| Crescent Steel and Allied Products Limited |
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| Annual
Report 1998 |
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| CONTENTS |
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| Company
Information |
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| Company
& Investors' Information |
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|
| Mission,
Vision and Values |
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| Company
Profile |
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| Financial
Highlights |
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| Financial
Summary |
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| Directors'
Report |
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| Chief
Executive's Review |
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|
| Auditors'
Report |
|
| Balance Sheet |
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|
| Profit
and Loss Account |
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| Cash
Flow Statement |
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| Notes
to the Accounts |
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| Pattern
of Share Holding |
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| Notice
of Annual General Meeting |
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| COMPANY
INFORMATION |
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|
| Board
of Directors |
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| Chairman |
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|
Mazhar Karim |
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| Chief
Executive |
|
Ahsan M. Saleem |
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|
Azimuddin Syed |
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|
Muhammad Arshad |
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|
Mohammad Sharif |
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|
Nasir Shafi |
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|
Nauman Ahmed Qureshi |
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|
Raziur Rehman Khan |
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|
Zahid Bashir |
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| Management |
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|
| Chief
Executive |
|
Ahsan M. Saleem, 45 |
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| and
Managing Director |
|
1983* |
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| Executive
Vice President |
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Mohammad Sharif, 66 |
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| and
Deputy Managing Director |
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1984* |
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| Executive
Vice President |
|
S.M. Ehtishamullah, 59 |
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| and
Chief Financial Officer |
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1996* |
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| Executive
Vice President |
|
S.A.N. Kazmi, 56 |
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| Marketing
and Sales |
|
1986* |
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|
|
|
| Senior
Vice President |
|
Mohammad Amin, 51 |
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| Finance
and Control |
|
1992* |
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| Senior
Vice President |
|
Nadir Mazhar, 51 |
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| and
General Manager (Factory) |
1993* |
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* Year joined company |
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| COMPANY
AND INVESTORS' INFORMATION |
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| STOCK
EXCHANGE LISTING |
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| Crescent
Steel and Allied Products Limited |
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| is
listed on the Karachi, Lahore and Islamabad |
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| Stock
Exchanges. |
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| Daily
quotations on the Company's stock can |
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| be
obtained from leading newspapers. |
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| Crescent
Steel is listed under 'Engineering'. |
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| The
shares of the company can be dealt |
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| through
the Central Depository System |
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| of
Karachi, Lahore and Islamabad Stock |
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| Exchanges.
This will obviate the incon- |
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| venience
of physical handling of share |
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| scrips. |
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| PUBLIC
INFORMATION |
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| Financial
analysts, stock brokers, interested |
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| investors
and financial media desiring |
|
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| information
about 'Crescent Steel' should |
|
|
| contact
Mohammad Amin at Company's |
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| Principal
Office Karachi. |
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| Telephone:
568-8447 |
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| SHAREHOLDER
INFORMATION |
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|
| Enquiries
concerning lost share certifi- |
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|
| cates,
dividend payments, change of |
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| address,
verification of transfer deeds |
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| and
share transfer should be directed to |
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| the
Shareholder Services Department at |
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| the
Registered office at Lahore. |
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| PRODUCTS |
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| CSAP
is a manufacturer of DSAW steel |
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| line
pipes in diameters ranging from 8" |
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| to
90" and applicator of multi-layer |
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|
| polyethylene/polypropylene
coating |
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| conforming
to international standards. |
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| ANNUAL
MEETING |
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|
| Fourteenth
Annual General Meeting of |
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|
| Crescent
Steel and Allied Products |
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| Limited
will be held on Thursday |
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| December
17, 1998 at 11:00 a.m. at Pearl |
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| Continental
Hotel, Shahrah-e-Quaid-e- |
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| Azam, Lahore. |
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| CORPORATE
SECRETARIES |
|
| Zaheer
A. Shaikh |
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| Rashid Sadiq |
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| AUDITORS |
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| A.F.
Ferguson & Co. |
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| Chartered
Accountants |
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| BANKERS |
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| Crescent
Investment Bank |
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| National
Bank of Pakistan |
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| National
Development Finance Corporation |
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| Societe
Generale The French & |
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| International
Bank |
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| Faysal Bank |
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| Standard
Chartered Bank |
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| Muslim
Commercial Bank |
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| Credit
Agricole Indosuez |
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| The
Global French Bank |
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| Trust
Investment Bank |
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| REGISTERED
OFFICE |
|
| 83,
Babar Block, New Garden Town, |
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| Lahore. |
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| Telephones
: 042-5839631, 5881974 - 5 |
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| Fax: 5881976 |
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| LIASON
OFFICE LAHORE |
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| 5th
Floor, PAAF Building, |
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| 7-D
Kashmir/Egerton Road, Lahore. |
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| Telephone
: 042- 6306880- 3 |
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| PRINCIPAL
OFFICE |
|
| 9th
Floor, Sidco Avenue Centre, |
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| 264-R.
A. Lines, Karachi-74400. |
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| Telephones:
021 - 5674881 - 5 |
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| Fax: 5680476 |
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| E.mail:
csaplho @ bimni.erum.com.pk |
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| Website:
http://www. spark-dir. com/ |
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| pages/crescent |
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| FACTORY |
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| A/25,
S.I.T.E., Nooriabad, |
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| District
Dadu, Sindh. |
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| Telephones : |
0221 - 39321 |
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|
39322 |
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39463 |
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| MISSION,
VISION AND VALUES |
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| 1.
To add value to shareholders and the economy |
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| by
engaging profitably in the supply of |
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| products
for Water, Oil and Gas transmission |
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| as
core business and other selected activities. |
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| 2.
To gain and maintain cost and quality |
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| leadership
in the international competitive |
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| environment,
as world class manufacturers. |
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| 3.
To promote best use and development of |
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| human
talent in a safe working environment; |
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| as
an equal opportunity employer. |
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| 4.
To conduct business as a responsible corporate |
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| citizen,
and take constructive interest in |
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| supporting
education and environmental |
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| causes. |
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| COMPANY
PROFILE |
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|
| Crescent
Steel and Allied Products Limited |
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|
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| is
a Public Limited Company listed on all the |
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| Stock
Exchanges of Pakistan. It started its |
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| commercial
production in March 1987. The |
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| manufacturing
facility consists of a Spiral Pipe |
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| Production
Line and a High Density |
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| Polyethylene
Coating Line, both located side |
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| by
side at the Sindh Industrial Trading Estate, |
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| Nooriabad
in Dadu district of Sindh. |
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| Crescent
Steel and Allied Products Limited |
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| is
an equal opportunity employer with a |
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| sense
of social responsibility and strongly |
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| supports
education and environmental causes. |
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| The
spiral Pipe Plant has a capability of |
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| manufacturing
high quality steel pipes in the |
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| diameter
range of 8 5/8" (219mm) - 90" |
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| (2200mm)
in wall thicknesses ranging from |
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| 4mm-
16 mm and material grades up to API |
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| 5Lx70
grade. The company has the unique |
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| distinction
of having the authorisation to use |
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| API
monogram of the American Petroleum |
|
| Institute
and of having been awarded ISO |
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| 9001
accreditation from January 1997. The |
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| maximum
annual capacity of the pipe plant |
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| is
80,000 tons per annum. Crescent Steel and |
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| Allied
Products Limited follows a strict quality |
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| regime
and the product is comparable to any |
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| of
its kind in the world. It is also authorised to |
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| use
the API monogram which is the highest |
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| accreditation
of quality in steel line pipes. |
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| A
high Density Polyethylene Coating Plant |
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| was
added adjacent to the pipe mill in 1992. |
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| This
plant is capable of applying Multi Layer |
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| Coating
comprising of Fusion Bonded Epox34 |
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| Co-Polymer
Adhesive and High Density |
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| Polyethylene
on Steel pipes ranging |
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| from
8 5/8" (219mm) - 42" (1000mm). For |
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| clients
who prefer a single layer protection |
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| only,
the Plant is capable of delivering Fusion |
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| Bonded
Epoxy as a single protection in the |
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| same range. |
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| Crescent
Steel maintains high quality norms |
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| in
all its products and has co--fly exceeded |
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| the
requirements of international standards |
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| both
in steel line pipe and multi layer coatings |
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| and
will continue to remain at the cutting |
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| edge
in terms of technology quality control and |
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| quality
assurance. |
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| FINANCIAL
HIGHLIGHTS |
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|
Percentage |
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|
|
Change |
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|
Year ended |
Year ended |
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|
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|
June 30, |
June 30, |
+ Increase |
|
|
|
|
1998 |
2.00 |
- Decrease |
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|
|
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|
|
| Operating
results (Rs. 000's.) |
|
|
|
|
|
|
|
| Revenues |
|
1,184,177 |
991,639 |
+ 19 |
|
|
| Income
from operations |
|
195,788 |
234,339 |
- 16 |
|
|
| Net income |
|
190,930 |
131,913 |
+ 45 |
|
|
|
|
|
|
| Data
per common share (Rs.) |
|
|
|
|
|
|
|
| Earnings |
|
9.51 |
7.56 |
+ 57 |
|
|
| Book value |
|
31.14 |
25.01 |
+ 25 |
|
|
| Stock
price range |
|
25-20 |
44-25 |
|
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|
|
|
|
|
| Financial
position at lane 30 (Rs. 000's.) |
|
|
|
|
|
|
|
| Total assets |
|
832,450 |
1,085,875 |
- 23 |
|
|
| Capitalization |
|
666,304 |
510,299 |
+ 31 |
|
|
| Long-term
debts |
|
40,819 |
73,433 |
- 44 |
|
|
| Lease
obligations |
|
2,245 |
4,233 |
- 47 |
|
|
| Deferred
taxation |
|
19,100 |
33,100 |
- 42 |
|
|
| Common
equity |
|
625,435 |
436,866 |
+ 43 |
|
|
| Current
liabilities |
|
166,195 |
575,576 |
- 71 |
|
|
|
|
|
|
| Other
statistics |
|
|
|
|
|
|
|
|
| Return
on average common equity |
35.95% |
33.96% |
+ 6 |
|
|
| Market
to book value (times) |
|
0.81 |
1.67 |
- 54 |
|
|
| Common
shares (Nos.) |
|
20,084,863 |
17,465,099 |
+ 15 |
|
|
|
|
|
|
|
| FINANCIAL
SUMMARY |
|
|
|
|
|
|
1998 |
1997 |
1996 |
1994 |
1993 |
|
|
|
|
| Operating
Results ( Rs. 000's) |
|
| Net Sales |
|
1,184,177 |
991,639 |
506,867 |
329,801 |
640,060 |
|
| Cost of Sales |
|
913,938 |
693,120 |
261,622 |
148.76 |
482,536 |
|
| Selling
and Administrative expenses |
74,451 |
64,180 |
34,610 |
27.40 |
18,946 |
|
| Financial
expenses |
|
17,602 |
26,700 |
23,550 |
34.87 |
40,161 |
|
| Other charges |
|
30,308 |
41,461 |
41,858 |
19.67 |
6,258 |
|
| Other
income, Net |
|
41,789 |
5,274 |
2,731 |
19.53 |
1,709 |
|
| Pre tax profit |
|
189,667 |
171,452 |
147,957 |
118.64 |
93,869 |
|
| Income tax |
|
(1,263) |
39,539 |
50,158 |
38 790 |
33,503 |
|
| Extraordinary
item |
|
47,852 |
-- |
-- |
-- |
(51) |
|
| Net income |
|
238,782 |
131,913 |
97,799 |
79,853 |
60,315 |
|
|
|
|
| Per
Share Results and Returns |
|
| Earning
per share (Rupees) |
|
9.51 |
7.56 |
6.43 |
6.05 |
5.71 |
|
| Net
income to sales (%) |
|
16.12 |
13.31 |
19.30 |
24.21 |
9.43 |
|
| Return
on average assets (%) |
|
19.91 |
14.97 |
23.10 |
14.95 |
10.27 |
|
| Return
on average equity (%) |
|
35.95 |
33.96 |
33.80 |
38.26 |
41.65 |
|
|
|
|
| Financial
Position (Rs. 000's) |
|
| Current Assets |
|
520,049 |
797,203 |
382,249 |
268,163 |
180,544 |
|
| Current liability |
|
166,195 |
575,576 |
267,873 |
259,671 |
152,011 |
|
| Operating
Fixed Assets |
|
230,395 |
240,181 |
247,487 |
262,898 |
275,817 |
|
| Total Assets |
|
832,450 |
1,085,875 |
676,963 |
592,775 |
474,389 |
|
| Long-term
Debt |
|
40,819 |
73,433 |
69,206 |
97,360 |
143,677 |
|
| Shareholders'
Equity |
|
625,435 |
436,866 |
339,883 |
238,744 |
178,700 |
|
| Break-up
value per share (Rupees) |
31.14 |
25.01 |
22.38 |
18.08 |
16.91 |
|
|
|
|
| Financial
Ratios |
|
|
| Current
assets to current liabilities |
3.13 |
1.47 |
1.56 |
1.03 |
1.18 |
|
| Long
term debt to capitalization (%) |
6.13 |
14.39 |
16.91 |
28.72 |
44.57 |
|
| Total
debt to total assets (%) |
|
24.87 |
59.76 |
49.70 |
59.70 |
62.35 |
|
| Interest
coverage (times) |
|
11.78 |
6.42 |
6.28 |
4.40 |
3.33 |
|
| Average
collection period (days) |
24 |
33 |
29 |
41 |
24 |
|
| Inventory
turnover (times) |
|
5.80 |
3.91 |
4.75 |
3.55 |
3.18 |
|
| Fixed
assets turnover (times) |
|
5.14 |
4.25 |
4.62 |
2.93 |
2.32 |
|
| Total
assets turnover (times) |
|
1.42 |
0.94 |
1.69 |
1.30 |
1.35 |
|
|
|
|
| Other
Data (Rs. 000's) |
|
|
| Depreciation |
|
35,920 |
35,285 |
48,459 |
29,845 |
28,326 |
|
| Capital
expenditure |
|
29,485 |
24,716 |
31,595 |
10,906 |
26,333 |
|
|
| In
order to make the comparisons more meaningful, the 1996 figures have been
annualized. |
|
|
|
| DIRECTORS'
REPORT |
|
|
|
|
| The
directors of the Company feel pleasure in submitting their report together
with the audited |
|
| accounts
of the Company for the year ended June 30,1998. The accompanying Chief
Executive's |
|
| Review
and other reports provide a more detailed description of activities in the
year and prospects |
|
| for the future. |
|
|
|
|
|
|
Year ended |
Year ended |
|
|
|
|
June 30, |
June 30, |
|
|
|
|
1998 |
1997 |
|
|
|
|
Rupees (000's) |
|
|
| PROFIT
FOR THE YEAR AND SURPLUS |
|
|
|
|
|
|
|
|
| Profit
before taxation and extraordinary item |
|
189,667 |
171,452 |
|
|
|
|
|
|
|
| Provision
for taxation |
|
|
|
|
| - Current |
|
|
(12,737) |
(22,039) |
|
|
| - Deferred |
|
|
14,000 |
(I7,500) |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
1,263 |
(39,539) |
|
|
|
--------------- |
--------------- |
|
|
| Profit
after taxation and before extraordinary item |
190,930 |
131,913 |
|
|
| Extraordinary
item |
|
47,852 |
-- |
|
|
|
|
--------------- |
--------------- |
|
|
| Profit
after taxation and extraordinary item |
|
238,782 |
131,913 |
|
|
| Unappropriated
Profit brought forward |
|
2,739 |
1,954 |
|
|
|
|
--------------- |
--------------- |
|
|
| Profit
available for appropriation |
|
241,521 |
133,867 |
|
|
|
|
|
| APPROPRIATIONS: |
|
|
|
| -
Reserve for proposed bonus shares issue |
|
|
|
| Nil
(1997:3 shares for every 20 shares) |
|
-- |
(26,198) |
|
|
| -
Proposed Dividend @ 25 % (1997: 20%) |
|
(50,212) |
(34,930) |
|
|
| -
General Reserve |
|
|
(190,000) |
(70,000) |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
(240,212) |
(131/128) |
|
|
|
|
--------------- |
--------------- |
|
|
| UNAPPROPRIATED
PROFIT CARRIED FORWARD |
1,309 |
2,739 |
|
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| AUDITORS |
|
|
|
| The
present auditors M/s. A.F. Ferguson & Company, Chartered Accountants
retire, and |
|
| being
eligible, offer themselves for reappointment. |
|
|
| PATTERN
OF SHAREHOLDINGS |
|
| The
pattern of shareholdings as referred in Section 236 of the Companies
Ordinance, 1984 |
|
| is enclosed. |
|
|
| The
directors place on record their appreciation for the efforts put in by the
executives, |
|
| staff
members and workers of the Company. |
|
|
| FOR
AND ON BEHALF OF THE BOARD |
|
|
| Sd/- |
|
| Ahsan
M. Saleem |
|
| Chief
Executive |
|
| Karachi:
October 13, 1998 |
|
|
|
| CHIEF
EXECUTIVE'S REVIEW |
|
|
| DEAR
INVESTOR |
|
|
|
|
|
|
|
|
|
| Bismillah
Ar Rahman Ar Rahim |
|
|
|
|
|
|
|
|
|
| While
presenting this report for |
|
|
|
|
| the
fiscal 1998, I would like to |
|
|
|
|
| start
by inviting your attention |
|
|
|
|
| to
the note of caution sounded |
|
|
|
|
| by
me at the last Annual General |
|
|
|
|
| Meeting
and I quote from the |
|
|
|
|
| 1997 report; |
|
|
|
|
|
|
|
|
|
|
| "With
financial resource |
|
|
|
|
| constraint
at the governmental |
|
|
|
|
| level,
the infrastructure |
|
|
|
|
| development
projects seem |
|
|
|
|
| to
be getting sidelined. Fiscal |
|
|
|
|
| 1999
will be a difficult year in |
|
|
|
|
| terms
of local order |
|
|
|
|
| intake..........". |
|
|
|
|
|
|
|
|
|
|
| I
am afraid that the outlook for |
|
|
|
|
| 1999
clouds the outstanding |
|
|
|
|
| achievements
in fiscal 1998. |
|
|
|
|
|
| Management's
response to |
|
|
|
| challenges
arising from the grim |
|
|
| outlook
for 1999 will be dealt |
|
|
|
| with
later in this report. Here I |
|
|
|
| would
like to take you through |
|
|
|
| with
our operations during fiscal |
|
|
| 1998
which has been a mile |
|
|
|
| stone
year in many a way. |
|
|
|
|
|
|
| Your
Company surpassed all |
|
|
|
| the
past records and I am happy |
|
|
| to
report that despite great |
|
|
|
| economic
uncertainty, 'the |
|
|
|
| revenues,
profits and assets |
|
|
|
| utilization
were all better than |
|
|
|
| ever
before. This was possible, |
|
|
|
| by
the Grace of Allah, due to a |
|
|
|
| high
standard of performance |
|
|
|
| and
continued adherence to our |
|
|
|
| Mission
statement. |
|
|
|
|
|
|
| Due
to stringent cost control, |
|
|
|
| improvement
in productivity |
|
|
|
| and
specific focus on the return |
|
|
|
| on
assets objectives, there have |
|
|
|
| been
improvements in net |
|
|
|
| earnings
per share and all key |
|
|
|
| balance
sheet ratios. It is indeed |
|
|
| gratifying
that we are able to |
|
|
|
| report
results in line with targets |
|
|
| and
expectation of the |
|
|
|
| shareholders. |
|
|
|
|
|
|
| During
the year the Company |
|
|
|
| earned
highest ever pretax |
|
|
|
