THE YEAR ENDED DECEMBER 31, 1997 |
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
| The
Company is a public company incorporated in Pakistan under the Companies Act,
1913, |
|
| (now
Companies Ordinance, 1984) and its shares are quoted on the stock exchanges
in Pakistan. |
|
| The
principal activity of the Company is manufacturing, purchasing and marketing
of fertilizers. |
|
|
| 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
Accounting convention |
|
| These
accounts have been prepared under the historical cost convention. |
|
|
| 2.2
Retirement benefits |
|
| The
Company has the following plans for its employees: |
|
|
|
|
| a)
Defined benefit funded gratuity for all employees who complete qualifying
period of |
|
| service
and age. |
|
|
|
| b)
Defined contributory provident fund for all employees for which contributions
are charged to |
|
| income. |
|
|
|
|
|
| c)
Defined benefit funded pension for management employees who complete
qualifying period |
|
| of
service and age. |
|
|
|
| These
funds are administered by trustees. Annual contributions to the gratuity fund
are |
|
| based
on actuarial valuation every three years using a projected benefits valuation
method; |
|
| contributions
to the management staff pension fund are based on actuarial valuation using
an |
|
| accrued
benefit valuation method; contributions are charged to income. |
|
|
| 2.3
Taxation |
|
| Provision
for current taxation is based on taxable income at the current rates to
taxation after |
|
| taking
into account tax credits and tax rebates, if any. |
|
|
| The
Company accounts for deferred tax in respect of all major inter-period timing
differences |
|
| using
the liability method at the current rates of taxation. |
|
|
| 2.4
Fixed capital expenditure |
|
|
|
| Fixed
assets, except freehold land, are stated at cost less accumulated
depreciation. |
|
| Freehold
land and capital work in progress are stated at cost. |
|
|
|
|
| Depreciation
is provided on the straight-line method to write off the cost of an asset
over its |
|
| estimated
useful life without taking into account any residual value. Full year's
depreciation is |
|
| charged
on normal additions, while no depreciation is charged on items deleted during
the |
|
| year. |
|
|
|
|
|
|
| Maintenance
and repairs are charged to income as and when incurred. Major renewals
and |
|
| improvements
are capitalised and the assets so replaced, if any, are retired. Gains and |
|
| losses
on disposal of assets, if any, are included in income currently. |
|
|
| 2.5
Investments |
|
| These
are stated at cost. |
|
|
| 2.6
Deferred costs |
|
| Initial
fill of the catalysts in the ammonia plant is capitalised with plant and
machinery whereas |
|
| costs
of subsequent replacement of such catalysts are deferred and amortised in
equal |
|
| instalments
over their estimated useful lives. |
|
|
| Costs
deferred in respect of issue of shares for plant expansion unit are amortised
in equal |
|
| instalments
over three years from the date of commencement of commercial production. |
|
|
| 2.7
Stores and spares |
|
| These
are valued at weighted average cost except for items in transit which are
valued at |
|
| invoice
price and related expenses incurred upto the balance sheet date. For items
which |
|
| are
slow moving and/or identified as surplus to the Company's requirement, a
provision is |
|
| made
for excess of book value over estimated realisable value. |
|
|
| 2.8
Stock in trade |
|
| Stocks
are valued at the lower of cost and net realisable value except for stock in
transit which |
|
| is
valued at invoice price and related expenses incurred upto the balance sheet
date. |
|
|
| Cost
is determined as follows: |
|
|
| Raw
materials |
at weighted average cost |
|
|
| Work
in process ) |
at weighted average cost
of purchases and |
|
| Finished
goods ) |
applicable manufacturing
expenses |
|
|
| 2.9
Rates of exchange |
|
| Transactions
in foreign currencies are recorded in the books at the rates of exchange
ruling |
|
| on
the date of the transaction. Assets and liabilities in foreign currencies at
the year end are |
|
| translated
into rupees at the rates prevailing on the balance sheet date or at the
contracted |
|
| rate
where exchange risk cover has been obtained. Exchange differences are
included in the |
|
| income
for the year. |
|
|
| 2.10
Revenue recognition |
|
| Sales
revenue is recognised at the time of despatch of goods to customers. |
|
|
| 3.
SHARE CAPITAL |
|
| AUTHORISED |
|
| This
represents 300,000,000 (1996: 300,000,000) ordinary shares of Rs 10 each· |
|
| ISSUED,
SUBSCRIBED AND FULLY PAID IN CASH |
|
| This
represents 256,495,902 (1996: 256,495,902) ordinary shares of Rs 10 each. |
|
|
|
|
| 4.
CAPITAL RESERVE |
|
|
|
|
1997 |
1996 |
|
|
|
(Rupees '000) |
|
|
| Share
premium-note 4.1 |
|
|
40,000 |
40,000 |
|
| Capital
redemption reserve- note 4.2 |
|
|
120,000 |
120,000 |
|
|
|
|
---------- |
---------- |
|
|
|
|
160,000 |
160,000 |
|
|
|
========= |
========= |
|
|
|
|
|
| 4.1
Share premium |
|
| This
represents premium of Rs 5 per share received on public issue of 8,000,000
ordinary |
|
| shares
in 1991 |
|
|
| 4.2
Capital redemption reserve |
|
| This
represents reserve setup on redemption of preference shares of Rs 120,000
thousand in |
|
| 1996. |
|
|
|
|
|
| 5.
LONG TERM LOANS - SECURED |
|
|
Balance outstanding |
Annual interest |
Half-yearly equal |
Date of final |
|
|
1997 |
1996 |
% |
instalments |
|
repayment |
|
|
|
|
(Rupees '000) |
|
| 5.1
Government of Pakistan loan |
|
| 5th
Danish credit |
|
13,925 |
15,666 |
8.75 |
16 |
October |
1, 2005 |
|
| 5.2
Loans for plant expansion unit |
|
|
|
|
|
|
| a)
Asian Development Bank |
384,285 |
507,596 |
ADB rate + 1.30 |
11 |
January |
15, 2003 |
|
| 1003-PAK(PS) |
|
|
|
| b)
Asian Finance and Investment Corporation |
|
| 12-PAK(C) |
|
219,632 |
268,429 |
LIBOR + 1.25 |
9 |
January |
152,002 |
|
|
| c)
Commonwealth Development Corporation |
|
| L 282801 |
|
198,390 |
238,068 |
10 |
10 |
October |
252,002 |
|
|
| d)
American Express Bank Limited |
|
| Buyers'
credit |
|
2,037,131 |
2,407,518 |
8.30 |
11 |
March |
28, 2003 |
|
|
---------- |
---------- |
|
|
|
2,839,438 |
3,421,611 |
|
|
|
---------- |
---------- |
|
|
2,853,363 |
3,437,277 |
|
| Less:
Amount payable within twelve |
|
| months
shown as current maturity |
530,204 |
536,003 |
|
|
---------- |
---------- |
|
|
|
2,323,159 |
2,901,274 |
|
|
|
======== |
======== |
|
|
| 5.1
Government of Pakistan loan |
|
| This
loan represents the onlent proceeds of credit obtained by the Government of
Pakistan |
|
| from
an international agency. |
|
|
|
|
| This
loan was disbursed in foreign currency and is repayable in local currency. |
|
| Disbursements
have been determined for repayment in Rupees by translation at the rates of |
|
| exchange
prevailing on the respective dates of disbursement. Interest on loan also
include |
|
| the
Govemment's exchange risk commission. The Loan is to be secured by a mortgage
in |
|
| favour
of the Government of Pakistan over the Company's fixed assets. |
|
|
| 5.2
Loans for plant expansion unit |
|
| All
the loans have been disbursed in foreign currency and have been valued at
contracted |
|
| rates
at which exchange risk cover has been arranged. In case of loan (a) the loan
balance |
|
| includes
the adjustment under the exchange rate pooling system of Asian Development |
|
| Bank. |
|
|
|
| Loans-(a)
to (c) are secured 'by a first equitable mortgage created on all immovable
assets |
|
| and
by way of hypothecation on assets including plant, machinery, tools and
spares and all |
|
| other
movable properties including stocks and book debts but subject to any prior
charge on |
|
| stocks
and book debts in favour of commercial banks to secure short term debts. |
|
|
| Loan
(d) is secured by a bank guarantee which is secured by a first charge by way
of |
|
| equitable
mortgage on all fixed assets of the Company. |
|
|
| 6.
DEFERRED TAXATION |
|
| The
net balance for deferred taxation at current tax rate is in respect of the
following major timing |
|
| differences: |
|
|
|
|
|
1997 |
1996 |
|
|
|
(Rupees '000) |
|
|
| Accelerated
depreciation allowance |
|
|
738,000 |
947,000 |
|
| Provision
for doubtful debts and slow moving/surplus spares |
(11,000) |
(5,000) |
|
|
|
|
------------ |
------------ |
|
|
|
|
727,000 |
942,000 |
|
|
|
|
========= |
========= |
|
| 7.
CREDITORS, ACCRUED AND |
|
| OTHER
LIABILITIES |
|
|
| Creditors |
|
|
388,764 |
393,846 |
|
| Accrued
liabilities |
|
|
226,181 |
167,397 |
|
| Other
liabilities |
|
|
189,695 |
184,146 |
|
| Interest
accrued on secured loans |
|
|
73,623 |
85,856 |
|
| Deposits |
|
|
37,931 |
33,601 |
|
| Retention
money |
|
|
5,743 |
6,847 |
|
| Advances
from customers |
|
|
322,582 |
468,032 |
|
| Workers'
profit participation fund - note 7.1 |
|
270,280 |
212096 |
|
| Workers'
welfare fund |
|
|
98,309 |
60,520 |
|
| Unclaimed
dividend |
|
|
25,415 |
22,077 |
|
|
|
|
----------- |
----------- |
|
|
|
|
1,638,523 |
1,634,418 |
|
|
========= |
========= |
|
|
|
|
|
1997 |
1996 |
|
|
|
(Rupees '000) |
|
| 7.1
Workers' profit participation fund |
|
| Balance
at the beginning of the year |
|
212,096 |
147,159 |
|
| Interest
on funds utilised in Company's business |
|
1,713 |
1,908 |
|
| Allocation
for the year |
|
|
270,280 |
212,096 |
|
| Amount
paid to the Trustees of the Fund |
|
(213,809) |
(149,067) |
|
|
|
|
----------- |
----------- |
|
|
|
|
270,280 |
212,096 |
|
|
========= |
========= |
|
| 8.
CONTINGENT LIABILITIES AND COMMITMENTS |
|
| (a) Contingent liabilities |
|
| (i)
Guarantees issued by banks |
|
| on
behalf of the Company |
|
|
106,479 |
125,340 |
|
|
|
|
| (ii)
Claims against the Company not |
|
|
|
| acknowledged
as debt |
|
|
79,158 |
77,885 |
|
|
| (iii)
The Customs authorities had raised demands aggregating Rs 179 million on
import of |
|
| duty-free first charge catalysts for the
expansion unit. The Company filed a petition on |
|
| which the High Court of Sindh gave its
decision in favour of the Company. Consequently |
|
| no provision for custom duty demand has
been incorporated in the accounts. The |
|
| Customs authorities have since filed an
appeal with the Supreme Court. |
|
|
| (b) Commitments in respect of: |
|
|
|
|
1997 |
1996 |
|
|
|
|
(Rupees '000) |
|
|
| (i)
Capital expenditure |
|
|
135,814 |
63,890 |
|
|
|
|
| (ii)
Purchase of fertilizer, stores, |
|
|
|
| spares
and other revenue items |
|
|
192,920 |
54,321 |
|
|
| (iii)
Undertakings to a lender to an associated company |
|
| FFC-Jordan
Fertilizer Company Limited (FJFC) through |
|
| an
agreement to provide funding equal to the deficiency |
|
| notified
by the lender, in the form of subordinated long |
|
| term
loan or by subscription to additional equity. No |
|
| deficiency
has been notified, upto the balance sheet |
|
| date. |
|
|
|
|
-- |
-- |
|
|
|
|
Year |
|
| (iv)
Leased vehicles |
|
1998 |
|
234 |
193 |
|
| (v)
Leased premises |
|
1998 |
|
20,632 |
10,290 |
|
|
|
|
1999 |
|
10,180 |
9,216 |
|
|
|
|
2000 |
|
9,254 |
8,942 |
|
|
|
|
2001 |
|
2,658 |
2,658 |
|
|
| 9.
FIXED ASSETS |
|
|
| 9.1
The following is a statement of operating assets |
|
|
|
|
WRITTEN |
|
|
COST |
|
DEPRECIATION |
DOWN VALUE |
|
|
As at |
Additions/ |
As at |
As at January 1, |
For the year/ |
As at |
As at |
Annual rate of |
|
|
January 1, |
(disposals) |
December 31, |
1997 |
(on disposals) |
December 31, |
December 31, |
depreciation |
|
|
1997 |
|
1997 |
|
1997 |
1997 |
1997 |
% on cost |
|
|
|
|
(R U P E E S '000) |
|
|
|
|
|
| Freehold
land |
39,488 |
6,115 |
45,603 |
-- |
-- |
-- |
45,603 |
-- |
|
|
|
|
|
| Buildings and |
|
| structures on |
|
| freehold land |
973,851 |
19,255 |
993,106 |
529,429 |
58,451 |
587,880 |
405,226 |
5 to 10 |
|
|
| Buildings and |
|
| structures on |
|
| leasehold
land |
40,000 |
-- |
40,000 |
30,000 |
2,000 |
32,000 |
8,000 |
5 |
|
|
|
|
|
|
| Railway
siding |
26,517 |
-- |
26,517 |
19,164 |
1,326 |
20,490 |
6,027 |
5 |
|
|
| Plant
and machinery |
9,613,105 |
33,627 |
9,640,872 |
5,061,986 |
738,800 |
5,800,200 |
3,840,672 |
10 to 15 |
|
|
|
(5,860) |
|
(586) |
|
| Furniture,
fixtures, |
|
| office
and electrical |
|
| equipment |
|
102,116 |
14,492 |
112,962 |
67,282 |
9,775 |
74,698 |
38,264 |
10 to 15 |
|
|
|
(3,646) |
|
|
(2,359) |
|
|
| Vehicles |
|
123,686 |
44,207 |
144,856 |
66,895 |
26,682 |
78,954 |
65,902 |
20 |
|
|
|
(23,037) |
|
|
(14,623) |
|
|
|
| Maintenance
and |
|
| other
equipment |
297,711 |
16,829 |
313,871 |
219,917 |
30,955 |
250,285 |
63,586 |
15to 331/3 |
|
|
|
(669) |
|
|
(587) |
|
|
| Library
books |
2,528 |
442 |
2,970 |
2,138 |
350 |
2,488 |
482 |
30 |
|
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
|
|
|
11,219,002 |
134,967 |
11,320,757 |
5,998,811 |
888,339 |
6,846,995 |
4,473,762 |
|
|
|
(33,212) |
|
|
(18,155) |
|
|
========= |
========= |
========= |
========= |
========= |
========= |
========= |
|
| 1996 |
|
11,068,569 |
215,641 |
11,219,002 |
5,196,303 |
858,307 |
5,996,811 |
5,222,191 |
|
|
|
(65,208) |
|
(57,799) |
|
|
========= |
========= |
========= |
========= |
========= |
========= |
========= |
|
| Cost
of fixed assets has been shown net of Government grant of Rs 68,164 thousand
(1996: |
|
| Rs
68,164 thousand). |
|
|
| 9.2
DETAILS OF FIXED ASSETS SOLD |
|
|
|
Book |
Sale |
|
|
|
Cost |
Value |
Proceeds |
|
|
| Description |
|
|
( R u p e e s' 0 0 0 ) |
|
|
|
|
|
|
| VEHICLES |
|
|
| By
Company policy to executives |
|
|
| Col.
(Retd.) Azhar Ali Shah |
917 |
4 |
219 |
|
| Mr.
Aurangzeb |
|
210 |
-- |
86 |
|
| Mr.
M. Anwar |
|
280 |
56 |
115 |
|
| Mr.
Asif Kamal |
|
365 |
73 |
149 |
|
| Mr.
Ahmad Rizwan |
|
281 |
168 |
197 |
|
| Mr.
Abdul Hameed Lodhi |
|
277 |
55 |
113 |
|
| Mr.
Farzand Ali |
|
390 |
78 |
160 |
|
| Mr.
Iftikhar Zulfiqar |
|
356 |
71 |
161 |
|
| Mr. Ijaz Butt |
|
|
377 |
75 |
155 |
|
| Mr.
Irfan Razzaq |
|
349 |
209 |
248 |
|
| Mr.
Jamil Ashraf |
|
410 |
82 |
168 |
|
| Mr.
Kaleem Ahmad |
|
256 |
51 |
105 |
|
| Mr.
Munawar H. Jaffri |
|
210 |
- |
86 |
|
| Mr.
Muzaam All Baber |
|
290 |
174 |
178 |
|
| Capt.
(Retd.) Niaz ul Haq |
|
688 |
275 |
393 |
|
| Mr.
Rehmat Ullah Surhyo |
|
589 |
353 |
413 |
|
| Syed
Raza Ali |
|
268 |
54 |
110 |
|
| Mian
Sahib Dino |
|
348 |
70 |
143 |
|
| Mr.
Sajjad Akbar Mirza |
|
549 |
220 |
359 |
|
| Syed
Shahid Hussain Rizvi |
636 |
509 |
556 |
|
| Syed
Sajjad ur Rehman |
|
526 |
105 |
216 |
|
| Mr.
Saghir Hussain Jafri |
|
360 |
72 |
148 |
|
| Mr.
Tariq Nawaz |
|
250 |
-- |
82 |
|
| Mr.
Wasim Zaffar |
|
524 |
105 |
215 |
|
| Mr.
Zia M. Minhas |
|
405 |
-- |
164 |
|
|
|
|
|
| By
tender to employees |
|
|
|
| Mr.
Ather Mehmood |
|
562 |
225 |
328 |
|
| Malik
Hameed Ullah |
|
530 |
244 |
502 |
|
| Mr.
Naveed Ahmed Malik |
276 |
37 |
300 |
|
| Mr,
Zafar Ali Khan |
|
394 |
37 |
415 |
|
|
|
|
|
|
| By
tender to outsiders |
|
|
|
| Mr.
Amjad Ali |
|
582 |
12 |
508 |
|
| Mr.
Abdul Samad |
|
140 |
16 |
166 |
|
| Mr.
Abdul Ghafoor |
|
268 |
161 |
240 |
|
| Mr.
Allah Buksh |
|
225 |
95 |
190 |
|
| Mr.
Fasahat Izhar |
|
314 |
185 |
251 |
|
| Mr.
Irshad Ali |
|
205 |
82 |
166 |
|
| Mr.
Kausar Mehmood |
|
186 |
37 |
202 |
|
| Mr.
Muhammad Nawaz |
|
344 |
206 |
286 |
|
| Mr.
Saeed Javed |
|
142 |
13 |
141 |
|
| Mr.
Salim Akhtar |
|
314 |
188 |
245 |
|
| Malik
Tariq Muslim |
|
186 |
37 |
185 |
|
|
| Description |
|
|
| By
Insurance Claim |
|
| EFU
Insurance Company |
|
2,314 |
1,492 |
1,896 |
|
| By
transfer to Fauji Foundation |
3,097 |
2,478 |
2,478 |
|
|
| FURNITURE,
FIXTURES, OFFICE AND ELECTRICAL EQUIPMENT |
|
| By
Company policy to executives |
|
| Lt.
Gen. (Retd.) M. Arif Bangash |
367 |
320 |
312 |
|
| Mr.
Abid Maqbool |
|
45 |
11 |
15 |
|
| Brig.
(Retd.) M. Ajmal Khan |
66 |
12 |
22 |
|
| Lt.
Col. (Retd.) Amangir Khan |
59 |
20 |
19 |
|
| Lt.
Col. (Retd.) M. Abbas Malik |
23 |
6 |
7 |
|
| Syed
Azhar H. Shirazi |
|
24 |
6 |
8 |
|
| Mr.
M.S. Chaudhary |
|
25 |
10 |
10 |
|
| Maj.
(Retd.) Faruq Mumtaz |
18 |
10 |
9 |
|
| Mr.
Khalid Mahmood Butt |
27 |
7 |
8 |
|
| Mr.
Khalid Mahmood |
|
25 |
6 |
8 |
|
| Capt.
(Retd.) Muti Ullah |
|
28 |
7 |
10 |
|
| Capt.
(Retd.) Niaz ul Haq |
|
88 |
26 |
36 |
|
| Mr.
Rehmat Ullah Surhyo |
|
44 |
40 |
36 |
|
| Col.
(Retd.) Mohammad Safdar |
86 |
82 |
66 |
|
| Mr.
Mohammad Shoaib |
|
43 |
16 |
14 |
|
| Maj.
(Retd.) Shaukat All Khan |
26 |
6 |
7 |
|
| Dr. M. Sadiq |
|
45 |
11 |
15 |
|
| Mr.
Shakeel Ahmed |
|
25 |
6 |
8 |
|
| Maj.
(Retd.) Zia Ullah Raja |
24 |
6 |
8 |
|
|
| By trade in |
|
| Agmum
Multan |
|
343 |
67 |
61 |
|
| By
Insurance Claim |
|
|
| EFU
Insurance Company |
|
155 |
97 |
98 |
|
| By
transfer to FJFC |
|
26 |
18 |
18 |
|
| By
transfer to Fauji Foundation |
680 |
475 |
475 |
|
|
| 10.
CAPITAL WORK IN PROGRESS |
|
|
|
1997 |
1996 |
|
|
|
( R u p e e s' 0 0 0 ) |
|
|
|
| Civil works |
|
|
5,167 |
1,454 |
|
| Plant,
machinery and equipment |
|
15,846 |
4,747 |
|
|
|
|
------------ |
------------ |
|
|
|
|
21,013 |
6,201 |
|
|
========= |
========= |
|
| 11.
LONG TERM INVESTMENTS |
|
|
|
|
|
1997 |
1996 |
|
|
|
(Rupees '000) |
|
| Associated
company |
|
|
| FJFC |
|
|
1,002,330 |
1,002,330 |
|
| Others |
|
|
| Term
deposits |
|
|
1,020,000 |
71,000 |
|
|
| WAPDA
Bearer Bonds |
|
| (market
value Rs 300,000 thousand; |
|
| 1996:
Rs 300,000 thousand) |
|
300,000 |
300,000 |
|
|
|
|
---------- |
---------- |
|
|
|
|
2,322,330 |
1,373,330 |
|
|
========= |
========= |
|
|
|
|
| Investment
in the associated company represents 100,233,000 (1996: 100,233,000) fully
paid |
|
| ordinary
shares of Rs 10 each representing 30% of FJFC share capital as at December
31, 1997. |
|
| The
market value of the Company's investment was Rs 1,949,532 thousand as at |
|
| December
31, 1997 (1996: Rs 1,368,180 thousand). These shares shall not be disinvested
or |
|
| pledged/mortgaged
pending repayment of loan to the lender to FJFC referred to in note
8(b)(iii). |
|
| However,
the Company may pledge upto 50% of it's investment for the purpose of
obtaining short |
|
| term
financing. |
|
|
| Term
deposits are with financial institutions for periods ranging from three to
five years. |
|
|
|
|
| WAPDA
Bearer Bonds (third issue) have been issued for ten years and will mature in
year 2000. Tax |
|
| exempt
return at the rate of 12.5% per annum on these bonds is payable half-yearly. |
|
|
| 12.
LONG TERM LOANS AND ADVANCES |
|
|
|
1997 |
1996 |
|
| Loans
and advances, considered good, to: |
|
(Rupees '000) |
|
|
| Executives |
|
|
|
26,070 |
19,380 |
|
| Other
employees |
|
|
5,963 |
3,884 |
|
| FFC-FJFC
Employees Trust |
|
|
52,771 |
64,294 |
|
|
---------- |
---------- |
|
|
|
|
84,804 |
87,558 |
|
| Less:
Amount due within twelve months, |
|
| shown
under current assets - note 17 |
|
|
49,714 |
20,955 |
|
|
|
|
---------- |
---------- |
|
|
|
|
35,090 |
66,603 |
|
|
========== |
========== |
|
|
|
|
| These
represent secured loans for house building, house rent advances and advances
pursuant to |
|
| agreement
with workers and loan to an employees trust secured by shares held by the
Trust. These |
|
| loans
and advances are repayable within one to ten years; the loan to the Trust is
however, |
|
| repayable
in monthly instalments by February 1999 with mark-up at the rate of 17.5% per
annum. |
|
| Loans
amounting to Rs 3,525 thousand (1996: Rs Nil) were outstanding for more than
three years; |
|
| maximum
amount outstanding from employees trust at the end of any month during the
year was |
|
| Rs
62,693 thousand (1996: Rs 76,044 thousand). |
|
|
|
| The
maximum amount of advances to executives outstanding at the end of any month
during |
|
| the
year was Rs 26,476 thousand (1996: Rs 20,009 thousand). |
|
|
|
| 13.
LONG TERM DEPOSITS, PREPAYMENTS |
|
| AND
DEFERRED COSTS |
|
|
|
1997 |
1996 |
|
|
|
(Rupees '000) |
|
|
| Deposits |
|
|
643 |
722 |
|
| Prepayments |
|
|
1,837 |
144 |
|
| Deferred
costs: |
|
|
| Catalysts |
|
|
42,715 |
89,184 |
|
| Less:
amortisation |
|
|
31,187 |
60,162 |
|
|
---------- |
---------- |
|
|
|
|
|
11,528 |
29,022 |
|
| Share
capital registration fee |
|
| and
share issue expenses |
|
|
|
-- |
604 |
|
| Less:
amortisation |
|
|
-- |
604 |
|
|
---------- |
---------- |
|
|
|
|
-- |
-- |
|
|
|
|
11,528 |
29,022 |
|
|
|
|
---------- |
---------- |
|
|
14,008 |
29,888 |
|
|
========= |
========= |
|
|
| 14.
STORES AND SPARES |
|
| Stores |
|
|
46,844 |
37,609 |
|
| Spares |
|
|
716,626 |
640,893 |
|
| Provision
for slow moving and surplus items |
|
(30,000) |
(5,977 |
|
|
|
|
----------- |
----------- |
|
|
|
|
686,926 |
634,916 |
|
| Loose
tools |
|
|
195 |
198 |
|
| Items
in transit |
|
|
67,373 |
43,716 |
|
|
|
|
----------- |
----------- |
|
|
|
|
801,338 |
716,439 |
|
|
========= |
========= |
|
|
| 15.
STOCK IN TRADE |
|
| Raw
materials |
|
|
21,479 |
28,363 |
|
| Work
in process |
|
|
10,453 |
12,386 |
|
| Finished
goods: |
|
|
|
|
| Manufactured
urea |
|
|
62,011 |
6,866 |
|
| Purchased
fertilizers |
|
|
213,644 |
230,774 |
|
|
|
|
----------- |
----------- |
|
|
|
|
307,587 |
278,389 |
|
|
========= |
========= |
|
|
|
|
| Stock
of purchased fertilizers include stocks carried at net realisable value of Rs
213,006 thousand |
|
| (1996:
Rs 71,424 thousand). |
|
|
|
|
| 16.
TRADE DEBTS |
|
|
|
1997 |
1996 |
|
|
|
(Rupees '000) |
|
|
| Considered
good - secured |
|
|
675,339 |
398,275 |
|
| - unsecured |
|
|
70,450 |
21,030 |
|
| Considered
doubtful |
|
|
|
2,101 |
2,101 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
747,890 |
421,406 |
|
| Provision
for doubtful debts |
|
|
(2,101) |
(2,101) |
|
|
|
|
|
---------- |
---------- |
|
|
|
745,789 |
419,305 |
|
|
|
========= |
========= |
|
|
|
|
|
| Amount
due from associated undertakings was Rs 32,951 thousand (1996: Rs 17,234
thousand) |
|
| and
the maximum amount outstanding from associated undertakings at the end of any
month |
|
| during
the year was Rs 51,704 thousand (1996: Rs 39,304 thousand). |
|
|
| 17.
LOANS, ADVANCES, DEPOSITS, PREPAYMENTS |
|
| AND
OTHER RECEIVABLES |
|
|
|
|
|
1997 |
1996 |
|
|
|
(Rupees '000) |
|
|
| Current
portion of long term loans and advances |
|
49,714 |
20,955 |
|
| Advances
to suppliers, considered good |
|
4,814 |
11,602 |
|
| Due
from associated company |
|
|
80,841 |
25,351 |
|
| Deposits |
|
|
352 |
228 |
|
| Prepayments |
|
|
7,476 |
7,274 |
|
| Accrued
income on investments and bank deposits |
|
85,002 |
52,228 |
|
| Other
receivables (net of provision for doubtful receivables of |
|
| Rs
6,111 thousand; 1996: Rs 6,111 thousand) |
|
134,171 |
88,344 |
|
|
|
|
----------- |
----------- |
|
|
|
|
362,370 |
205,982 |
|
|
========== |
========== |
|
|
|
|
| Due
from associated company is in respect of expenditure on behalf of FJFC
carrying mark-up at |
|
| the
rate of 17% per annum. The maximum amount outstanding at the end of any month
during the |
|
| year
was Rs 80,841 thousand (1996: Rs 25,351 thousand). |
|
|
| The
maximum amount of advances to directors outstanding at the end of any month
during the year |
|
| was
Rs 247 thousand (1996: Rs Nil). |
|
|
| 18.
SHORT TERM INVESTMENTS |
|
| This
represents term deposits with financial institutions including a foreign
currency deposit of |
|
| equivalent
Rs 224,431 thousand (1996: Rs Nil). |
|
|
| 19.
CASH AND BANK BALANCES |
|
|
|
|
1997 |
1996 |
|
|
|
|
(Rupees '000) |
|
| At banks: |
|
|
| Deposit
accounts |
|
|
18,107 |
13,684 |
|
| Current
accounts |
|
|
39,272 |
116,906 |
|
| (includes
drafts under collection) |
|
| Foreign
currency savings account |
|
1,219 |
-- |
|
|
----------- |
----------- |
|
|
|
|
58,598 |
130,590 |
|
| Drafts
in hand and in transit |
|
271,609 |
36,858 |
|
| Cash in hand |
|
|
959 |
958 |
|
|
|
|
----------- |
----------- |
|
|
|
|
331,166 |
168,406 |
|
|
========== |
========== |
|
|
|
|
| Balances
with bank include Rs 37,931 thousand (1996: Rs 33,601 thousand) in respect of
security |
|
| deposits
received. |
|
|
| 20. SALES |
|
| This
includes Rs 1,966,303 thousand (1996: Rs 3,028,058 thousand)in respect of
sale of |
|
| purchased
fertilizers. |
|
|
|
|
| Sales
are exclusive of commission and allowances of Rs 504,407 thousand and Rs
92,386 thousand |
|
| (1996:
Rs 190,212 thousand and Rs 54,983 thousand) related to manufactured urea and
purchased |
|
| fertilizers
respectively. |
|
|
| 21.
COST OF GOODS SOLD |
|
|
|
|
1997 |
1996 |
|
|
|
(Rupees '000) |
|
|
| Raw
materials consumed |
|
|
856,294 |
689,539 |
|
| Fuel
and power |
|
|
1,232,123 |
1,012,700 |
|
| Chemicals
and supplies |
|
|
72,952 |
62,808 |
|
| Salaries,
wages and benefits |
|
421,800 |
360,007 |
|
| Rent,
rates and taxes |
|
|
4,701 |
4,103 |
|
| Insurance |
|
|
26,611 |
26,828 |
|
| Travel
and conveyance |
|
|
19,591 |
22,330 |
|
| Repairs
and maintenance (includes stores and |
|
|
|
| spares
consumed Rs 132,220 thousand; |
|
|
|
| 1996:
Rs 165,869 thousand) |
|
160,886 |
221,731 |
|
| Amortisation
of deferred costs |
|
31,187 |
60,766 |
|
| Depreciation |
|
|
850,400 |
840,963 |
|
| Communication,
establishment and other expenses |
|
91,484 |
88.89 |
|
| Provision
for slow moving and surplus spares |
|
24,023 |
-- |
|
| Opening
stock - work in process |
|
12,386 |
15,164 |
|
| Closing
stock - work in process |
|
(10,453) |
(12,386) |
|
|
----------- |
----------- |
|
| Cost
of goods manufactured |
|
|
3,793,985 |
3,393,441 |
|
|
|
|
|
|
| Opening
stock - manufactured urea |
|
|
6,866 |
18,879 |
|
| -
purchased fertilizers |
|
|
230,774 |
189,204 |
|
| Purchase
of fertilizers for resale |
|
|
2,245,035 |
3,659,266 |
|
|
|
|
----------- |
----------- |
|
|
|
|
6,276,660 |
7,260,790 |
|
|
|
|
|
|
| Closing
stock - manufactured urea |
|
|
(62,011) |
(6,866) |
|
| -
purchased fertilizers |
|
|
(213,644) |
(230,774) |
|
|
|
|
|
----------- |
----------- |
|
|
|
|
6,001,005 |
7,023,150 |
|
|
========= |
========= |
|
| 22.
SELLING AND DISTRIBUTION EXPENSES |
|
|
|
1997 |
1996 |
|
|
|
(Rupees '000) |
|
|
| Product
transportation |
|
|
546,099 |
427,829 |
|
| Salaries,
wages and benefits |
|
158,138 |
137,118 |
|
| Rent,
rates and taxes |
|
|
30,423 |
24,926 |
|
| Insurance |
|
|
4,025 |
2,690 |
|
| Travel
and conveyance |
|
|
18,444 |
21,903 |
|
| Sale
promotion and advertising |
|
30,056 |
21,169 |
|
| Communication,
establishment and other expenses |
|
24,084 |
27,237 |
|
| Warehousing
expenses |
|
|
26,898 |
9,559 |
|
| Depreciation |
|
|
17,939 |
17,344 |
|
| Provision
for doubtful receivables |
|
-- |
6,111 |
|
|
----------- |
----------- |
|
|
|
|
856,106 |
695,886 |
|
|
========== |
========== |
|
|
|
|
| 23.
FINANCIAL CHARGES |
|
| Interest
and related charges on long term loans |
|
413,058 |
493,493 |
|
| Mark
up and excise duty on redeemable capital |
|
- |
2,694 |
|
| Interest
on workers' profit participation fund |
|
1,713 |
1,908 |
|
| Mark
up and excise duty on short term finance |
|
38,246 |
11,252 |
|
| Exchange
gain on long term loans |
|
|
(47,939) |
(23,342) |
|
| Bank
charges |
|
|
8,692 |
9,158 |
|
|
----------- |
----------- |
|
|
|
|
413,770 |
495,163 |
|
|
========== |
========== |
|
|
|
|
| 24.
OTHER INCOME |
|
|
|
| Income
on loans, deposits and investments |
|
558,662 |
520,440 |
|
| Income
on tax-exempt investments |
|
37,500 |
43,528 |
|
| Gain
on sale of fixed assets |
|
8,978 |
4,805 |
|
| Sale
of scrap and sundry income |
|
648 |
6,992 |
|
| Exchange
gain on foreign currency deposits |
|
17,730 |
-- |
|
| Old
liabilities written back |
|
-- |
642 |
|
| Urea
price adjustment claims* |
|
|
-- |
142,165 |
|
|
----------- |
----------- |
|
|
|
|
623,518 |
718,572 |
|
|
========== |
========== |
|
|
| *
These represented price adjustment claims for prior years approved and
received from the |
|
| Government
of Pakistan pursuant to Marketing and Pricing Principles Agreement, net of
imported |
|
| urea
cost reimbursement claims of Rs 23,091 thousand written-off which were not
approved by the |
|
| Government.
The claims approved and received are less than the amount verified by the
auditors |
|
| of
the Company. This matter is accordingly being pursued with the Government for
recovery on the |
|
| basis
of claims so verified. |
|
|
| 25.
OTHER CHARGES |
|
|
|
1997 |
1996 |
|
|
|
(Rupees '000) |
|
|
| Workers'
profit participation fund |
|
|
270,280 |
212,096 |
|
| Workers'
welfare fund |
|
|
112,126 |
83,109 |
|
| Auditors'
remuneration |
|
|
| Audit fee |
|
|
550 |
480 |
|
| Fee
for tax and other advisory services, audit of |
|
| funds
and accounts for half year and certifications |
|
| for
Government and related agencies |
|
|
2,049 |
985 |
|
| Out
of pocket expenses |
|
|
100 |
110 |
|
|
|
|
---------- |
---------- |
|
|
|
|
385,105 |
296,780 |
|
|
|
|
========= |
========= |
|
|
|
|
|
|
| 26.
PROVISION FOR TAXATION |
|
| Current-for
the year |
|
1,793,000 |
l,418,000 |
|
| - for prior years |
|
|
75,000 |
106,000 |
|
|
|
|
---------- |
---------- |
|
|
|
|
1,868,000 |
1,524,000 |
|
|
|
|
|
|
| Deferred-for the year |
|
'(135,000) |
'(71,000) |
|
| -for prior years |
|
(80,000) |
40,000 |
|
|
---------- |
---------- |
|
|
|
(215,000) |
(31,000) |
|
|
|
|
|
|
|
---------- |
---------- |
|
|
|
1,653,000 |
1,493,000 |
|
|
|
========= |
========= |
|
|
|
|
|
| 27.
REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES |
|
| The
aggregate amounts charged in the accounts for the year for remuneration
including benefits |
|
| applicable
to the chief executive, directors and executives of the Company are given
below: |
|
|
|
|
1997 |
|
1996 |
|
|
|
Chief |
Executives |
Chief |
Working |
Executives |
|
|
|
Executive |
|
Executive |
Director |
|
|
|
|
(Rupees '000) |
|
(Rupees '000) |
|
|
| Managerial
remuneration |
1,466 |
245,635 |
1,800 |
1,051 |
172,408 |
|
| Retirement
benefits |
75 |
29,069 |
71 |
60 |
18,549 |
|
| Utilities
and upkeep |
156 |
15,567 |
150 |
113 |
9,977 |
|
| Travel
assistance |
100 |
15,882 |
143 |
118 |
12,465 |
|
| Others |
|
-- |
7,157 |
-- |
-- |
5,245 |
|
|
|
----------- |
----------- |
----------- |
----------- |
----------- |
|
| Total |
|
1,797 |
313,310 |
2,164 |
1,342 |
218,644 |
|
|
========= |
========= |
========= |
========= |
========= |
|
| No.
of persons |
1 |
496 |
1 |
1 |
460 |
|
|
| The
above were provided with medical facilities; the chief executive and certain
executives were |
|
| also
provided with use of Company's vehicle and household equipment in accordance
with the |
|
| Company's
policy. Further, free furnished accommodation was provided to the chief
executive. On |
|
| seperation
leave encashment of Rs 179 thousand to the chief executive and Rs 2,800
thousand |
|
| to
executives (1996: Rs 510 thousand to chief executive, Rs 244 thousand to
working director and |
|
| Rs
1,393 thousand to executives) were paid in accordance with Company's policy. |
|
|
| In
addition, 13 (1996: 11) directors were paid aggregate fee of Rs 25 thousand
(1996: Rs 14 |
|
| thousand). |
|
|
| 28.
RETIREMENT BENEFIT COSTS |
|
| 28.1
"Salaries, wages and benefits" expense stated in notes 21 and 22
include retirement benefit |
|
| amounts
of Rs 36,654 thousand (1996: Rs 103,217 thousand) in respect of gratuity,
provident |
|
| fund
and pension plans. |
|
|
| 28.2
Latest actuarial valuation of the gratuity fund was carried out as at
December 31, 1996. The |
|
| fair
value of the fund's assets and liabilities at the latest valuation date were
Rs 97,232 |
|
| thousand
and Rs 97,969 thousand respectively. The actuarial valuation was determined |
|
| assuming
expected rate of return of 14 per cent per annum and expected rate of
increase lin |
|
| salary
of 10 to 13 per cent per annum. |
|
|
| 28.3
Management staff pension fund has been established with effect from January
1, 1996 and |
|
| actuarial
valuation was carried out as of December 31, 1995. The fund's liability was
valued |
|
| at
Rs 79,507 thousand which was contributed to the fund. The actuarial valuation
was |
|
| determined
assuming expected rate of return of 12% per annum and expected rate of |
|
| increase
in salary of 12% per annum. |
|
|
| 29.
CASH GENERATED FROM OPERATIONS |
|
|
|
|
1997 |
1996 |
|
|
|
(Rupees '000) |
|
|
| Profit
before taxation |
|
|
5,023,201 |
3,946,709 |
|
|
|
|
|
|
| Adjustments
for non cash charges and other items |
|
|
|
| Depreciation |
|
|
868,339 |
858,307 |
|
| Amortisation
of deferred costs |
|
|
31,187 |
60,766 |
|
| Provision
for slow moving and surplus spares |
|
24,023 |
-- |
|
| Provision
for doubtful debts |
|
|
-- |
5,427 |
|
| Income
on loans, deposits and investments |
|
(596,162) |
(563,968) |
|
| Gain
on disposal of fixed assets |
|
|
(8,978) |
(4,805) |
|
| Financial
charges |
|
|
413,770 |
495,163 |
|
| Imported
urea cost reimbursement claims written off |
-- |
23,091 |
|
| Old
liabilities written back |
|
|
-- |
(642) |
|
| Exchange
gain on foreign currency deposits |
|
(17,730) |
-- |
|
|
|
|
----------- |
----------- |
|
|
|
|
714,449 |
873,339 |
|
|
|
|
|
|
|
|
|
----------- |
----------- |
|
|
|
|
5,737,650 |
4,820,048 |
|
| Changes
in working capital |
|
| (Increase)/decrease
in current assets: |
|
| Stores
and spares |
|
|
(108,922) |
(31,757) |
|
| Stock
in trade |
|
|
(29,198) |
(25,478) |
|
| Trade debts |
|
|
(326,484) |
(68,189) |
|
| Loans,
advances, deposits, prepayments |
|
|
|
| and
other receivables |
|
|
(68,124) |
(23,475) |
|
| Increase/(decrease)
in current liabilities: |
|
|
|
| Creditors,
accrued and other liabilities |
|
|
18,289 |
(688,997) |
|
|
|
|
---------- |
---------- |
|
|
|
|
(514,439) |
(837,896) |
|
| Changes
in long term loans and advances |
|
31,513 |
(56,937) |
|
| Changes
in long term deposits, prepayments |
|
|
|
| and
deferred costs |
|
|
(15,307) |
(2,345) |
|
|
|
|
---------- |
---------- |
|
|
|
|
5,239,417 |
3,922,870 |
|
|
========== |
========== |
|
| 30.
GENERAL |
|
|
|
|
|
|
1997 |
1996 |
|
|
|
|
|
(Tonnes '000) |
|
| 30.1
Production capacity |
|
| Design
capacity |
|
|
1,330 |
1,330 |
|
| Production |
|
|
1,507 |
1,407 |
|
|
|
|
| 30.2
Shod term finance facilities |
|
| Short
term running finances from various banks under mark-up arrangements amounted
to |
|
| Rs
1,300 million (1996: Rs 400 million) which represented the aggregate of sale
prices of all |
|
| mark-up
agreements between the Company and the banks with a corresponding purchase |
|
| price,
as determined by the banks subject to prompt payment rebate payable on
various |
|
| maturity
dates, last of which falls on September 30, 1998. |
|
|
| These
facilities are secured by hypothecation of stocks, stores and spares and
against a lien |
|
| on
short term deposits placed with banks and financial institutions. The rates
of mark-up, net |
|
| of
prompt payment rebates, range from Re 0.41 to Re 0.45 (1996: Re 0.45) per Rs 1,000 per |
|
| day. |
|
|
|
|
|
| Facilities
of letters of guarantee and letters of credit are also available to the
Company under |
|
| a
lien against investments in WAPDA Bearer Bonds and short term deposits. |
|
|
| 30.3
Transactions with associated undertakings |
|
| The
Company purchased from and sold to associated undertakings goods, materials
and |
|
| services
in the aggregate sum of Rs 1,849,036 thousand (1996: Rs 1,500,862 thousand)
and |
|
| Rs
95,110 thousand (1996: Rs 122,229 thousand) respectively and charged mark-up
of |
|
| Rs
23,511 thousand (1996: Rs 18,428 thousand). |
|
|
| 30.4
Donations |
|
| Donations
of Rs 6,752 thousand (1996: Rs 422 thousand) included in cost of goods sold |
|
| do
not include any amount paid to any person or organisation in which the chief
executive, |
|
| directors
or their spouses had any interest. |
|
|
| 30.5
Corresponding figures have been rearranged, where necessary, for the purpose
of |
|
| comparison. |
|
|
| PATTERN
OF SHAREHOLDING AS AT 31 DECEMBER 1997 |
|
|
|
Shareholding |
|
|
| Number of |
|
Total Number |
|
|
| Shareholders |
From |
To |
of Shares |
|
|
| 215 |
1 |
100 |
21352 |
|
|
|
| 1922 |
101 |
500 |
888000 |
|
| 344 |
501 |
1000 |
324686 |
|
| 395 |
1001 |
5000 |
972700 |
|
| 79 |
5001 |
10000 |
543700 |
|
| 9 |
10001 |
15000 |
114900 |
|
| 6 |
15001 |
20000 |
114700 |
|
| 4 |
20001 |
25000 |
96000 |
|
| 1 |
25001 |
30000 |
29000 |
|
| 4 |
30001 |
35000 |
130800 |
|
| 3 |
35001 |
40000 |
115700 |
|
| 6 |
40001 |
50000 |
282800 |
|
| 2 |
50001 |
55000 |
105300 |
|
| 4 |
55001 |
75000 |
267300 |
|
| 3 |
75001 |
80000 |
237200 |
|
| 5 |
80001 |
100000 |
451508 |
|
| 2 |
100001 |
110000 |
203800 |
|
| 1 |
110001 |
120000 |
120000 |
|
| 1 |
120001 |
125000 |
124300 |
|
| 3 |
125001 |
150000 |
414300 |
|
| 1 |
150001 |
180000 |
169200 |
|
| 1 |
180001 |
200000 |
196300 |
|
| 1 |
200001 |
215000 |
211100 |
|
| 1 |
215001 |
220000 |
216500 |
|
| 1 |
220001 |
225000 |
222200 |
|
| 1 |
225001 |
240000 |
230000 |
|
| 1 |
240001 |
290000 |
265100 |
|
| 1 |
290001 |
325000 |
321200 |
|
| 2 |
325001 |
340000 |
663600 |
|
| 1 |
340001 |
350000 |
349800 |
|
| 1 |
350001 |
360000 |
357500 |
|
| 1 |
360001 |
410000 |
402500 |
|
| 1 |
410001 |
440000 |
434700 |
|
| 1 |
440001 |
500000 |
461200 |
|
| 1 |
500001 |
650000 |
605300 |
|
| 1 |
650001 |
720000 |
700000 |
|
| 1 |
720001 |
750000 |
732200 |
|
| 1 |
750001 |
800000 |
768100 |
|
| 1 |
800001 |
930000 |
929400 |
|
| 1 |
930001 |
1100000 |
1016136 |
|
| 1 |
1100001 |
1150000 |
1130000 |
|
| 1 |
1150001 |
1200000 |
1160500 |
|
| 1 |
1200001 |
1350000 |
1316000 |
|
| 1 |
1350001 |
1450000 |
1392800 |
|
| 1 |
1450001 |
1700000 |
1665708 |
|
| 1 |
1700001 |
1800000 |
1784064 |
|
| 1 |
1800001 |
1850000 |
1803587 |
|
| 1 |
1850001 |
2000000 |
1897500 |
|
| 1 |
2000001 |
2050000 |
2043300 |
|
| 1 |
2050001 |
2150000 |
2094700 |
|
| 1 |
2150001 |
2250000 |
2230500 |
|
| 1 |
2250001 |
2350000 |
2309200 |
|
| 1 |
2350001 |
2500000 |
2397800 |
|
| 1 |
2500001 |
3000000 |
2609700 |
|
| 1 |
3000001 |
4000000 |
3345900 |
|
| 1 |
4000001 |
5000000 |
4308440 |
|
| 1 |
5000001 |
5200000 |
5148000 |
|
| 1 |
5200001 |
7000000 |
5548500 |
|
| 1 |
7000001 |
10000000 |
9968813 |
|
| 1 |
10000001 |
15000000 |
11394899 |
|
| 1 |
15000001 |
21000000 |
20329100 |
|
| 2 |
21000001 |
50000000 |
44655009 |
|
| 1 |
50000001 |
111155000 |
111151800 |
|
| ---------- |
---------- |
---------- |
---------- |
|
| 3054 |
|
256495902 |
|
| ========= |
|
========= |
|
|
| PATTERN
OF SHAREHOLDING AS AT 31 DECEMBER 1997 |
|
|
|
|
Ordinary |
|
| Serial |
Categories of
Shareholders |
Nos. |
Shares of |
% |
|
| No. |
|
|
Rs.10/Each |
|
|
| 1 |
Charitable Trust: |
|
1 |
|
|
|
Fauji Foundation |
|
|
111,151,800 |
43.33 |
|
| 2. |
Investment Companies: |
|
22 |
|
|
|
National Investment Trust |
|
22,052,909 |
8.60 |
|
|
Pakistan Kuwait
Investment Company (Pvt.) Ltd |
11,394,899 |
4.44 |
|
|
Halder Topsee A/S.
Denmark |
|
501 |
|
|
|
Industrialization Fund
for Developing |
|
|
|
|
Countries. (EFU) Denmark |
|
7,191,300 |
2.80 |
|
|
Investment Corporation of
Pakistan |
|
5,548,500 |
2.16 |
|
|
Other Investment
Companies |
|
847,500 |
0.33 |
|
| 3. |
Financial Institutions: |
|
11 |
|
|
|
Bankers Equity Limited |
|
1,784,064 |
0.70 |
|
|
National Development
Finance Corporation |
9,968,813 |
3.89 |
|
|
Pakistan Industrial
Development Corporation |
1,016,136 |
0.40 |
|
|
Commonwealth Development
Corporation |
|
|
|
(CDC) England |
|
1 |
|
|
|
Other Financial
Institutions |
|
2,213,901 |
0.86 |
|
| 4. |
Foreign Investors: |
|
57 |
75,463,240 |
29.42 |
|
| 5. |
Individuals: |
|
2927 |
2,973,800 |
1.16 |
|
| 6. |
Government of Pakistan: |
|
1 |
1,803,587 |
0.71 |
|
| 7. |
Insurance Companies: |
|
15 |
2,924,700 |
1.14 |
|
| 8. |
Modaraba Companies |
|
8 |
48,900 |
0.02 |
|
| 9. |
Joint Stock Companies |
|
11 |
111,251 |
0.04 |
|
| 10. |
Leasing Companies |
|
1 |
100 |
|
|
|
|
------------- |
------------ |
------------ |
|
|
Total |
|
3054 |
256,495,902 |
100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
