| Hoechst Marison Roussel (Pakistan) Limited |
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| Annual
Report 1998 |
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| Contents |
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| Notice
of Meeting |
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| Company
Information |
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| Ten-Year
Summary of Statistics |
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| Directors'
Report |
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| Auditors'
Report |
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| 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 Shareholding |
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| Notice
of Meeting |
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| Notice
is hereby given that the Thirty-first Annual General Meeting of the Company
will be held on Thursday, |
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| 15th
April, 1999 at 10:00 hours in the auditorium of the Finance and Trade Centre
Building, Sharea- |
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| Faisal
Karachi, to transact the following business: |
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| ORDINARY
BUSINESS: |
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| 1.
To confirm the minutes of the last Annual General Meeting. |
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| 2.
To receive and adopt the Balance Sheet and Profit & Loss Account for the
year ended December 31,1998 |
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| together
with the Directors' and Auditors' reports thereon. |
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| 3.
To approve the dividend for the year @ Rs. 2.00 per share, as recommended by
the Directors. |
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| 4.
To appoint Auditors for the year ending December 31, 1999 and to fix their
remuneration. The retiring |
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| Auditors,
M/s. A.F. Ferguson & Co. being eligible offer themselves for
re-appointment. |
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| 5.
To elect seven Directors as fixed by the Board in accordance with the
provisions of Section 178 of the |
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| Companies
Ordinance, 1984 for a term of three years. The retiring Directors namely
Messrs. Syed Babar |
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| Ali,
M.Tariq Umar, Pir Ali Gohar, Syed Hyder Ail, Pascal Soriot, F.X. Roger, M.Z.
Moin Mohajir, being eligible, |
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| have
notified their intention to offer themselves for re-election as Directors. |
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| SPECIAL
BUSINESS: |
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| 5.
To approve the remuneration payable to the Chief Executive and other
whole-time working Directors of |
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| the
Company. |
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| A
statement under Section 160 of the Companies Ordinance, 1984, pertaining to
the Special Business |
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| is
being sent to the shareholders with this notice. |
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By Order of the Board |
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|
M. Z. Moin Mohajir |
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| Karachi,
March 24, 1999 |
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Director/Secretary |
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| Notes: |
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| 1.
The Share Transfer Books of the Company shall remain closed from April 2,1999
to April 15, 1999 (both |
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| days
inclusive). |
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| 2.
A member entitled to attend and vote at the above meeting may appoint a Proxy
to attend and vote on |
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| his
behalf. No person shall be appointed as Proxy who is not a member of the
Company qualified to vote |
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| except
that a Corporation being a member may appoint as Proxy a person who is not a
member. The |
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| completed
Proxy Form must be deposited at the Registered Office of the Company not less
than 48 hours |
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| before
the time for holding the meeting. |
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| Statement
under Section 160 of the Companies Ordinance, 1984. |
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| This
statement sets out the material facts concerning the special business to be
transacted at the Thirty-first Annual |
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| General
Meeting of Hoechst Marion Roussel (Pakistan) Limited to be held on Thursday
April 15, 1999. |
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| Approval
of the shareholders will be sought for the remuneration payable to the Chief
Executive and other whole- |
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| time
working Directors in accordance with their terms and conditions of service.
For this purpose, it is intended |
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| to
propose that the following resolution be passed as an Ordinary Resolution. |
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| "RESOLVED
THAT the Company hereby authorises, the holding of offices of profit and
payment as remuneration |
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| to
Mr. M. Tariq Umar Chief Executive and M/s. M.Z. Moin Mohajir and A.R. Tahir
(alternate director) whole-time |
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| working
Directors not exceeding in the aggregate rupees eight million per annum,
exclusive of perquisites and |
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| retirement
benefits to which they are entitled under their terms of employment, for the
year ending December 31, |
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| 1999,
and for the remainder of their term remuneration per annum not exceeding the
said amount as increased |
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| by
the sums that may be applicable under their respective terms of employment. |
|
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| FURTHER
RESOLVED THAT in the event of any of the aforesaid offices of profit falling
vacant, the approval |
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| hereby
given shall be equally applicable to any other person appointed to fill such
vacancy." |
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| Company
Information |
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| Board
of Directors |
Syed Babar Ali |
Chairman |
|
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|
M. Tariq Umar |
Managing Director |
|
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|
Pir Ali Gohar |
(Alternate Asif Ali
Gohar) |
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Pascal Soriot |
(Alternate A. R. Tahir) |
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|
Syed Hyder Ali |
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|
F. X. Roger |
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|
M. Z. Moin Mohajir |
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| Company
Secretary |
M.Z. Moin Mohajir |
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| Auditors |
|
A.F. Ferguson & Co. |
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| Legal
Advisors |
Fatehali W. Vellani &
Company |
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Azfar & Azfar |
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Orr. Dignam & Co. |
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Rizvi, Isa & Co. |
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| Bankers |
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ABN AMRO Bank N.V |
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ANZ Grindlays Bank Ltd. |
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Bank of America NT &
SA |
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Bank of Tokyo-Mitsubishi,
Ltd. |
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Citibank, N. A. |
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Credit Agricole Indosuez |
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Deutsche Bank AG |
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Habib Bank Limited |
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Honkong & Shanghai
Banking Corporation Ltd. |
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Muslim Commercial Bank
Ltd. |
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Societe Generale - The
French & International Bank |
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Standard Chartered Bank |
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| Registered
Office |
Hoechst House, |
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|
Pict No. 23, Sector No.
22, |
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|
Korangi Industrial Area, |
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Karachi-74900. |
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| Postal
Address |
P.O. Box No. 4962, |
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|
Karachi-74000. |
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| Registrars
& Share |
Ferguson Associates
(Pvt.) Ltd. |
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| Transfer
Office |
State Life Building No.
l-A, |
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|
I.I. Chundrigar Road, |
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|
Karachi-74000. |
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| Ten-Year
Summary of Statistics |
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|
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|
1989 |
1990 |
1991 |
1992 |
1993 |
1994 |
1995 |
1996 |
1997 |
1998 |
|
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|
| Operating assets |
|
97,656 |
94,603 |
116,275 |
141,409 |
157,538 |
188,010 |
355,691 |
311,715 |
284,104 |
240,995 |
| Capital
work-in progress |
3,624 |
9,492 |
29,388 |
25,888 |
45,222 |
183,058 |
36,012 |
105,163 |
1,638 |
3,565 |
| Net
current and other assets |
721 |
18,789 |
49,564 |
48,514 |
51,015 |
253,213 |
129,657 |
(16,737) |
117,112 |
88,646 |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
| Total
assets employed |
|
102,001 |
122,884 |
195,227 |
215,811 |
253,775 |
624,281 |
521,360 |
400,141 |
402,854 |
333,206 |
|
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
|
| Ordinary
capital |
|
57,873 |
57,873 |
57,873 |
69,448 |
69,448 |
69,448 |
69,448 |
69,448 |
69,448 |
69,448 |
| Reserves |
|
17,569 |
38,749 |
80,631 |
98,633 |
151,775 |
201,584 |
212,125 |
204,949 |
221,752 |
237,987 |
| Redeemable
capital |
|
9,000 |
7,200 |
31,650 |
22,350 |
13,050 |
240,000 |
136,667 |
49,333 |
62,000 |
8,000 |
| Long
term & deferred liabilities |
17,559 |
19,062 |
25,073 |
25,380 |
19,502 |
113,249 |
103,120 |
76,411 |
49,654 |
17,771 |
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
| Total
funds employed |
|
102,001 |
122,884 |
195,227 |
215,811 |
253,775 |
624,281 |
521,360 |
400,141 |
402,854 |
333,206 |
|
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
|
|
|
| Net
turnover |
|
736,195 |
887,468 |
1,112,096 |
1,272,943 |
1,308,682 |
1,532,542 |
1,960,288 |
1,422,957 |
1,409,552 |
1,420,712 |
| Indenting
commission |
|
10,771 |
12,219 |
16,196 |
15,619 |
18,800 |
18,585 |
17,919 |
18,293 |
16.14 |
17,868 |
| Profit
before taxation |
|
40,563 |
70,859 |
77,526 |
80,898 |
82,182 |
72,063 |
40,170 |
32,743 |
61,808 |
62,285 |
| %
of net sales |
|
5.50 |
8.00 |
7.00 |
6.4 |
6.3 |
4.7 |
2.0 |
2.3 |
4.4 |
4.4 |
| %
of average assets employed |
45.30 |
63.00 |
48.70 |
39.4 |
35.0 |
16.4 |
7.0 |
7.1 |
15.4 |
16.9 |
| Profit/(loss)
after taxation |
29,363 |
32,755 |
41,882 |
43,466 |
53,142 |
63,699 |
24,431 |
(7,176) |
30,692 |
30,123 |
| Cash
dividend - amount |
|
5,787 |
11,575 |
- |
13,889 |
- |
13,890 |
13,890 |
- |
13,889 |
13,888 |
| Cash
dividend - % |
|
10 |
20 |
- |
20 |
- |
20 |
20 |
- |
20 |
20 |
| Bonus
issue - amount |
|
- |
- |
11,575 |
- |
- |
- |
- |
- |
- |
- |
| Bonus
issue - % |
|
- |
- |
20 |
- |
- |
- |
- |
- |
- |
- |
| Earnings
per share Rs. |
|
7.00 |
12.24 |
1,339 |
11.64 |
11.80 |
10.30 |
5.78 |
4.70 |
8.90 |
8.97 |
| Number
of permanent |
|
|
| employees
at year end |
|
877 |
906 |
923 |
953 |
941 |
954 |
1,007 |
882 |
626 |
521 |
|
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|
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|
|
| Directors'
Report |
|
|
| We
are pleased to present the Annual Report of your company for the year ended
31 December 1998. This was |
|
| the
first full year of your company's manufacturing and trading operations as a
pharmaceutical company. The |
|
| mainly
indent business of dyes which was also done under the umbrella of the company
has been discontinued |
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| after
31.12.1 998. |
|
|
| Whilst
the Pakistan Pharmaceutical Market recorded a 4.6% growth (IMS - Q4, 1998) in
1998, our pharma sales |
|
| grew
by 16% over last year which can be termed as an excellent achievement since
all of it was volume increase. |
|
| It
may be noted that last year's sales figures include the turnover of Specialty
Chemicals business which was |
|
| discontinued
w.e.f. 1.7.1997. |
|
|
| Despite
the continuing efforts of the pharma industry the government has not granted
any increase in sales prices |
|
| since
November 1996. In fact, there has been a decrease in the prices of two of our
products viz. Claforan® lg and |
|
| Lasix®40mg
by 8% and 10% as per our agreement with the Ministry of Health. Therefore the
total volume increase |
|
| is
slightly more than 16%. We are actively pursuing the price increase issue,
along with the industry and |
|
| independently,
with the Ministry of Health. |
|
|
| Amaryl®
- the first 3rd generation oral sulphonylurea, launched in April 1998 has
been received very well by the |
|
| doctors.
It is an exciting new molecule with a lot of promise. In November we launched
another anti-diabetic |
|
| Neodipar®
which also got a good response. We also launched a line extension of the
Claforan® range by introducing |
|
| the
0.5g presentation also. |
|
|
| We
succeeded in getting a record number of 11 new products/line extensions
registered by the Ministry of Health |
|
| during
1998. |
|
|
| We
continue to face severe competition from generics for Claforan®, Daonil® and
Tarivid.® However, our highly |
|
| focussed
marketing and sales strategy has helped us to register a satisfactory growth
in the sale of these products. |
|
|
| Novalgin®
Tablets and Syrup and Avil® range were promoted actively with resulting
increase in sales of these |
|
| products
to record levels. |
|
|
| Indenting |
|
| The
indenting business of Dyes recorded an increase of 3% over last year. As
mentioned earlier this business has |
|
| been
discontinued after 31.12.1 998. |
|
|
| Finance & Accounts |
(Rs.000) |
|
| Profit
for the year before taxation |
|
62,285 |
|
| Taxation: |
|
| Current
- for the year |
|
|
|
33,400 |
|
|
- for prior years |
|
|
5,767 |
|
| Deferred
- for the year |
|
|
(7,005) |
|
|
|
|
|
|
---------- |
|
|
|
|
32,162 |
|
|
|
|
---------- |
|
| Profit
after taxation |
|
|
|
30,123 |
|
| Unappropriated
profit brought forward |
|
252 |
|
|
|
|
---------- |
|
|
|
|
30,375 |
|
| Appropriations: |
|
| Proposed
dividend @ 20% |
|
|
13,888 |
|
| Transfer
to General Reserve |
|
|
16,000 |
|
|
|
|
---------- |
|
|
|
|
29,888 |
|
|
|
|
---------- |
|
| Unappropriated
profit carried forward |
|
487 |
|
|
========== |
|
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| The
taxation figure is high due to prior years' tax provisions consequent to an
agreement with the Tax Authorities |
|
| which
also resulted in settlement of our determined tax refunds. |
|
|
| The
financing cost has been reduced considerably due to a combination of
excellent stocks and receivables |
|
| management
where outstandings are of only 16 days, receipt of tax refunds and other
measures. |
|
|
| There
has been a marked improvement in the various accounting ratios and the
overall financial situation has |
|
| further
improved. |
|
|
| The
Directors are pleased to recommend a dividend of 20% i.e. Rs. 2 per share. |
|
|
| Human
Resources |
|
| The
total number of employees at the end of 1998 went down to 521 from 626 at the
end of the last year due to the |
|
| retirement
of 79 employees under the voluntary retirement scheme of the company and
other resignations including |
|
| the
employees belonging to the Dyes business consequent to it's discontinuation. |
|
|
| For
the first time productivity based incentives were introduced in the factory
resulting in a 23% increase in |
|
| productivity. |
|
|
| Safety
& Environment |
|
| Strong
emphasis on the safety aspects continued to produce positive results. Whilst
no major accident was |
|
| reported
during the year, the incidence of minor accidents was also insignificant. |
|
|
| Future
Outlook |
|
| The
pharmaceutical industry continues to be dependent on the government in
respect of the pharmaceutical prices. |
|
| It
is now over two years since the last price increase was received and during
this time the Rupee has been |
|
| devalued
by 25% besides other cost increases. Further denial of our legitimate right
could prove harmful for the |
|
| whole
industry including your company. We have nevertheless taken a number of steps
including reduction in |
|
| headcount,
improved inventory and receivables management, rationalization of packaging,
control on expenditure |
|
| etc.
to offset the various cost increases. |
|
|
| On
December 1, 1998 Hoechst A.G. and Rhone Poulenc S.A. announced the merger of
their Life Sciences |
|
| business.
This will, inter-alia, mean a merger of your company with Rhone Poulenc Rorer
Pakistan (Private) |
|
| Limited
At the time of writing this report we are not aware of the modalities to be
adopted in this regard Perhaps |
|
| at
the time of the Annual General Meeting we may be able to give more details. |
|
|
| Directors |
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| During
the year under review Mr. P. Rigclot retired from his regional
responsibilities and consequently resigned ~ |
|
| from
the Board. Mr. S. Heitmann also resigned from the Board after the end of the
year The Board decided to ~:~ |
|
| reduce
the number of directors from 8 to 7 and nominated Mr. F.X. Roger to fill the
vacancy created by the above F |
|
| resignations
We wish to place our thanks to both the retiring directors for their
contribution to the company. |
|
|
| Pattern
of Share Holding |
|
| A
statement of the pattern of shareholding is shown on page 33. |
|
|
| Earning
Per Share |
|
| The
earning per share before tax is Rs. 8.97. |
|
|
| Holding
Company |
|
| The
company is a subsidiary of Hoechst Marion Roussel Aktiengesellschaft which is
incorporated in Germany. |
|
|
| Auditors |
|
|
|
| The
present Auditors Messrs A. F. Ferguson & Co. retire and being eligible
offer themselves for reappointment. |
|
|
| General |
|
| We
would like to thank all the employees, who have once again played a
significant role in your company's |
|
| performance. |
|
|
|
By order of the Board |
|
|
|
|
|
Syed Babar Ali |
|
|
M. Tariq Umar |
|
|
Chairman |
|
|
Chief Executive |
|
|
| Karachi:
January 28, 1999. |
|
|
|
| Auditors'
Report to the Members |
|
|
| We
have audited the annexed balance sheet of Hoechst Marion Roussel (Pakistan)
Limited as at |
|
| December
31, 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 confirmity 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 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 state of
the |
|
| Company's
affairs as at December 31, 1998 and of the profit and the cash flow 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. |
|
|
|
|
|
|
|
A.F. Ferguson & Co. |
|
|
|
Chartered Accountants |
|
|
| Karachi:
February 4, 1999 |
|
|
|
| Balance
Sheet as at December 31, 1998 |
|
|
|
Note |
1998 |
1997 |
|
|
|
|
|
(Rupees in
thousands) |
|
|
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
|
|
|
| Authorised
Capital |
|
|
|
| 10,000,000
Ordinary shares of Rs 10 each |
|
100,000 |
100,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid - up capital |
3 |
69,448 |
69,448 |
|
| Revenue
reserve |
|
4 |
237,500 |
221,500 |
|
| Unappropriated
profit |
|
|
487 |
252 |
|
|
|
|
---------- |
---------- |
|
|
|
|
307,435 |
291,200 |
|
|
|
|
|
| REDEEMABLE
CAPITAL |
|
5 |
8,000 |
62,000 |
|
|
|
|
|
| LONG
- TERM LOAN AND DEFERRED |
|
|
|
| LIABILITY |
|
|
|
|
| Long
- term loan |
|
6 |
- |
24,878 |
|
| Deferred
taxation |
|
7 |
17,771 |
24,776 |
|
|
|
|
---------- |
---------- |
|
|
|
|
17,771 |
49,654 |
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
|
| Current
maturity of redeemable |
|
|
|
| capital
and long - term loan |
|
8 |
48,878 |
28,878 |
|
| Shod
- term loans |
|
|
- |
156,420 |
|
| Shod
- term running finances utilized |
|
|
|
| under
mark - up arrangements |
|
9 |
71,864 |
33,472 |
|
| Creditors,
accrued and other |
|
|
|
|
| liabilities |
|
10 |
301,495 |
256,396 |
|
| Proposed
dividend |
|
|
13,888 |
13,889 |
|
|
|
|
---------- |
---------- |
|
|
|
|
436,125 |
489,055 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
11 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
769,331 |
891,909 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
|
Note |
1998 |
1997 |
|
|
|
|
|
(Rupees in
thousands) |
|
|
|
|
|
| TANGIBLE
FIXED ASSETS |
|
|
|
|
| Operating
assets |
|
12 |
240,995 |
284,104 |
|
| Capital
work-in-progress |
|
13 |
3,565 |
1,638 |
|
|
|
|
---------- |
---------- |
|
|
|
|
244,560 |
285,742 |
|
|
|
|
|
| LONG
- TERM RECEIVABLE |
|
|
- |
18,709 |
|
| LONG
- TERM DEPOSITS AND PREPAYMENTS |
14 |
450 |
1,201 |
|
| LONG
- TERM LOANS AND ADVANCES |
|
|
1,128 |
1,130 |
|
| CURRENT
ASSETS |
|
|
|
|
| Stores
and spares |
|
15 |
25,199 |
24,682 |
|
| Stock-in-trade |
|
16 |
305,700 |
266,457 |
|
| Trade debts |
|
17 |
65,808 |
77,287 |
|
| Loans
and advances |
|
18 |
3,349 |
4,420 |
|
| Deposits
and short-term |
|
|
|
|
| prepayments |
|
19 |
65,199 |
9,623 |
|
| Taxation |
|
|
43,834 |
130,146 |
|
| Other
receivables |
|
20 |
13,440 |
53,245 |
|
| Bank
and Cash balances |
|
21 |
664 |
19,267 |
|
|
|
|
---------- |
---------- |
|
|
|
|
523,193 |
585,127 |
|
|
|
|
---------- |
---------- |
|
|
|
|
769,331 |
891,909 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| The
annexed notes form an integral pad of these accounts. |
|
|
|
|
|
SYED BABAR ALI |
|
M. TARIQ UMAR |
|
|
Chairman |
|
|
Chief Executive |
|
|
|
|
|
|
|
| Profit
and loss account for the year ended December 31, 1998 |
|
|
|
|
|
Note |
1998 |
1997 |
|
|
|
|
|
(Rupees in
thousands) |
|
|
|
|
|
| Net Sales |
|
22 |
1,420,712 |
1,409,552 |
|
| Cost
of Sales |
|
22 |
1,353,396 |
1,364,253 |
|
|
|
|
---------- |
---------- |
|
|
|
|
67,316 |
45,299 |
|
| Indenting
commission |
|
22 |
17,868 |
16,135 |
|
|
|
|
---------- |
---------- |
|
| Operating
profit |
|
|
85,184 |
61,434 |
|
| Other
income |
|
25 |
34,099 |
29,819 |
|
|
|
|
---------- |
---------- |
|
|
|
|
119,283 |
91,253 |
|
|
|
|
---------- |
---------- |
|
| Financial
charges |
|
26 |
39,862 |
105,505 |
|
