FAUJI CEMENT COMPANY LIMITED

Annual Reports 2003

Contents

Company Information at a Glance

Vision and Mission Statement

Notice of the Eleventh Annual General Meeting

Report of the Directors

Statement of Compliance

Auditors' Report

Balance Sheet

Profit and Loss Account

Cash Flow Statement

Statement of Changes in Equity

Notes to the Accounts

Pattern of Shareholdings as on 30 June 2003

Company Information

Board of Directors

Lt Gen (Retd) Syed Muhammad Amjad, HI, HI (M)

Chairman

Maj Gen (Retd) Rehmat Khan, HI (M)

Chief Executive /MD

Brig (Retd) Ghulam Hussain, SI (M)

Director

Mr. Qaiser Javed

Director

Mr. Riyaz H. Bokhari, IFU

Director

Mr. Erling Frandsen, F.L. Smidth & Co

Director

Mr. Muhammad Raza Mirza, CDC

Director

Brig (Retd) Aftab Ahmad, SI (M)

Director

Brig (Retd) Arshad Shah, SI (M)

Director

Company Secretary:

Brig (Retd) Allah Ditta, SI (M)

House No. 8, Street No. 30,

Sector F-7/1, Islamabad

Tel: (051) 9221690

Fax: (051) 9221693

Audit and Finance Committee:

Mr. Qaiser Javed, President

Mr. Muhammad Raza Mirza, Member

Brig (Retd) Aftab Ahmad, SI (M), Member

Brig (Retd) Arshad Shah, SI (M), Member

Registered Office and

M-40-1, 1st Floor, Hotel Pakland,

Marketing/Sales Department:

Bank Road, Saddar, Rawalpindi - Pakistan

Tel: (051) 5528960-63

Fax: (051) 5528965-66

Factory:

Near Village Jhang, Tehsil Fatehjang

District: Attock

Tel: 0596-538047-48, 538138, 538148 - 49

Fax: 0596-538025

Auditors:

M/sTaseerHadiKhalid&Co,

Chartered Accountants

Fax: (051) 2822671

Legal Advisors:

M/s Orr Dignam & Co, Advocates

Fax: (051) 2260653

Farooq Law Associates, Advocates & Attorneys

Fax: (051) 2272643

Registration &

Mr. Aftab Muhammad Hafeez,

Shares Transfer Officer

Shares Manager

House No. 8, Street No. 30,

Sector F-7/1, Islamabad

Tel: (051) 9221695

Fax: (051) 9221693

Vision Statement

To turn around the Company with a view to making it a

profitable concern through its life while contributing to

National Development and benefiting all stake-holders,

inclusive of employees, in an optimal manner.

Mission Statement

Achieve profitability as soon as possible but not later than 30

September 2004; and maintain it thereafter.

Notice of the Eleventh Annual General Meeting

All Shareholders of the Company.

M/s Taseer Hadi Khalid & Co, Auditors of the Company.

Notice is hereby given that pursuant to extension of 43 days granted by SECP and the Stock Exchanges for

holding of AGM 2003 and circulation of Annual Accounts 2002-2003, the Eleventh Annual General Meeting

of the Company will be held at 09:30 AM. on Monday, 08 December 2003 at Hotel Pearl Continental, The

Mall, Rawalpindi, to transact the following business:-

1.     To confirm the minutes of Tenth Annual General Meeting.

2.     To receive, consider and adopt the audited accounts of the Company with the Auditors' Report

for the year ended 30 June 2003.

3.     To consider and approve the Directors' Report for the year ended 30 June 2003.

4.     To appoint auditors of the Company and to fix their remuneration.

5.    Increase in number of Directors from 9 to 10:-

a.     Fauji Cement Company Limited has presently got total of 9 Directors out of whom six are

elected by share-holders under section 178 and three are nominated by creditors / special

interest parties under section 182 of Companies Ordinance 1984.

b.     With the issue of Companies (amendment) Ordinance 2002, it has been made mandatory

for the listed Companies to have not less than seven directors elected by the shareholders.

Accordingly the Board of Directors in the 43rd Meeting of the Board, have decided to increase

the number of Directors from 9 to 10 (Ten); out of whom seven will be elected directors.

c.     Approval of Shareholders is required.

6.    To elect Directors of the Company for a period of three years, as stipulated vide section 178 of

the Companies Ordinance, 1984, in that:-

a.    Pursuant to section 178 (2) (b), of the Companies Ordinance 1984, names of the retiring

Directors are:-

(1)   Lt Gen (Retd) Syed Muhammad Amjad. HI, HI (M)

(2)   Maj Gen (Retd) Rehmat Khan, HI (M)

(3)   Brig (Retd) Ghulam Hussain, SI (M)

(4)   Mr. Qaiserjaved

(5)   Brig (Retd) Aftab Ahmad, SI (M)

(6)   Brig (Retd) Arshad Shah, SI (M)

b.    Pursuant to sections 174,178 (3) and 178 (4) of the Companies Ordinance 1984, following

persons have indicated their intention to offer themselves for election as Directors:-

(1)   Lt Gen (Retd) Syed Muhammad Amjad, HI, HI (M)

(2)   Maj Gen (Retd) Rehmat Khan, HI (M)

(3)   Brig (Retd) Ghulam Hussain, SI (M)

(4)   Mr. Qaiser Javed

(5)   Brig (Retd) Aftab Ahmad, SI (M)

(6)   Brig (Retd) Arshad Shah, SI (M)

(7)   Brig (Retd) GhazanfarAli, SI (M)

7.   Any other business with the permission of the Chair.

By order of the Board

Place:   Rawalpindi                                                                               Brig (Retd) Allah Ditta, SI (M)

Date:    13 November 2003                                                                                  Company Secretary

NOTES:

1.     The Share Transfer Books of the Company will remain closed from 01 December 2003 to 09 December 2003 (both

days inclusive). No transfer will be accepted for registration during this period.

2.     A member entitled to attend and vote at the Annual General Meeting may appoint a proxy to attend and vote in place

of the member. Proxies, in order to be effective, must be received at the Registered Office located at M-40-1,1st Floor,

Hotel Pakland, Bank Road, Saddar, Rawalpindi, duly stamped and sigogd, not less than 48 hours before the Meeting. A

member may not appoint more than one proxy. Proxy Form is placed in the Annual Report.

3.       CDC Account Holders will further have to follow the under mentioned guidelines as laid down by the Securities &

Exchange Commission of Pakistan:-

(A)     For attending the Meeting

(1)    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 or original passport at the time of attending the

meeting.

(2)    In case of corporate entity, the Board of Directors' Resolution/ Power of Attorney with specimen signature

of the nominee shall be produced at the meeting.

(B)     For appointing proxies

(1)    In case of individuals, the account holder or sub-account holder and/or the persons whose securities are

in group account and their registration details are uploaded as per the Regulations, shall submit the Proxy

Form of another member as per the above requirement.

(2)    The Proxy Form shall be witnessed by two persons whose names, addresses and NIC numbers shall be

mentioned on the Form.

(3)    Attested copies of NIC or the passport of the beneficial owners and the proxy shall be furnished with the

Proxy Form.

(4)    The Proxy shall produce his/her original NIC or original passport at the time of meeting.

(5)    In case of corporate entity, the Board of Directors' Resolution/along with Power of Attorney with specimen

signature shall be submitted, Proxy From to the Company.

4.      Members are requested to promptly notify any change in their address.

5.      For any other information, contact Ph: 051-9221690, Fax No: 051-9221693, E-mail: fcdsecy@isd.wol.net.pk and

Web Site: http://www.fccl.com.pk

General

1.    The Directors are pleased to present their Eleventh Annual Report along with Company's audited

accounts for the financial year ended 30 June    2003 and Auditors' Report thereon.

Market Overview

2.     Cement industry in Pakistan is still underutilized at 67.29% of its rated capacity (which is 16.925 million

tons per year). However the capacity utilization in year 2002-2003 has increased by 6.41% which signals

a positive trend for the future. It is encouraging to note that besides negative indicators like low per capita

consumption, slow pace of development and instability of prices for most of the year, Fauji Cement has

shown good resilience.

3.     During the period of intense competition (November 2002 to May 2003), with the limitation of Not

having converted to Coal / Gas, Fauji Cement was at a disadvantage of using high cost Furnace Oil while

its competitors enjoyed a significant edge in the production cost due to use of 100% coal. Despite this, we

have been able to maintain reasonable market share with considerable increase in capacity utilization even

though we continued to charge the premium price:-

Particulars

2002-2003

2001-2002

Difference

Domestic Sales (tons)

616,620.74

582,644.50

5.83%

Exports (tons)

26,150.00

15,205.00

71.98%

Total Despatches

642,770.74

597,849.50

7.51%

Capacity Utilization

68.0296

63.26%

4.76

Market Share (North Zone)

7.06%

7.83%

-0.77

Export Share

6.07%

14.26%

-8.19

Net Sales (Rs. 000)

1,510,738,009

1,586,605,728

-4.78%

Operating Profit (Rs. 000)

122,212,790

317,023,389

-61.45%

~4~ During the FY 2003-2004 growth is expected to rise due not only to decrease in excise duty by 25%

but also various other incentives for construction industry and other government projects as already

announced in Federal and Provincial Budgets. Additional factors like growth in road infrastructure and

acceleration of development in Afghanistan shall also expand capacity utilization. Therefore, under projected

market environments we are well poised to expand our domestic sales as well as exports.

Production Aspects

5. Performance of the plant remained satisfactory with an overall efficiency exceeding 100 percent.

Efficiency in terms of fuel, power and raw material consumption at our plant is still among the best, while

our labour cost is one of the lowest in the cement industry. Due to suppressed demand for cement, plant

operations had to be curtailed. Comparative production figures are as under:-

2002-2003

2001-2002

a.          Clinker                             (tons)      =

583,796.00

582,956.00