| DADABHOY CEMENT INDUSTRIES LIMITED |
|
|
|
|
|
|
|
|
|
| ANNUAL
REPORT 1998 |
|
|
|
| CONTENTS |
PAGE NO. |
|
|
| COMPANY
INFORMATION |
|
| NOTICE
OF THE MEETING |
|
| DIRECTORS'
REPORT |
|
| GRAPHS |
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| BALANCE
SHEET |
|
| PROFIT
AND LOSS ACCOUNT |
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| NOTES
TO THE ACCOUNTS |
|
| PATTERN
OF HOLDING OF THE SHARES |
|
|
|
| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
|
| MR.
MOHAMMAD HUSSAIN DADABHOY |
Chairman |
|
| MRS.
RAZIA HUSSAIN DADABHOY |
|
| MRS.
HUMAIRA DADABHOY |
|
| MR.
MOHAMMAD AMIN DADABHOY |
Chief Executive |
|
| MS.
YASMEEN DADABHOY |
|
| MR.
FAZAL KARIM DADABHOY |
|
| MR.
NASEEMUDDIN |
|
|
| COMPANY
SECRETARY & |
|
| GENERAL
MANAGER FINANCE |
|
| MR.
NAYYAR KARIM |
|
|
| AUDITORS |
|
| FORD,
RHODES, ROBSON, MORROW |
|
| CHARTERED
ACCOUNTANTS |
|
|
| SOLICITOR: |
|
| DR.
RAIS M. MUSHTAQ (ADVOCATE) |
|
|
| BANKERS: |
|
| ALLIED
BANK OF PAKISTAN LIMITED |
|
| UNITED
BANK LIMITED |
|
| NATIONAL
DEVELOPMENT FINANCE CORPORATION |
|
| NATIONAL
BANK OF PAKISTAN |
|
| DEUTSCHE
BANK |
|
| BANK
OF PUNJAB |
|
|
| REGISTRAR: |
|
| FORD,
RHODES, ROBSON, MORROW |
|
| ROOM
NO. 12, 1ST FLOOR, |
|
| WRITERS
CHAMBERS, |
|
| MUMTAZ
HASAN ROAD, KARACHI. |
|
|
| REGISTERED
OFFICE: |
|
| 5TH
FLOOR, MAQBOOL COMMERCIAL COMPLEX |
|
| JCHS
BLOCK 7 & 8 |
|
| SHAHRAH-E-FAISAL,
KARACHI |
|
|
| FACTORY: |
|
| NOORIABAD
DEH KALU KOHAR, |
|
| DIST.
DADU (SINDH) |
|
|
|
| NOTICE
OF THE 18TH ANNUAL GENERAL MEETING |
|
| OF
SHAREHOLDERS |
|
|
| NOTICE
is hereby given that the 18th Annual General Meeting of shareholders of
Dadabhoy Cement |
|
| Industries
Limited will be held on Tuesday the 29th day of December, 1998 at 12.05 p.m.
at |
|
| D.H.A.
Sunset Club Khayaban-e-Jami Phase-II Ext. Defence Housing Authority, Karachi,
to transact |
|
| the
following business: |
|
|
| ORDINARY
BUSINESS |
|
|
| 1.
To confirm the minutes of the 17th Annual General Meeting of the company held
on 27th |
|
| December
1997. |
|
|
|
|
| 2.
To receive, consider and adopt the Audited Accounts of the Company for the
year ended |
|
| 30th
June, 1998 together with the Directors' and Auditors' Reports thereon. |
|
|
| 3.
To appoint auditors for the ensuing year and fix their remuneration. |
|
|
| Special
Business: |
|
|
| 4.
To approve the revised remuneration of the Chairman and fixed the
remuneration of working |
|
| Director
in place of Managing Director. |
|
|
| 5.
To transact any other business as may be placed before the meeting with the
permission |
|
| of
the Chair. |
|
|
|
|
By Order of the Board |
|
|
|
|
|
|
| Karachi: |
|
|
(NAYYAR KARIM) |
|
| Dated:
27th November 1998. |
|
Company Secretary |
|
|
| NOTES: |
|
|
| 1.
The Share Transfer Books of the Company will remain closed for transaction
from 25th |
|
| December,
1998 to 29th December, 1998 (Both days inclusive). |
|
|
|
|
| 2.
Any member of the company entitled to attend and vote may appoint another
member as |
|
| his/her
Proxy to attend and vote on his/her behalf. Proxies must be received at the
registered |
|
| office
of the company not less than 48 hours before the meeting. |
|
|
| 3.
Members are requested to notify change in their addresses, if any,
immediately to our registrar |
|
| Ford,
Rhodes, Robson, Morrow 1st floor, Writers Chambers, Mumtaz Hassan Road, off
I.I. |
|
| Chundrigar
Road, Karachi. |
|
|
| 4.
A statement under section 160 of the companies ordinance 1984 pertaining to
the special |
|
| business
is dispatched to the shareholders alongwith the Annual Report for the year
1998. |
|
|
|
| STATEMENT
UNDER SECTION 160(1)(b) OF THE |
|
| COMPANIES
ORDINANCE, 1984 |
|
|
| This
statement sets out the material facts concerning the special business to be
transacted of the |
|
| 18th
Annual General Meeting of the Company to be held on December 29, 1998. |
|
|
| According
to Government regulations, shareholders' approval will be sought for payment
of |
|
| remuneration
and the provision of certain facilities to the Chairman and a Working
Director in |
|
| place
of Chief Executive of the company as recommended by the Board of Directors of
the Company. |
|
| For
this purpose it is proposed to pass the following resolution as an ordinary
resolution: |
|
|
| 'RESOLVED
that the Company hereby authorises the holding of office of profit and
payment as |
|
| tax
free monthly remuneration to Mr. Mohammad Hussain Dadabhoy, Chairman not
exceeding |
|
| Rs.
200,000/- (Rupees Two Hundred Thousand Only) and Mr. Fazal Karim Dadabhoy,
Director |
|
| of
the company as tax free monthly remuneration of Rs. 50,000 for the year
ending 30-6-1999 |
|
| and
for subsequent years a sum with an annual increase of up to 25% of the
remuneration being |
|
| paid
from time to time, as determined by the Board of Directors. The Chairman and
Working |
|
| Director
will also be provided company maintained cars, leave fare assistance, free
medical cover |
|
| for
self and family and other perquisites, as per company rules and regulation in
force from time |
|
| to time." |
|
|
|
| DIRECTORS'
REPORT |
|
|
| Your
Directors take pleasure in presenting their report along with audited
accounts and auditors |
|
| report
thereon for the year ended June 30, 1998. |
|
|
| Operating
Results |
|
| Overall
recession in the country severally affected the all industrial activities in
the country with |
|
| almost
stand still activities in the infrastructure development in the country
during the year. Coupled |
|
| with
inflation. higher cost of input, devaluation of Pak rupee, cement industry is
passing through |
|
| worst
ever crises of the history. These factors grossly squeezed the aggregate
demand of cement |
|
| in
the country, the said factors resulted in operating losses to the industry.
However your company |
|
| has
closed the year with the marginal profit which was possible because of tight
control over |
|
| expenditure,
production efficiency and last but not least night awakening efforts of the
management |
|
| and
staff of the company. |
|
|
| The
net sale revenue for the year under review amounting to Rs. 1,000.367 million
(1997 Rs. |
|
| 755.012
million) is showing increase of 32.5% over the last year. Pretax profit is
Rs. 18.995 |
|
| million
as compared to net loss before tax in 1997 Rs. 132.481 million. |
|
|
| Production
and Sales |
|
| The
production of cement for the year was 547,054 tons as compared to 486,856
tons for the |
|
| previous
year. The Kiln was operated at 109% of the installed capacity. Despite the
depressed |
|
| demand,
there was no decrease in production and sale of cement however, lower price
affects |
|
| the
profitability of the company. |
|
|
| Market
Review |
|
| The
socio economic conditions and law and order situation coupled with sanctions
imposed by |
|
| the
International Community and multilateral lending agencies after nuclear blast
have led the industry |
|
| into
crises because all foreign aided projects were abandoned. During the year
under review, |
|
| Government
reduced the prices of Furnace Oil but the same are still behind the price of
Furnace |
|
| Oil
prevail in International Market. Constant increase in input prices coupled
with the stagnation |
|
| of
demand has resulted in piling up of stock of cement and over supply. The
impact of input |
|
| prices
could not be passed on to the end users. In order to save the industry from
disaster, the |
|
| Government
must take remedial measures which should include review of tax structure of
cement |
|
| industry,
as the industry at present is not in a position to carry the burden of over
increasing |
|
| input
prices. |
|
|
| Future
Prospects |
|
| After
having been realized the gravity of the problem being faced by the industry
Government |
|
| had
reduced price of furnace oil and increase rebate to Rs. 600/- per ton on
export of cement. |
|
| But
due to the recession in South East Asia coupled with currency problem in
ASEAN countries, |
|
| the
cement sector is not in a position to compete with the Manufacturers of these
countries in |
|
| International
market, despite the fact that there is a great potential and demand of
Pakistani cement |
|
| in
surrounding countries like Sri Lanka, Bangladesh, Burma etc. This will only
be possible if |
|
| government
offer higher incentive and reduction in prices of input materials. This will
help to |
|
| minimize
over supply and disposal of piled up stock of cement industries. |
|
|
| Last
but not least the captive power plant of the Group has commenced supplying of
electricity ~i |
|
| to
cement plant on trial basis and commercial supply will be started from 1st
December, 1998 ~i |
|
| which
will improve the efficiency of the plant because of uninterrupted supply. |
|
|
| Year
2000 Compliance
~ |
|
| You
will be pleased to note that year 2000 compliance in your company is
progressing well ahead |
|
| with
the help of our in-house experts. Assistance from outside experts is also
under consideration. |
|
|
| In
order to compliance all efforts will be made to accomplish the task with
requisite tests by the |
|
| end
of next financial year. |
|
|
| PATTERN
OF SHAREHOLDING |
|
| The
pattern of shareholding of the company as on 30-06-1998 is enclosed with the
Annual |
|
| accounts. |
|
|
| AUDITORS |
|
| The
present Auditors M/s Ford, Rhodes, Robson, Morrow, Chartered Accountants will
retire and |
|
| being
eligible to have offered themselves for reappointment for ensuing year. |
|
|
| Acknowledgement |
|
| In
the end we wish to express our thanks to all the Financial institutions who
have been associated |
|
| with
the company, for their support and cooperation. We would also like to thank
to all our dealers |
|
| and
customers for their continued association and support. We thank a team of
dedicated Managers |
|
| and
other Executives, Supervisors and Workers who continued to put in their best
efforts for achieving |
|
| optimum
results. |
|
|
|
|
FOR & ON BEHALF OF THE BOARD |
|
|
|
|
|
|
|
| Karachi: |
|
(MOHAMMAD AMIN DADABHOY) |
|
| Dated:
27th November, 1998. |
|
Chief Executive |
|
|
|
|
|
|
|
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of DADABHOY CEMENT INDUSTRIES
LIMITED |
|
| as
at June 30, 1998 and the related profit and loss account and statement of
changes in financial |
|
| position,
together with the notes forming part thereof, for the year then ended and we
state that |
|
| we
have obtained all the information and explanations which to the best of our
knowledge and |
|
| belief
were necessary for the purposes of our audit and, after due verification
thereof, we report |
|
| that: |
|
|
| (a)
in our opinion, proper books of 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, profit and loss account and the statement of changes
in financial |
|
| position,
together with the notes forming part thereof, give the information required
by the |
|
| Companies
Ordinance, 1984 in the manner so required and respectively give a true and |
|
| fair
view of the state of the company's affairs as at June 30, 1998 and of the
profit and |
|
| the
changes in financial position (cash flow statement), for the year then ended. |
|
|
|
|
| (d)
in our opinion, no Zakat was deductible at source under the Zakat and Ushr
Ordinance, |
|
| 1980. |
|
|
|
| (e)
without qualifying our opinion, we draw attention to the following matters. |
|
|
| (i)
as disclosed in notes. 7(b) and 7(c), net increases of Rs. 140.054 million
and Rs. 34.918 |
|
| million,
aggregating to Rs. 174.972 million, in interest based loans and trade
financing |
|
| respectively,
resulting from the restructuring of long term loans and short term running |
|
| finances
during the year by a financial institution, have not been recorded by the
company |
|
| in
the accounts of the current year, pending resolution of the matter disclosed
in note |
|
| 14(a)(i)
relating to penal interest/additional interest and a final decision in this
regard |
|
| by
the concerned authorities. Therefore, the ultimate outcome of the action to
be taken |
|
| by
the company cannot presently be determined and, hence, additional liability
amounting |
|
| to
Rs. 174.972 million that may result has not been recorded by the company in
these |
|
| accounts. |
|
|
|
|
| (ii)
the ultimate outcome of the remaining contingencies shown in note 14 to the
accounts |
|
| amounting
to Rs. 142.392 (1997- Rs. 425.988)million, excluding Rs. 174.972 million, |
|
| as
referred to in (i) above, cannot presently be determined and, hence, no
provision |
|
| that
may result has been made in the accounts of the current year. |
|
|
|
| Karachi: |
|
|
|
Ford, Rhodes, Robson, Morrow |
|
| Dated:
November 28, 1998 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1998 |
|
|
|
|
|
June 30, |
June 30, |
|
|
|
|
1998 |
1997 |
|
|
|
Note |
(Rs '000s) |
|
| CAPITAL
AND RESERVES |
|
|
|
|
|
|
|
| Share
Capital |
|
|
|
|
|
|
| Authorised |
|
|
|
|
|
|
| 60,000,000
(1997: 60,000,000) |
|
|
| ordinary
shares of Rs. 10/- each |
|
|
600,000 |
600,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up capital |
3 |
398,688 |
398,688 |
|
| Reserves/(Accumulated
losses) |
|
4 |
5,772 |
(8,221) |
|
|
|
|
---------- |
---------- |
|
|
|
|
404,460 |
390,467 |
|
|
|
|
|
|
| SURPLUS
ON REVALUATION OF FIXED ASSETS |
5 |
487,688 |
487,688 |
|
| REDEEMABLE
CAPITAL |
|
|
6 |
26,653 |
58,366 |
|
| LONG
TERM LOANS |
|
|
7 |
703,231 |
238,129 |
|
| LONG
TERM DEPOSITS |
|
|
8 |
28,847 |
28,568 |
|
| OBLIGATIONS
UNDER FINANCE |
LEASES |
|
9 |
28,848 |
17,149 |
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
|
|
|
| Current
maturities of redeemable capital, |
|
| long
term loans and obligations under |
10 |
100,712 |
355,106 |
|
| finance
leases |
|
|
| Short
term running finances |
|
11 |
13,196 |
146,300 |
|
| Short
term loan |
|
12 |
35,671 |
31,562 |
|
| Creditors,
accrued and other liabilities |
13 |
171,499 |
274,628 |
|
| Provision
for taxation - net |
|
|
2,385 |
890 |
|
| Unclaimed
dividend |
|
|
7,126 |
11,217 |
|
|
|
|
---------- |
---------- |
|
|
|
|
330,589 |
819,703 |
|
| CONTINGENCIES
AND COMMITMENT |
|
14 |
---------- |
---------- |
|
|
|
|
2,010,316 |
2,040,070 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
June 30, |
June 30, |
|
|
|
|
1998 |
1997 |
|
|
|
|
Note |
(Rs '000s) |
|
|
|
|
| TANGIBLE
FIXED ASSETS |
|
|
|
|
|
| Operating
fixed assets at cost less |
|
| accumulated
depreciation |
|
15 |
1,541,193 |
1,576,291 |
|
| Capital
work-in-progress |
|
16 |
32,688 |
26,884 |
|
| Spares
held for capital expenditure |
|
3,995 |
2,677 |
|
|
|
|
|
|
---------- |
---------- |
|
|
|
|
1,577,876 |
1,605,852 |
|
|
|
|
|
|
| LONG
TERM INVESTMENTS |
|
17 |
77,326 |
81,191 |
|
|
|
|
|
| LONG
TERM LOANS, DEPOSITS |
|
|
| AND
PREPAYMENT |
|
18 |
10,266 |
9,822 |
|
| CURRENT
ASSETS |
|
|
|
|
|
|
| Stores,
spares and loose tools |
|
19 |
136,773 |
135,171 |
|
| Stock-in-trade |
|
20 |
31,566 |
42,590 |
|
| Trade
debts |
|
21 |
108,200 |
116,848 |
|
|
|
|
| Loans,
Advances, deposits, prepayments |
|
| and
other receivables |
|
22 |
59,369 |
46,516 |
|
| Cash
and bank balances |
|
23 |
8,940 |
2,080 |
|
|
|
|
---------- |
---------- |
|
|
|
|
344,848 |
343,205 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
2,010,316 |
2,040 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
MOHAMMAD AMIN DADABHOY |
|
FAZAL KARIM DADABHOY |
|
|
Chief Executive |
|
Director |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
|
|
|
|
|
Year ended |
Year ended |
|
|
|
|
June 30, |
June 30, |
|
|
|
Note |
1998 |
1997 |
|
|
|
|
(Rs. '000s) |
|
|
|
|
| NET SALES |
|
|
24 |
1,000,367 |
755,912 |
|
| COST
OF SALES |
|
25 |
862,910 |
749,281 |
|
|
|
|
|
---------- |
---------- |
|
| GROSS
PROFIT |
|
|
137,457 |
6,631 |
|
|
|
|
| Administrative
expenses |
|
44,741 |
41,784 |
|
| Selling
and distribution expenses |
|
10,491 |
10,628 |
|
|
|
|
---------- |
---------- |
|
|
|
|
55,232 |
52,412 |
|
|
|
|
---------- |
---------- |
|
| OPERATING
PROFIT/(LOSS) |
|
|
82 225 |
(45,781) |
|
|
|
|
|
---------- |
---------- |
|
| Additional
surcharge - WAPDA |
|
|
- |
83,706 |
|
| Financial
charges |
|
28 |
76 866 |
11,630 |
|
| Workers'
Profit Participation Fund |
|
1,000 |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
77,866 |
95,336 |
|
|
|
|
---------- |
---------- |
|
|
|
|
4,359 |
(141,117) |
|
| Other
income |
|
29 |
14,636 |
8,636 |
|
|
|
|
---------- |
---------- |
|
| PROFIT/(LOSS)
BEFORE TAXATION |
|
|
18,995 |
(132,481) |
|
| TAXATION |
|
|
|
| Current |
|
|
|
5,002 |
3,780 |
|
| Prior |
|
|
|
- |
1,735 |
|
|
|
---------- |
---------- |
|
|
|
5,002 |
5,515 |
|
|
|
---------- |
---------- |
|
| NET
PROFIT/(LOSS) FOR THE YEAR |
|
13,993 |
(137,996) |
|
| (ACCUMULATED
LOSSES)/UNAPPROPRIATED |
|
|
|
| PROFIT
BROUGHT FORWARD |
|
(131,445) |
6,551 |
|
|
|
|
---------- |
---------- |
|
| ACCUMULATED
LOSSES CARRIED FORWARD |
|
(117,452) |
131,445) |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
MOHAMMAD AMIN DADABHOY |
|
FAZAL KARIM DADABHOY |
|
|
Chief Executive |
|
Director |
|
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION (CASH FLOW STATEMENT) |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
|
|
|
Year ended |
Year ended |
|
|
|
|
|
June 30, |
June 30, |
|
|
|
|
|
1998 |
1997 |
|
|
|
|
|
(Rs '000s) |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
|
|
|
| Profit/(loss)
before taxation |
|
18,995 |
(132,481) |
|
| Adjustment
for items not involving |
|
|
|
| movement
of funds: |
|
|
|
|
|
|
|
| Depreciation |
|
44,747 |
41,191 |
|
| Financial
Charges |
|
76,866 |
11,630 |
|
| Gain
on sale of fixed assets |
|
(491) |
(697) |
|
| Provision
against debts considered |
|
|
|
| doubtful |
|
3,173 |
- |
|
|
|
---------- |
---------- |
|
|
|
|
|
124,295 |
52,124 |
|
|
|
|
|
---------- |
---------- |
|
| Profit/(loss)
before working capital changes |
|
143,290 |
(80,357) |
|
| Working
Capital Changes |
|
|
|
|
|
|
| (Increase)/decrease
in current assets |
|
|
|
|
|
| Stores
spares and loose tools |
|
|
(1,602) |
10,557 |
|
| Stock-in-trade |
|
|
|
11,024 |
11,731 |
|
| Trade
debts |
|
|
|
5,475 |
(23,948) |
|
| Loans.
advances, deposits, prepayments |
|
|
| and
other receivables |
|
(12,853) |
49,559 |
|
|
|
---------- |
---------- |
|
|
|
2,044 |
47,899 |
|
| Increase/(decrease)
in current liabilities |
|
|
| Short
term loan |
|
4,109 |
31,562 |
|
| Creditors,
accrued and other liabilities |
|
(57,172) |
36,253 |
|
|
|
---------- |
---------- |
|
|
|
(53,063) |
67,815 |
|
|
|
---------- |
---------- |
|
| Cash
generated from operations |
|
92,271 |
35,357 |
|
| Taxes
paid |
|
(3,507) |
(4,952) |
|
| Financial
charges paid including the |
|
|
| effects
of restructuring |
|
(122,823) |
(9,719) |
|
|
|
---------- |
---------- |
|
| Net
cash (outflow)/inflow from operating activities |
(34,059) |
20,686 |
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
|
|
|
| Capital
expenditure |
|
(16,191) |
18,332) |
|
| Spares
held for capital expenditure |
|
(1,318) |
(2,677) |
|
| Sale
proceeds of fixed assets |
|
1,229 |
1,087 |
|
| Loans,
deposits and prepayment |
|
(444) |
1,115 |
|
| Investments |
|
