| KSB Pumps Company Limited |
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| Annual
Report 1998 |
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| Contents |
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| MISSION
STATEMENT & VALUES |
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| COMPANY
INFORMATION |
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| DEALERS
NETWORK |
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| NOTICE
OF MEETING |
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| DIRECTORS'
REPORT |
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| MANAGEMENT
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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| KSB
Pumps Company Limited |
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| REGISTERED
OFFICE |
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WORKS |
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| 16/2,
Sir Aga Khan Road |
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Hazara Road, Hassanabdal |
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| Lahore-54000 |
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Ph: (05772)
520236-520238-520239-2396 |
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| Ph:
(042) 6304173-6304174-6370969-6370970 |
Fax: (05772) 520237 |
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| Fax:
(042) 6368878-6366192 |
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| Cover: |
Awareness of
Environmental protection and its preservation is an integral part |
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of KSB's projects to
provide fresh water throughout the country |
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| Mission
Statement |
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| We
manufacture and market a selected range of standard and engineered |
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| pumps
and castings of world class quality. Our efforts are directed to have |
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| delighted
customers in the water, sewage, oil, energy, industry and building |
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| services
sectors. |
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| In
line with the Group strategy, we are committed to develop into a center |
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| of
excellence in water application pumps and be a strong regional player. We |
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| want
to market valves, complete system solutions and foundry products |
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| including
patterns for captive, automotive and other industries. We will develop |
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| a
world class human resource with highly motivated and empowered employees. |
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| The
measure of our success is being a clear market leader, achieving quantum |
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| growth
and providing attractive returns to stakeholders. |
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| Our
Values are |
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| *
We believe in self-esteem of our customers, |
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| suppliers
and employees |
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| *
We work as a team where every member owns the |
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| process
with an entrepreneurial spirit |
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| *
We work with professional honesty and integrity |
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| *
We trust our employees and appreciate their |
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| contributions |
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| *
We strive for continuous improvement to achieve |
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| excellence
in all spheres of our activities |
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| *
We are an equal opportunity employer and follow |
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| merit
in human resources development |
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| *
We fulfill moral obligation towards society and |
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| environment |
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| Company
Information |
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| DIRECTORS |
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| Peter
Wurzbacher |
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Chairman |
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| Arif Ijaz |
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Managing Director |
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| Manzurul
Haq |
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| Abdul
Razak Adamjee |
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| Razi-ur-Rahman
Khan |
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| Iqbal
Adamjee |
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| R. D. Ahmad |
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| COMPANY
SECRETARY |
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| S.
Zamanat Abbas |
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| MANAGEMENT |
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| Arif Ijaz |
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Chief Executive |
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| A.
Ghaffar Khan |
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Sales & Marketing |
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| S.
Zamanat Abbas |
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Finance &
Administration |
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| Pervez
Iqbal Mughal |
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Production |
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| Bashir
Saleem |
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Projects |
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| AUDITORS |
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| A.
F. Ferguson & Co. |
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| BANKERS |
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| ANZ
Grindlays Bank |
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| Bank
of America NT & SA |
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| Hongkong
& Shanghai Banking Corporation Limited |
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| Deutsche
Bank AG |
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| Muslim
Commercial Bank Limited |
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| Habib
Bank Limited |
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| United
Bank Limited |
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| LEGAL
ADVISORS |
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| Orr
Dignam & Co. |
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| Zafar
Law Associates |
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| Dealers
Network |
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| LAHORE |
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| UPPAL
MACHINERY STORES |
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| 98-Railway
Road, Lahore. Ph: 7662541 -7657974 |
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| ALI
AGENCIES |
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| 37-Umer
Market. Mcleod/Railway Road, Lahore. Ph: 7650758- 7665758 |
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| KARACHI |
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| ANWAR
CORPORATION |
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| Nicol/Frere
Road Crossing, P.O. Box No. 4755, Karachi. Ph: 2428411-14 |
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| SH.
WILAYAT AHMED & SONS |
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| G-1
A1-Yousuf Chambers, Shahrah-e-Liaquat, Karachi. Ph: 2623081 - 2628398 |
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| ENGINEERING
SALES & SERVICES |
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| Syedna
Tahir Saifuddin Road, Off M.A. Jinnah Road, Karachi. Ph: 7731866 - 7731710 |
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| RAWALPINDI |
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| HASSAN
ENGINEERING |
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| A/754
Taj Mahal Market, Jinnah Road, Rawalpindi. Ph: 555386 |
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| KHYBER
ELECTRIC GO. (PVT) LTD. |
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| 43-R/S,Bank
Road, Rawalpindi. Ph: 567783-4 |
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| MULTAN |
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| SULTAN
SONS (PVT) LTD. |
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| Sultan
Mansions, Railway Road, Multan. Ph: 542345- 542501 |
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| QUETTA |
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| MARSHALL
TRADING CO. |
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| Shahrah-e-Adalat,
Quetta. Ph: 842867 |
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| FAISALABAD |
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| AL-HASEEB
CORPORATION |
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| 26
Gulistan Market, Railway Road, Faisalabad. Ph: 619454 |
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| PESHAWAR |
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| GEO
PUMPS & ELECTRICAL SERVICES |
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| Sikandar
Plaza, Shuba Bazar, Peshawar |
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| Notice
of Meeting |
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| Notice
is hereby given that the |
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| 41st
annual general meeting of |
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| the
members of KSB Pumps Company |
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| Limited,
will be held at Hotel Avari, |
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| Shahrah-e-Quaid-e-Azam,
Lahore, on |
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| Tuesday,
the 22nd December, 1998 at |
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| 4.00
p.m. to transact the following |
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| business: |
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| 1.
To confirm the minutes of the |
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| annual
general meeting held on |
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| December
06, 1997. |
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| 2.
To consider and adopt the audited |
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| accounts
of the Company for the |
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| year
ended June 30, 1998 and |
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| report
of the auditors and Directors |
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| thereon. |
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| 3.
To approve the payment of dividend |
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| of
10% for the year ended June 30, |
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| 1998
as recommended by the |
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| Directors. |
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| 4.
To appoint auditors and fix their |
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| remuneration. |
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| Messrs
A. F. Ferguson & Co., |
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| Chartered
Accountants, the retiring |
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| auditors,
being eligible, offer |
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| themselves
for re-appointment as |
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| auditors
of the Company. |
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| Notes: |
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| 1.
A member entitled to attend and vote at |
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| this
meeting is entitled to appoint |
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| another
member as proxy. Proxies in |
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| order
to be effective must be received at |
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| the
Registered Office of the Company |
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| not
later than 48 hours before the time |
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| appointed
for the meeting. If a member |
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| appoints
more than one proxy and |
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| more
than one instruments of proxy are |
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| deposited
by a member with the |
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| Company,
all such instruments of proxy |
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| shall
be rendered invalid. Every proxy |
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| shall
have the right to attend, speak and |
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| vote
in place of the member appointing |
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| him/her
at the meeting. |
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| 2.
The Share Transfer Books of the |
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| Company
will remain closed from |
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| December
17, 1998 to December 22, |
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| 1998
(both days inclusive). Transfers |
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| received
in order at the Registered |
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| Office
of the Company by the close of |
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| business
on December 16, 1998 will be |
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| in
time to be passed for payment of |
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| dividend
to the transferees. |
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| 3.
Members are required to notify the |
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| change
of address, if any, immediately. |
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BY ORDER OF THE BOARD |
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| Lahore, |
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S. ZAMANAT ABBAS |
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| November
27, 1998 |
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Company Secretary |
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| Directors'
Report |
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| The
Directors are pleased to present the annual report together with the audited
accounts of the Company for the year ended June |
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| 30, 1998. |
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| STATE
OF COMPANY'S AFFAIRS |
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| The
Management Report on page 9 comments on the business of the Company during
the year and has the approval of the |
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| directors. |
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| RESULTS
FOR THE YEAR |
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Rupees |
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| Profit
for the year before providing for taxation |
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29,375,911 |
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| Provision
for taxation |
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(13,350,000) |
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---------- |
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| Profit
after taxation |
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16,025,911 |
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| Unappropriated
profit brought forward |
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405,732 |
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| Available
for appropriation |
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16,431,643 |
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| Appropriated
as under: |
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| - Transfer to general reserve |
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4,000,000 |
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| - Proposed dividend
@ Rs. 1.00 per share (10 %) |
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12,000,000 |
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---------- |
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16,000,000 |
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| Unappropriated
profit carried forward |
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431,643 |
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|
========== |
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| MATERIAL
CHANGES SINCE THE BALANCE SHEET DATE |
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| There
have been no material changes since June 30, 1998 and the Company has not
entered into any commitments which would affect |
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| the
financial position of the Company at that date. |
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| BOARD
OF DIRECTORS
i:' |
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| Mr.
Peter Wurzbacher was appointed Director and Chairman in place of Dr. K.
Wiegand with effect from 06-12-1997. Mr. Arif Ijaz was ~- |
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| appointed
as Director in place of Dr. A. Wittmann with effect from 06-12-1997 and as
Chief Executive/Managing Director in place of |
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| Mr.
Manzurul Haq with effect from 01-01-1998. |
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| The
Board wishes to record its deep appreciation for the devotion and guidance
provided to the Board by Dr. K. Wiegand during the |
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| term
of his office for 22 years. The Board also records its appreciation for the
splendid work done by Mr. Manzurul Haq during the |
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| tenure
of office as Chief Executive/Managing Director for over 16 years for
promoting the interest of the Company. Mr. Manzurul Haq |
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| who
has been given assignment in USA by the KSB Group still continues to
contribute as Member of the Board of Directors. The Board |
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| also
wishes to thank Dr. A. Wittmann for his valuable contribution provided during
his directorship. |
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| BUSINESS
OF THE COMPANY |
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| The
Company's business is that of manufacture and sale of pumps and valves. In
addition, castings are manufactured for sale to third |
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| parties. |
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| PATTERN
OF SHAREHOLDING |
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| The
information about the pattern of shareholding appears as an appendix to the
accounts on page 29. |
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| HOLDING
COMPANY |
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| The
holding company is Canadian Kay Pump Limited incorporated in Toronto, Canada.
Their particulars appear in note 2 to the |
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| accounts. |
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| Auditors |
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| The
present auditors, M/s. A. F. Ferguson & Co., being eligible, have offered
themselves for re-appointment. |
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| Lahore, |
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|
Arif Ijaz |
|
R.D. Ahmad |
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| October
21, 1998 |
|
Chief Executive |
|
Director |
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| Management
Report |
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| I
am pleased to present the Management |
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| Report
for the year ended June 1998. |
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| The
deteriorating economic scenario that |
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| started
in early 1997 persisted into the |
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| year
under review. Inspite of strong |
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| international
donor pressure the |
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| government
debt did not go down. A |
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| massive
Cash Flow crunch was created |
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| in
public sector institutions who could |
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| neither
finance development nor pay |
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| their
sub-suppliers. KSB major business |
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| (approximately
50%5 is in the water and |
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| sewage
sectors and this scenario took |
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| its
toll on reduced order intake and |
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| turnover.
On the other side various |
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| political
issues kept on cropping up in |
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| the
year under review that took on the |
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| proportions
of a crisis. This resulted in |
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| lower
investor confidence and large scale |
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| industrial
growth almost came to a |
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| standstill.
Our ability to tap this sector of |
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| the
market that is on the high |
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| value-added
side was also |
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| hampered. |
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| On
a positive side the management of |
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| this
Company could forecast the impact |
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| of
the slowdown on our business |
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| accurately
and a series of measures were |
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| taken
to improve the operational |
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| efficiency
of the Company and key |
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| success
factors were |
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| identified.
It is |
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| heartening
to note |
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| that
inspite of the |
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| slowdown
some of |
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| the
indicators show |
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| a
positive trend in |
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| June '98 as |
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| compared
with |
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| corresponding |
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| figures
last year. Inventory and |
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| receivables,
bank borrowings and |
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| resulting
financial cost all show |
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| downward
trends. All these positive |
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| trends
add up to show a 3% |
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| improvement
in gross margins. As a |
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| result
of rightsizing, |
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| per
employee |
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| productivity
of the |
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| Company
also |
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| showed
a positive |
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| trend
which augurs |
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| well
for the future. |
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| One
of the main |
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| strategic
offensives |
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| of
this year was a |
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| decision to |
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| implement
a state-of-the art online |
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| Information
Technology system. In |
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| engineering
companies with a large range |
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| of
products like KSB, the material |
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| variants
can run into thousands and |
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| manual
or stand alone systems cannot |
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| cater
for fast thruput times, which are a |
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| necessity
if we plan to extensify our |
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| export
operations. The key decision to |
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| install
and implement a "COMET" on line |
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| MRP
system has been taken, especially |
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| with
a view to use past experience of |
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| other
KSB Companies who are already |
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| using
this system. It is planned that this |
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| system
will be operational in July '99 and |
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| that
is where the real benefits are |
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| supposed
to accrue. KSB Pakistan |
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| alongwith
support from KSB AG is alive |
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| to
the problems of the 2000 millennium |
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| bug
and extensive plans are in place how |
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| to
overcome this problem. Luckily this |
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| coincides
and dovetails very well with |
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| our
IT offensive and synergies are bound |
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| to result. |
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| The
refocusing and restructuring of the |
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| sales
network was also carried out in this |
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| period.
As a result two sales offices, |
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| Sargodha
and Mirpur (AK) were closed |
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| down
and it is planned to set up a |
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| regional
office in Multan where a huge |
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| market
for Energy pumps is now |
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| emerging
in the shape of private sector |
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| powerplants.
It is also planned that a |
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| dedicated
'Customer Service |
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| Department'
will become an effective |
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| part
of sales in the future. The Lahore |
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| sales
office was also renovated with a |
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| new
Corporate Image and Corporate |
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| Colours
that will identify all KSB offices |
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| in
the future. Major orders were |
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| received
from the Karachi Water & |
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| Sewerage
Board for the supply of very |
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|
| high
capacity RDLv pumps for the |
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| Dhabeji
Pumping Stations Phase II |
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| (Rs.81
million) and for 352 KRT |
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| dewatering
pumps for the Ghazi Barotha |
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| Power
Project. A revived focus on Exports |
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| also
saw an increased order intake. |
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| It
is a well known Management doctrine |
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| that
companies of the 21st century have |
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| to
clearly spell out their goals and |
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| missions.
In May this year, a three day |
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| intensive
workshop of senior managers |
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| produced
the first Mission & Values |
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| statement.
These statements are also |
|
| part
of this Annual Report. It is |
|
| encouraging
to note that this is an alive |
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| document
at KSB Pakistan and its |
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| essence
is slowly being assimilated into |
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| the
culture of this Company. |
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| Finally
in these trying times, I would |
|
| like
to thank all the shareholders of |
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| this
Company for the dedication, |
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| commitment
and trust that allowed |
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| us
to take challenging and difficult |
|
| decisions. |
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| Lahore |
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|
Arif Ijaz |
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| October 21, 1998 |
|
Managing Director |
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|
| Auditors'
Report to the Members |
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|
| We
have audited the annexed balance |
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|
| sheet
of KSB Pumps Company Limited as |
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| at
June 30, 1998 and the related profit |
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|
| and
loss account and cash flow |
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|
|
| statement,
together with the notes |
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|
|
| forming
part thereof for the year ended |
|
|
| June
30, 1998 and we state that we have |
|
|
| obtained
all the information and |
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|
|
| explanations
which to the best of our |
|
|
| knowledge
and belief were necessary for |
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|
| the
purpose 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; |
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|
|
|
| (b)
in our opinion |
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|
|
|
|
| (i)
the balance sheet and profit |
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|
|
| and
loss account together with |
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|
| the
notes thereon have been |
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| drawn
up in conformity with |
|
|
| the
Companies Ordinance, |
|
|
| 1984
and are in agreement |
|
|
| with
the books of account 'and |
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|
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| are
further in accordance with |
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|
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| accounting
policies |
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|
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| consistently
applied; |
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|
|
| (ii)
the expenditure incurred |
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| during
the year was for the |
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| purpose
of the company's |
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|
|
| business;
and |
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|
|
| (iii)
the business conducted, |
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| investments
made and the |
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| expenditure
incurred during |
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| the
year were in accordance |
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| 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 |
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| balance
sheet, profit and loss |
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| account
and cash flow statement, |
|
| together
with the notes forming |
|
| part
thereof, give the information |
|
| required
by the Companies |
|
| Ordinance,
1984, in the manner |
|
| so
required and respectively give a |
|
| true
and fair view of the state of |
|
| the
company's affairs as at June 30, |
|
| 1998
and of the profit and cash |
|
| flows
for the year then ended; |
|
|
| (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 the Ordinance and: |
|
|
| without
qualifying our opinion we |
|
| draw
attention to note 11.2 of the |
|
| accounts
which explains the reasons |
|
| for
amortising the cost of Voluntary |
|
| Golden
Handshake Scheme. |
|
|
| Lahore, |
|
A.E Ferguson & Co. |
|
| November
25, 1998 |
|
Chartered Accountants |
|
|
|
| Balance
Sheet as at June 30 |
|
|
|
|
1998 |
1997 |
|
|
Note |
Rupees |
Rupees |
|
|
|
|
| CAPITAL
AND RESERVES |
|
|
|
| SHARE
CAPITAL |
|
|
|
| Authorised |
|
|
|
|
| 15,000,000
ordinary shares of Rs 10 each |
|
150,000,000 |
150,000,000 |
|
