| Cherat Cement Company Ltd |
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| Annual
Report 1998 |
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| CONTENTS |
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| GRAPHS
OF PROGRESS (LIST) |
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| COMPANY
INFORMATION |
|
| NOTICE
OF MEETING |
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| DIRECTORS'
REPORT TO MEMBERS |
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| YEARWISE
STATISTICAL SUMMARY |
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| RATIO
ANALYSIS |
|
| AUDITORS'
REPORT TO MEMBERS |
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| BALANCE
SHEET |
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| PROFIT
& LOSS ACCOUNT |
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| CASH
FLOW STATEMENT |
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| NOTES
TO THE ACCOUNTS |
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| PATTERN
OF SHAREHOLDING |
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| GRAPHS
OF PROGRESS |
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| WEALTH
GENERATED & DISTRIBUTED |
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| DEVELOPMENT
OF BALANCE SHEET TOTAL |
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| STATUS
OF LOANS |
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| FINANCIAL
CHARGES |
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| CEMENT
SALES (IN TONNES) |
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| RETURN
ON EQUITY (INCLUDING RESERVES) |
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| CLINKER/CEMENT
PRODUCTION |
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| COMPANY
INFORMATION |
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| BOARD
OF DIRECTORS |
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| Mr.
Mohammed Faruque |
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|
Chairman |
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| Mr.
Zahid Faruque |
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|
Chief Executive/Managing
Director |
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| Mr.
Akbarali Pesnani |
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|
Director |
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| Mr.
Razi-ur-Rahman Khan (NIT) |
|
Director |
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| Mr.
Nasim Beg (NIT) |
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|
Director |
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| Mr.
Khalifa Muhammad Aminullah (NIT) |
|
Director |
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| Mr.
Abdul Latif Uqaili (ICP) |
|
Director |
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| Mr.
Azam Faruque |
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|
Director |
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| COMPANY
SECRETARY |
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| Rauf Jafrani |
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| AUDITORS |
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| Sidat
Hyder Qamar Maqbool & Co. |
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| BANKERS |
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| Muslim
Commercial Bank Ltd. |
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| United
Bank Limited |
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| ABN
Amro Bank |
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| American
Express Bank Ltd. |
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| ANZ
Grindlays Bank plc |
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| Credit
Agricole Indosuez |
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| Bank
of America |
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| National
Bank of Pakistan |
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| Allied
Bank of Pakistan Limited |
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| REGISTERED
OFFICE |
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| Modern
Motors House, |
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| Beaumont
Road, |
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| Karachi-75530 |
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| FACTORY |
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| Village
Lakrai, |
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| R O. Box28, |
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| Nowshera. |
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| SALES OFFICE |
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| 1st
Floor, Betani Arcade, |
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| Jamrud Road, |
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| Peshawar. |
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| REGIONAL
OFFICE |
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| 3,
Sunder Das Road, |
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| Lahore. |
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| ISLAMABAD
OFFICE |
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| No
7, Mezzanine Level, |
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| Razia
Sharif Plaza, |
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| 92,
Blue Area, |
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| Islamabad. |
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| NOTICE
OF MEETING |
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| NOTICE
IS HEREBY GIVEN that the Seventeenth Annual General Meeting of this Company
will be held on |
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| Friday,
December 18, 1998 at 04:00 p.m. at the Registered Office of the Company at
Modern Motors House, |
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| Beaumont
Road, Karachi to transact the following business: |
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| 1.
To receive and consider the audited accounts of the company for the year
ended on June 30, |
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| 1998,
with the Directors' & Auditors' Reports thereon. |
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| 2.
To appoint auditors for the ensuing year and to fix their remuneration. |
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|
By Order of the Board |
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|
R. JAFRANI |
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| Karachi,
30th October, 1998. |
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Company Secretary |
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| NOTE: |
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| (1)
A member eligible to attend and vote at the Annual General Meeting may
appoint another mem- |
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| ber
as his/her proxy to attend and vote in his/her stead. Proxies to be effective
must be in writing |
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| and
must be received by the Company 48 hours before the Meeting. |
|
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| (2)
The register of members will be closed from Friday, December 04, to Friday,
December 18, |
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| 1998,
inclusive, and no transfers will be registered during that time. |
|
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| (3)
The Shareholders are requested to notify the Company immediately the change
in their |
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| address,
if any. |
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| DIRECTORS'
REPORT TO THE MEMBERS |
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| for
the year ended 30th June, 1998 |
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| Dear
Shareholders, |
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| Your
directors are pleased to present to you the working results of the company
alongwith |
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| the
Audited Accounts for the Year ended June 30th, 1998. |
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| PRODUCTION |
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| The
production of Clinker and Cement during the period under review had to be
adjusted |
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| according
to the market demand. This was also necessary to avoid piling up stock, which |
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| would
have blocked the working capital. |
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| The
Comparative figures for production of clinker and cement are as under:- |
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|
1997-98 |
1996-97 |
%Change |
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|
Tons |
Tons |
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| Clinker |
|
611,648 |
741,750 |
(17.54) |
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| Cement |
|
670,750 |
798,454 |
(15.99) |
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|
| DESPATCHES |
|
| The
overall slow down in the economic activity in the country has also affected
the demand for |
|
| Cement.
The corresponding figures for last two years are as follows: |
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|
1997-98 |
1996-97 |
%Change |
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|
Tons |
Tons |
|
|
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| Cement
Booked |
|
662,212 |
798,246 |
(17.0) |
|
| Cement
Despatched |
|
663,437 |
797,880 |
(16.8) |
|
|
| SALES
AND MARKETING |
|
| During
the year under review our sales and revenues were affected due to general
sluggishness |
|
| in
the market, drastic slowing down of construction and development activities
and because of |
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| increased
supply of cement from new plants. The gross sales during the year amounted to
Rs. |
|
| 2,298
million compared to Rs. 2,830 million for the year 1996-97 reflecting a
decrease of |
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| approximately
18.8 percent. Besides the decrease in volume the prices of cement also con- |
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| tinue
to remain under pressure. |
|
|
| It
is also important to note that heavy taxation in the form of excise duty @40%
is having a |
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| negative
impact on the industry as a whole. Out of the current years revenue of Rs.
2,298 |
|
| million
we had to pay Rs. 997 million to the Government in the form of Excise duty,
which works |
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| out
to approximately 44% of our total revenues. |
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| OPERATING
RESULTS |
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| The
summarized operating results are as follows' |
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1997-98 |
1996-97 |
Change |
|
|
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|
(Rs. in Million) |
% |
|
|
| Net Sales |
|
1,302.1 |
1,496.0 |
(12.9) |
|
| Cost
of Sales |
|
1,171.3 |
1,259.9 |
(7.0) |
|
|
|
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|
| Gross Profit |
|
130.8 |
236.1 |
(44.6) |
|
| Expenses
& Taxes |
|
126.1 |
128.0 |
(1.5) |
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|
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| Net Profit |
|
4.7 |
108.1 |
(95.7) |
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|
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| While
the sales have gone down by about 13% the increase in input cost and low
volume of |
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| production,
resulting in higher fixed cost per ton seriously affected our earning
capacity and |
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| profitability. |
|
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| Other
comparative figures are reflected in the Financial Statements. |
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| APPROPRIATION
OF PROFIT |
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| Considering
the current year's profit of only Rs. 4.745 million, and the likely difficult
times in |
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| the
foreseeable future, the directors very reluctantly had to take the unpleasant
decision of not |
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| declaring
any dividend for the current year. Accordingly the total unappropriated
profit of Rs. |
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| 44.558
million has been carried forward to next year. |
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| FUTURE
PROSPECTS |
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| Currently
there is an oversupply of approximately 7 million tons of cement with the
result that |
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| the
plants are forced to curtail their production in line with the market demand.
In order for the |
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| industry
to survive and not be classified as Sick, avenues will have to be found for
export. The |
|
| government
needs to provide the requisite incentives and necessary facilities at ports
to en- |
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| courage
the manufacturers to go for export. This could also become a source of
Foreign Ex- |
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| change
earning for the country in these difficult times. Additionally, it is
necessary that taxes |
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| imposed
on the cement industry be rationalized keeping in view the industry's
capacity to |
|
| carry
this burden. While reduction in taxes may result in increased demand it will
also ensure |
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| continuous
revenue for the government and save colossal amount of foreign exchange and |
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| local
resources that have gone into setting up these highly capital intensive
Cement Projects. |
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| Y2K
COMPLIANCE |
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| The
computer system at our company is fairly well developed and the system is
operating at all |
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| the
following locations: |
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| - Head Office at Karachi |
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| - Factory at Nowshera |
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| - Sales offices at: |
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|
Peshawar |
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|
Lahore |
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|
Islamabad |
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| Currently
consultants are involved in upgrading our accounting and information system
to meet |
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| the
year 2000 requirements. |
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| We
are also investigating and upgrading our process for Y2K compliance. |
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| DEBT
OBLIGATION |
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| We
continue to meet our financial commitments and debt obligations as per agreed
schedule. |
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| However,
due to difficult Foreign Exchange Reserve position, we are still awaiting
permission |
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| from
State Bank of Pakistan to make remittance against one of our loan
installments which was |
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| due
on September 3, 1998. The French Bankers have been informed of this delay,
and the |
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| reason
there against. The amount in question will be remitted as soon as the
necessary per- |
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| mission
is received from the State Bank of Pakistan. |
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| AUDITORS |
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| The
present Auditors M/s. Sidat Hyder Qamar Maqbool & Co., Chartered
Accountants, retire |
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| and
being eligible offer themselves for reappointment. |
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| ACKNOWLEDGEMENT |
|
| In
the end we wish to express our thanks to all the financial institutions
including the French |
|
| banks
that have been associated with the project, for their support and
cooperation. We would |
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| also
like to thank all our dealers and customers for their continued association
and support. |
|
| Our
special thanks are due to our team of dedicated managers and other
executives, supervi- |
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| sors
and hard working workers, who continue to put in their best efforts for
achieving optimum |
|
| results
in these difficult times. |
|
|
| Thank you, |
|
|
|
On behalf of the Board |
|
|
Cherat Cement Company Limited |
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|
|
(MOHAMMED FARUQUE) |
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| Nowshera:
October 30th, 1998 |
|
Chairman |
|
|
|
|
| YEARWISE
STATISTICAL SUMMARY |
|
|
|
(Rs. in million) |
|
|
1998 |
1997 |
1996 |
1995 |
1994 |
1993 |
1992 |
1991 |
1990 |
1989 |
|
| ASSETS
EMPLOYED |
|
| Fixed Assets |
|
1,186 |
1,260 |
1,378 |
1,471 |
1,453 |
1,236 |
1,059 |
861 |
614 |
564 |
|
| Investments
and |
|
| Long-term
Advances |
|
| & Deposits |
|
12 |
13 |
14 |
14 |
12 |
11 |
9 |
73 |
50 |
92 |
|
|
| Current
Assets |
645 |
589 |
638 |
427 |
376 |
357 |
242 |
154 |
225 |
153 |
|
|
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Total
Assets Employed |
1,843 |
1,862 |
2,030 |
1,912 |
1,841 |
1,604 |
1,310 |
1,088 |
889 |
809 |
|
|
=========================================================================================================================== |
|
|
| FINANCED BY |
|
| Shereholders
equity |
926 |
921 |
885 |
864 |
704 |
621 |
457 |
385 |
314 |
303 |
|
| Long-Term
Liabilities |
271 |
336 |
434 |
544 |
633 |
572 |
520 |
438 |
257 |
266 |
|
| Deferred
Liabilities |
191 |
191 |
206 |
165 |
42 |
40 |
31 |
2 |
-- |
-- |
|
| Current
Liabilities |
455 |
414 |
505 |
339 |
462 |
371 |
302 |
263 |
318 |
240 |
|
|
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Total
Funds Invested |
1,843 |
1,862 |
2,030 |
1,912 |
1,841 |
1,604 |
1,310 |
1,088 |
889 |
809 |
|
|
|
=========================================================================================================================== |
|
|
| TURNOVER
& PROFIT |
|
| Turnover
(Net) |
1,302 |
1,496 |
1,368 |
953 |
530 |
763 |
630 |
550 |
466 |
373 |
|
|
|
|
| Operating
Profit |
74 |
174 |
334 |
337 |
143 |
309 |
197 |
130 |
101 |
101 |
|
| Profit
before Taxation |
12 |
118 |
274 |
289 |
122 |
277 |
157 |
85 |
55 |
54 |
|
| Profit
after Taxation |
5 |
108 |
166 |
159 |
83 |
164 |
73 |
70 |
55 |
54 |
|
| Cash
Dividend |
-- |
72 |
144 |
-- |
-- |
-- |
-- |
-- |
45 |
45 |
|
| Stock Dividend |
-- |
-- |
-- |
96 |
64 |
64 |
33 |
25 |
-- |
-- |
|
| Transfer
to Reserves |
-- |
25 |
25 |
55 |
15 |
100 |
40 |
40 |
20 |
15 |
|
| Profit c/f |
|
45 |
40 |
29 |
32 |
24 |
20 |
20 |
20 |
15 |
25 |
|
|
|
| RATIO
ANALYSIS ON ACCOUNTS |
|
| for
the year ended 30th June, 1998 |
|
|
|
1998 |
1997 |
|
|
| PROFITABILITY |
|
|
| Gross
Profit (percentage) |
|
10.04 |
15.79 |
|
| Operating
Profit (percentage) |
|
5.69 |
11.65 |
|
| Profit
Before Tax (percentage) |
|
0.89 |
7.92 |
|
| Net
Profit After Tax (percentage) |
|
0.36 |
7.23 |
|
| Growth
in Net Profit After Tax (percentage) |
|
-95.61 |
-34.85 |
|
| Net
Profit to Share Holder's Equity (Average after tax) (percentage) |
0.51 |
11.97 |
|
| E.P.S.
(Before Tax) |
|
0.24 |
2.46 |
|
| E.P.S.
(After Tax) |
|
0.10 |
2.25 |
|
| Net
Profit to Total Assets (Average after tax) (percentage) |
0.26 |
5.56 |
|
| Increase
in Sales (Gross percentage) |
|
-18.78 |
27.92 |
|
| Increase
in Sales (Net percentage) |
|
-12.96 |
9.33 |
|
| Materials
as % of Net Sales |
|
14.34 |
14.48 |
|
| Labour
as % of Net Sales |
|
6.19 |
4.77 |
|
| Other
Cost of Sales Expenses as % of Net Sales |
|
69.44 |
64.97 |
|
| Raw
& Packing Material as % of Cost of Sales |
|
15.94 |
17.19 |
|
| Administrative
Expenses as % of Net Sales |
|
2.68 |
2.31 |
|
| Selling
Expenses as % of Net Sales |
|
1.68 |
1.82 |
|
| Financial,
other charges & (other income) as % on Net Sales |
4.75 |
3.21 |
|
|
| SHORT
TERM SOLVENCY |
|
|
| Working
Capital Ratio |
|
1.75:1 |
1.85:1 |
|
| Acid
Test Ratio |
|
1.58:1 |
1.65:1 |
|
| Working
Capital Turnover (Net Sales) times |
|
4.70 |
5.54 |
|
| Inventory
Turnover/Times |
|
4.40 |
4.90 |
|
|
| OVERALL
VALUATION AND ASSESSMENT |
|
|
| Number
of Times Interest Earned |
|
1.13 |
2.59 |
|
| Return
on Equity after tax (Average in percentage) |
0.51 |
11.97 |
|
| P.
E. Ratio (Before Tax) |
|
41.67 |
8.35 |
|
| Book
Value Per Share |
|
19.24 |
19.13 |
|
| Long-Term
Debts to Equity Ratio |
|
0.36 |
0.43 |
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of CHERAT CEMENT COMPANY LIMITED as at
June |
|
| 30,
1998 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, 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 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 June 30, |
|
| 1998
and of the profit and 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. |
|
|
|
SIDAT HYDER QAMAR MAQBOOL & CO. |
|
| KARACHI
- 30th October, 1998 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT 30TH JUNE, 1998 |
|
|
|
NOTE |
1998 |
1997 |
|
|
(Rupees '000) |
|
|
| SHARE
CAPITAL |
|
| Authorised |
|
| 50,000,000
(1997: 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 |
444,558 |
439,813 |
|
|
|
|
--------------- |
--------------- |
|
|
|
925,882 |
921,137 |
|
| REDEEMABLE
CAPITAL |
|
5 |
91,687 |
119,617 |
|
| LONG-TERM
LOANS |
|
6 |
119,370 |
165,336 |
|
|
| LIABILITIES
AGAINST ASSETS SUBJECT |
|
| TO
FINANCE LEASE |
|
7 |
35,356 |
20,458 |
|
| DEFERRED
LIABILITY |
|
8 |
191,301 |
191,279 |
|
| LONG-TERM
DEPOSITS - unsecured |
|
9 |
24,826 |
30,448 |
|
|
|
| CURRENT
LIABILITIES |
|
| Short-term
finance |
|
10 |
241,622 |
91,138 |
|
| Current
maturity |
|
11 |
87,365 |
94,513 |
|
| Creditors,
accrued and other liabilities |
12 |
111,798 |
127,627 |
|
| Taxation |
|
11,216 |
24,386 |
|
| Proposed
dividend |
|
-- |
72,199 |
|
| Unclaimed
dividend |
|
2,795 |
3,750 |
|
|
--------------- |
--------------- |
|
|
454,796 |
413,613 |
|
| Contingencies
and commitments |
|
13 |
--------------- |
--------------- |
|
|
1,843,218 |
1,861,888 |
|
|
========== |
========== |
|
| AUDITORS'
REPORT ANNEXED |
|
|
| FIXED
ASSETS - TANGIBLE |
|
| Operating
assets - at book value |
|
14 |
1,112,752 |
1,198,081 |
|
| Assets
subject to finance lease |
|
15 |
73,576 |
61,531 |
|
| Capital
work-in-progress |
|
|
205 |
-- |
|
|
--------------- |
--------------- |
|
|
1,186,533 |
1,259,612 |
|
|
| INVESTMENTS
- at Cost |
|
16 |
5,800 |
7,300 |
|
|
|
| LONG-TERM
DEPOSITS |
|
6,382 |
6,117 |
|
|
|
| CURRENT
ASSETS |
|
|
| Stores, spares and
loose tools |
17 |
224,442 |
241,540 |
|
| Stock-in-trade |
|
18 |
64,673 |
61,534 |
|
| Advances,
deposits, prepayments and |
|
| other
receivables |
|
19 |
161,406 |
124,845 |
|
| Short-term
investments |
|
20 |
117,053 |
117,053 |
|
| Cash
& Bank balances |
|
21 |
76,929 |
43,887 |
|
|
--------------- |
--------------- |
|
|
644,503 |
588,859 |
|
|
--------------- |
--------------- |
|
|
1,843,218 |
1,861,888 |
|
|
========== |
========== |
|
| These
accounts should be read with the annexed notes. |
|
|
|
ZAHID FARUQUE |
|
AKBARALI PESNANI |
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| for
the year ended 30th June, 1998 |
|
|
|
|
NOTE |
1998 |
1997 |
|
|
|
(Rupees '000) |
|
|
| Sales - net |
|
22 |
1,302,114 |
1,496,011 |
|
| Cost
of sales |
|
23 |
1,171,344 |
1,259,864 |
|
|
|
--------------- |
--------------- |
|
| Gross profit |
|
|
130,770 |
236,147 |
|
|
|
--------------- |
--------------- |
|
| Administration
expenses |
|
24 |
34,850 |
34,549 |
|
| Selling
and Distribution expenses |
|
25 |
21,878 |
27,299 |
|
|
|
--------------- |
--------------- |
|
|
|
56,728 |
61,848 |
|
|
|
--------------- |
--------------- |
|
| Operating
profit |
|
|
74,042 |
174,299 |
|
|
|
--------------- |
--------------- |
|
| Financial
charges |
|
26 |
88,992 |
74,509 |
|
| Other
charges |
|
27 |
3,868 |
3,211 |
|
| Other income |
|
28 |
(30,983) |
(29,689) |
|
