For business information, annual reports, laws, ordinances, regulations and articles.

	Web Paksearch.com

SIEMENS
ANNUAL REPORT 2003
Board of Directors
Syed Babar Ali, Lahore			Chairman
Sohail Wajahat Siddiqui, Karachi			Managing Director
Tariq Iqbal Khan, Karachi			Director
Joachim Moeller, Erlangen			Director (effective 01 .01 .2003)
Konrad Pernstich, Erlangen			Director
Rolf Schlotfeldt, Munich			Director
Masood Karim Shaikh, Karachi			Director
Tertius Vermeulen, Karachi			Director (until 14.1 1.2002)
Gerhard Wilcke, Karachi			Director
Mohammad Haleem Khan			Company Secretary
Management			Chief Executive Officer
Sohail Wajahat Siddiqui			Chief Financial Officer
Gerhard Wilcke			Information & Communication
Parvez Iftikhar			Power Transmission & Distribution
Mohammad llyas			Industrial Solutions & Power Generation
Nasim A. Siddiqui			Automation & Drives
Sohail Wajahat Siddiqui
Medical Solutions, Transportation
Systems & Solar
Bankers
ABN Amro Bank
American Express Bank Limited
Citibank NA
Deutsche Bank AG
Habib Bank Limited
Hongkong & Shanghai Banking Corporation Limited
Mashreq Bank psc
Meezan Bank Limited
Muslim Commercial Bank Limited
Standard Chartered Bank
Union Bank Limited
Auditors
Taseer Hadi Khalid & Company, Karachi
Registered Office
B-72, Estate Avenue, Sindh Industrial Trading Estates
Karachi-75700
Dear,ShareHolders
I am pleased to present the Directors' Report and the audited financial statements for the year ended
September 30, 2003 along with the Auditors' Report.
Compliance with the Code of Corporate governence.
The Board of Directors of your Company remained actively engaged during the year in performing its
duties under the Code of Corporate Governance. The Statement of Compliance with the Best Practices
of Corporate Governance is annexed to this report.
Change in the Board
Mr. Konrad Pernstich resigned on December 31, 2002 and the vacancy has been filled by Mr. Joachim
Moeller.   The Board appreciates the valuable services rendered by Mr. Pernstich and welcomes Mr.
Moeller.
The term of office of present directors will expire in December, 2003. The election is scheduled on
December 1, 2003.
Audit Committee
The Board has constituted an Audit Committee with specific terms of reference comprising the
following:
Mr. Masood Karim Shaikh, Chairman     (Non-executive director)
Mr. Tariq Iqbal Khan,         Member        (Non-executive director)
Mr. Rolf Schlotfeldt,           Member       (Non-executive director)
Mr. M. Haleem Khan          Secretary       (Company Secretary)
The Audit Committee reviewed the quarterly, half yearly and yearly financial statements, the internal
audit plan, material audit findings and recommendations of the Internal Auditor. The minutes of the
Audit Committee Meetings were circulated to all members, Directors and the CFO within a fortnight.
The Committee also discussed with the External Auditors of the Company the major issues and their
observations contained in their letter to the Management. Internal Audit Reports have been provided
to the External Auditors for their review.
Corporate and Finance Reporing Fund
•   The financial statements prepared by the management of the Company present fairly its state of
affairs, the result of its operations, cash flows and changes in equity.
•   Proper books of account of the Company have been maintained.
•   Accounting policies have been consistently applied in preparation of financial statements and
accounting estimates are based on reasonable and prudent judgement.
•   Approved International Accounting Standards, as applicable in Pakistan, have been followed in
preparation of financial statements and there were no departures there from.
•   The system of internal control has been designed to manage the various risks being faced by the
company and is being continuously reviewed by the management and internal audit for further
improvements thereon.  The process of review will continue and any weakness in controls will be
removed.
•   There are no doubts upon the Company's ability to continue as a going concern.
•   There has been no departure from the best practices of corporate governance as detailed in the
listing regulations of the stock exchanges of Pakistan.
•   Key operating and financial data for the last six years is shown on page 1
•   Outstanding taxes and levies, if any, are given in Note to the audited financial statements.
•   The value of investments based on respective un-audited accounts of funds are as follows:
Provident Fund as on June 30, 2003             Rs. 321. 647 million
Gratuity Fund as on September 30, 2003     Rs.204.463 million
The audit of accounts of these funds is currently in progress.
•   During the last business year five meetings of the Board of Directors were held.
Attendance by each Director is as follows:
Name of Director			No. of Meetings	No. of Meetings
			attended	required to attend
Syed Babar Ali			4	5
Tariq Iqbal Khan			3	5
Rolf Schlotfeldt			1	5
Masood Karim Shaikh			3	5
Joachim Moeller			0	3
Sohail Wajahat Siddiqui			5	5
Gerhard Wilcke			3	4
Konrad Pernstich			1	2
Tertius Vermeulen			2	2
•   No trade in the shares of the Company were carried out by the Directors, CEO, CFO,
Company Secretary, Executives and their spouses and minor children.
Financial Statements
The financial statements of the Company have been duly audited and approved without qualification
by the auditors of the Company, Taseer Hadi Khalid & Company and their report is attached with the
financial statements.
No material changes and commitments affecting the financial position of your Company have occurred
between the end of the financial year to which this Balance Sheet relates and the date of the Directors'
Report.
Appropriations
Your directors propose to appropriate the net income of the Company as under:
					(Rupees in '000)
Net profit after taxation for the year					349,971
Unappropriated profit brought forward					550
Available for appropriation					350,521
Appropriations
Transfer to asset replacement reserve					100,000
Transfer to revenue reserve - general					48,000
Interim dividend paid    @ 130%					101,005
Proposed final dividend @ 130%					101,005                                                    \ (350,010)                                                  ;
Unappropriated profit carried forward					511
During the year under review the economy of Pakistan grew steadily and all the macro economic
indicators point to a positive trend. Growth in exports, increase in foreign exchange reserves and check
on inflation with steady reduction in interest rates provided ample reasons for increased investments
in the industrial sector. The investments in the infrastructure of the country, particularly in the
electricity generation and distribution systems, remained below the needed level due to intended
privatization of the power utilities. The oil and gas sector continued to grow at a faster rate along with
Information and Communication sector. Thanks to our diversified portfolio we were able to increase
our business volume in the growing sectors.
New Orders increased by 23% over the last year. The major inflow is in the power and distribution
transformers from local utilities as well as from overseas customers besides large orders in the
Information & Communication field.
Sales increased by 20% to which the main contribution was from Information & Communication,
Industrial Solutions, particularly in the oil and gas installation projects and from supplies of
transformers.
Gross profit however declined to 17% compared to 21% achieved last year. An extraordinary
appreciation of Euro in relation to Pak Rupee resulted in increased cost of inputs originating from
Europe which could not be passed on to the local market in which our competition is mainly with US
Dollar denominated inputs. The worst hit was our business of Rotating Machines, i.e. Motors and
Generating Sets which suffered heavy erosion of margins. Alternative sources are being explored to
offset the negative impact of rising Euro.
Profit before tax increased in absolute terms on account of increased sales but qualitatively remained
at the last year's level. The negative effect of the qualitative reduction of gross profit was offset by
reduction of selling and administration expenses from 10% last year to 8.7%, by higher commission
income and by higher financial income due to exchange gain as against exchange losses incurred in the
last year.
Profit after tax decreased by 10% compared to last year as the tax charge based on presumptive tax
regime on contracts revenue is higher this year.
Orders in hand at the end of the year are considered satisfactory.
Capital investments of Rs.103 million were made for modernization and replacements to keep our
infrastructure at the required standard.
Our contribution to the Exchequer as duties and taxes amounted to Rs.954 million.
The Executive Management Committee comprises of the following:
•   CEO
•   CFO
•   Heads of Operational Divisions
This committee, which meets regularly, reviews the result of its operations, formulates strategic plans
of marketing, production and investments, finalize annual and seasonal budgets and takes corrective
Human Resource
Sustainable success is our first priority. Through introduction of Siemens Leadership Framework we
strive to achieve outstanding results for achieving business excellence. We measure our performance
not only in terms of financial results but also focus on improving our processes, increasing customer
satisfaction and employee motivation. This enables a more balanced evaluation of our management's
performance. We believe that these measures are central to ensuring our long term success.
As a global network of innovation we provide hi tech products and solutions. We invest in our
and views the vocational training, continuing education, development, safety and health of its
employees as high priorities.
The company supports educational initiatives, promotes sports and cultural events and provides help
medals to the best students in recognition of their academic achievements in the field of engineering.
We organize regular visits of students from engineering and technical institutions and employees of
our large customers to our manufacturing complex. Such visits are part of the curriculum of many of
the institutions.
Siemens has a well established apprentice training center where young men are exposed to latest
technology and trained for the industry. The three year course imparts knowledge in electrical and
mechanical trades during which period the apprentices get stipend paid by the company. The trained
apprentices are much sought after not only by the local engineering industry but also by this sector in
the region.
Siemens has a policy of helping institutions which work for collective benefit to the society. Citizen
Police Liaison Committee is among many such institutions which received our help in the shape of
equipment. We also sponsored inter-school cricket tournament and provided cricket kits to the
winners for promotion of the game and to encourage budding talents from various schools.
The environmental compatibility of the company's production processes, products and solutions are
are the responsibility of every corporate citizen.
We monitor regularly the waste water effluent discharged through our production processes,
washrooms and canteen areas to ensure adherence to the National Environmental Quality Standards
of the Government of Pakistan.
All the fire extinguishers have been converted to dry chemical powder from BCF Halon Gas which was
contributing to depletion of ozone layer.
All metallic and oil waste out of our production processes is disposed of for recycling.
The Management places on record its deep appreciation and sincere thanks to the Board of Directors
whose whole-hearted support and guidance on key issues of business were among the key factors of
our achievements. We also acknowledge with thanks the efforts and contribution made by our
Managers, Officers and workers in achieving the results in a challenging and competitive environment.
The short and medium term outlook largely depends on the continuation of the economic and fiscal
policies of the government. There is a back log of the much needed infrastructure development in
power, water, transportation, communication and public health sectors and we are ready to play our
part in those projects of vital importance to the country.
Sales               Rs. 1,098 million    +40%
New Order     Rs. 1,166 million    +39%
Locally Manufactured Products and			Services
INFORMATION & COMMUNICATION:			A Containers for switching Systems Telephone
			sets
Services			A Digital Microwave Radio System
			A SDH Optic Fibre Transmission equipment
A Installation and Commissioning Supervision of			A Rectifier panels for telephone exchanges
Public digital exchanges (EWSD) and Mobile			A Outdoor telephone distribution cabinets and boxes
Switching Centers (D 900).
A Operation and maintenance support providing			•POWER TRANSMISSION & DISTRIBUTION: |
round the clock technical assistance for EWSD
and D 900 Switching Systems.			Services
A Expert services for SDH and Digital Microwave
Radio equipment.			A Center of Competence for Network Planning
A Training center for Switching and Transmission			A Upgrading   and   Retrofitting   of   Electrical
networks for Siemens and customers.			Installations
A Installation   &   Commissioning   of  Internet			A Maintenance and Spare Parts
Services.			A Customer Training
A Installation and Commissioning of Voice Mail			A Network Analysis and Consultancy
System.			A Engineering for System Protection
			A Asset Management, Operation and Integrated
Products			Service Contracts
			A System Studies
Manufacturing is carried out at Siemens joint
ventures Telephone Industries of Pakistan (Pvt.)			Products
Ltd.,   (TIP),   Haripur   and   Carrier   Telephone
Industries (Pvt.) Ltd.,  (CTI), Islamabad. Both			Transformers
factories also carry out majority of equipment			A Distribution transformers
repair locally. Following products are produced			A Power transformers upto 145 kV/60 MVA
locally:			A llkV Auto transformers with OLTC for use as
A Digital Switching System EWSD			Voltage Stabilizers
A Analog Telephone Sets			A Rectifier transformers
Sales                Rs. 182 million     -   8%
New Orders     Rs.1 64 million     -35%
Medical Solutions	are at CMH Rawalpindi, Ziauddin Hospital Karachi
Notice of Meeting
Notice is hereby given that the Fifty-first Annual General Meeting of the shareholders of Siemens
(Pakistan) Engineering Company Limited will be held on Wednesday, December 31,   2003 at B-72,
Estate Avenue, S.I.T.E., Karachi at 9:00 a.m. to transact the following business:
Ordinary Business
1.     To confirm the Minutes of the Extra-Ordinary General Meeting of the shareholders of the
Company held on December 1, 2003.
2.     To receive and adopt the audited financial statements for the year ended September 30, 2003 and
reports of the directors and auditors thereon.
3.     To declare the dividend.
4.     To appoint auditors and to fix their remuneration.
5.     To transact such other ordinary business as may be placed before the meeting with the permision
of the Chair.
Special Business
6.   To approve the holding of office of profit as Chief Financial Officer by Mr. Gerhard Wilcke, the
Director of the Company
By order of the Board
M. Haleem Khan
Notes:
1.    The Share Transfer Books of the Company will remain closed from December 23, 2003 to
January 1, 2004 (both days inclusive).
2.   A member entitled to attend and vote at this meeting may appoint another member as his/her proxy
to attend and vote on his/her behalf. Proxy forms in order to be valid must be received at the
Registered Office of the Company not less than 48 hours before the time of meeting. A member
shall not be entitled to appoint more than one proxy. A proxy must be a member.
3.   CDC account holders will further have to follow the under mentioned guidelines as laid down in
Circular No.l dated January 26, 2000 issued by the Securities and Exchange Commission of
Pakistan.
i)   In case of individuals, the account holder or sub-account holder and/or the person, whose
securities are in group account and their registration details are uploaded as per the
Regulations, shall authenticate his/her identity by showing his/her original National Identity
Card (NIC) or original passport at the time of attending the meeting.
The shareholders registered on CDS are also requested to bring their particulars, I.D. numbers
and account numbers in CDS.
ii)  In case of a corporate entity the Board of Directors' resolution/Power of Attorney with specimen
signature of the nominee shall be produced (unless it has been provided earlier) at the time of
meeting.
4.   The statement in regard to special business is enclosed for the members.
Low Voltage Motors			A Turnkey operation and maintenance contracts
A 3-phase squirrel cage induction types motors			A Genuine back up spare parts inventory
for horizontal and vertical applications, 1HP to			A Installation, Testing and Commissioning
500HP, 2, 4 & 6 poles
A 3-phase squirrel cage induction motors for			MEDICAL SOLUTIONS, TRANSPORTATION
horizontal   and vertical applications in energy			SYSTEMS & SOLAR:
saving design with    elegant surface finish, 1HP
to 25HP, 2, 4 & 6 poles			Rail Transportation
A 3-phase vertical hollow shaft motors for deep			A Complete design and manufacture of system
well turbine pumps, 7.5HP to 250HP, 2, 4 & 6			and power supply Racks for Auto Block,
poles			Tokenless and Track Circuiting Systems.
A Single   phase   motors   for   domestic   and			A Completely wired Track Cabinets, Control and
industrial applications			Indication Panels, and Assembly of Signal
A Fan motors for Air Conditioners			Groups.
A Special Motors
* Pole changing Motors			Medical Solutions
* Brake Motors
* Geared Motors			Services
* Explosion proof Motors			We offer economical and complete solution to
* Motors for textile applications			customers for execution of projects on turnkey
			basis,    project    management,    inclusive    of
Service and Repair			engineering, construction, supplies, installation,
A Pre and post purchase consultancy services for			commissioning, customer training and long term
power solutions			maintenance.
A Maintenance, Repairs and Overhauls with full
backup support
14.   The Board has arranged orientation courses for its directors to apprise them of their duties and
responsibilities.
15.   The Head of Internal Audit has access to the Chairman of the Audit Committee.
16.   The CFO and the Company Secretary are qualified to hold their offices.
17.   The Company Secretary attends the Board Meetings of the Company.
18.   The Company publishes its quarterly unaudited financial statements along with the Directors'
Review.
19.   The statutory auditors carried out limited scope review of the half yearly financial statements of
the Company.
20.   The Annual Reports including the financial statements are circulated within three months of the
close of the Company's financial year.
21.   All material information as required under the relevant rules has been provided to the stock
exchanges and to the Security & Exchange Commission of Pakistan within the prescribed time
limit.
22.   All quarterly, half yearly and annual financial statements presented to the Board for approval were
duly signed by the CEO and the CFO before presenting to Board for its approval.
23.   The directors, CEO, CFO and executives do not hold any interest in the shares of the Company
other than that disclosed in the pattern of shareholding.
24.   The directors' report has been prepared in compliance with the requirements of the Code and
Section 236 of the Companies Ordinance 1984 and fully describes the salient matters required to
be disclosed.
25.   The Company has complied with all the corporate and financial reporting requirements of the
Code.
26.   The Board has formed an audit committee. It comprises of three members, all of whom are non-
executive directors.
27.   The meetings of the audit committee were held at least once every quarter prior to approval of
interim and final results of the Company and as required by the Code. The terms of reference of
the committee have been formed and advised to the committee for compliance.
28.   The Company has an internal audit function in place. The function is managed by suitably
qualified and experienced staff. The internal audit activities are further supplemented by financial
audit carried out by regional audit team.
29.   The statutory auditors of the Company have confirmed that they have been given a satisfactory
rating under the quality control review programme of the Institute of Chartered Accountants of
Pakistan, that they or any of the partners of the firm, their spouses and minor children do not hold
shares of the Company and that the firm and all its partners are in compliance with International
Federation of Accountants (IFAC) guidelines on code of ethics as adopted by Institute of Chartered
Accountants of Pakistan.
30.   The statutory auditors or the persons associated with them have not been appointed to provide
other services except in accordance with the listing regulations and the auditors have confirmed
that they have observed IFAC guidelines in this regard.
Statement of Compliance with the best practices of Code of Corporate Governance
1 . The Board comprises seven directors, including the CEO and the CFO who are the only executive
directors. The Company encourages representation of independent non-executive directors.
There are three independent non-executive directors, one of whom is the Chairman and two
represent the National Investment Trust Limited (NIT).
2. All the directors have given declaration that they were aware of their duties and powers under
the relevant laws and the Company's Memorandum and Articles of Association and the listing
regulations of the stock exchanges of Pakistan.
3. The directors have confirmed that none of the directors of the Company (except for one
representing NIT who has been exempt from the restriction) is serving as a director in ten or
more other listed companies.
4. All the resident directors of the Company are registered taxpayers and none of them has
defaulted in payment of any dues to any banking company, a DPI or NBFI.
5. None of the directors or their spouses is engaged in business of stock brokerage.
6. The Company elects its directors every three years. During the year there was one casual
vacancy which was filled by the directors within 30 days.
7. The Company has adopted a Statement of Ethics & Business Practices which has been signed by
all the directors and employees of the Company.
8. The Board of Directors has issued a Vision and Mission Statement. All significant policies of the
Company have been incorporated in the Company's Code of Corporate Governance. The level of
materiality for the business has been defined by the Board.
9. All the powers of the Board have been duly exercised and decisions on material transactions