KSB Pumps Company Limited - Annual Reports

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KSB Pumps Company Limited

Annual Report 2000

Contents

Company Information

DIRECTORS

Dr. Agus Susanto

Chairman

Arif Ijaz

Managing Director

Peter Wurzbacher

Manzurul Haq

R. D. Ahmad

Farooq Hassan

Aezaz Hussain

Anis Wahab Zuberi

(Nominee NIT)

COMPANY SECRETARY

S. Zamanat Abbas

MANAGEMENT

Arif Ijaz

Chief Executive

S. Zamanat Abbas

Finance & Administration

Pervez Iqbal Mughal

Production

Tariq Yar Khan

Sales & Marketing

AUDITORS

A.F. Ferguson & Co.

BANKERS

Standard Chartered Grindlays Bank Ltd.

Credit Agricole Indosuez

ABN Amro Bank N.V.

Deutsche Bank AG

Muslim Commercial Bank Limited

United Bank Limited

LEGAL ADVISORS

Orr Dignam & Co.

Mandviwala & Zafar

Dealers Network

LAHORE

* UPPAL MACHINERY STORES

98-Railway Road, Lahore. Ph: 7657974 Fax: 7662541

* ALI AGENCIES

37-Umer Market, Mcleod/Railway Road, Lahore. Ph: 7650758 - 7665758

KARACHI

ANWAR CORPORATION

Nicol/Frere Road Crossing, P.O. Box No. 4755, Karachi. Ph: 2428411-14

ENGINEERING SALES & SERVICES

Syedna Tahir Saifuddin Road, Off M.A. Jinnah Road, Karachi. Ph: 7731866 - 7731710

RAWALPINDI

HASSAN ENGINEERING

A/754 Taj Mahal Market, Jinnah Road, Rawalpindi. Ph: 555386 Fax: 535386

KHYBER ELECTRIC CO. (PVT) LTD.

43-R/S,Bank Road, Rawalpindi. Ph: 567783-4

MULTAN

SULTAN SONS (PVT) LTD.

Sultan Mansions, Railway Road, Multan. Ph: 548574 - 542501

QUETTA

MARSHALL TRADING CO.

Shahrah-e-Adalat, Quetta. Ph: 842867 - 836913 Fax: 836912

FA1SALABAD

AL-HASEEB CORPORATION

26 Gulistan Market, Railway Road, Faisalabad. Ph: 619454 Fax: 624404

PESHAWAR

GEO PUMPS & ELECTRICAL SERVICES

Sikandar Plaza, Shuba Bazar, Peshawar. Ph: 253119

Notice of Meeting

Notice is hereby given that the 44th annual general meeting of the members

of KSB Pumps Company Limited, will be held at Hotel Avari, Shahrah-e-Quaid-e

Azam, Lahore, on Friday, the 29th June, 2001 at 4.00 p.m. to transact the

following business:

1. To confirm the minutes of the last annual general meeting held on June 27, 2000.

2. To consider and adopt the audited accounts of the Company for the

year ended December 31, 2000 and report of the Auditors and Directors thereon.

3. To approve and declare dividend of 1% of the financial year ended

December 31, 2000 as recommended by the Directors.

4. To appoint auditors and fix their remuneration.

Messrs A.F. Ferguson & CO., Chartered Accountants, the retiring

auditors, being eligible, offer themselves for re-appointment as

auditors of the Company.

NOTES:

1. A member entitled to attend and vote at this meeting is entitled to appoint

another members as proxy. Proxies in order to be effective must be received at

the Registered Office of the Company not later than 48 hours before the time

appointed for the meeting. If a member appoints more than one proxy and

more than one instruments of proxy are deposited by a member with the

Company, all such instruments of proxy shall be rendered invalid. Every proxy

shall have the right to attend, speak and vote in place of the member appointing

him/her at the meeting.

2. To Share Transfer Books of the Company will remain closed from 22nd

June 2001 to 29th June 2001 (both days inclusive). Transfers received in order at

the Registered Office of the Company by the close of business on 21st June,

2001 will be in time to be passed for payment of dividend to the transferees.

3. To CDC account/sub account holders and/or the persons whose securities are

in group account and their registration details are up-loaded as per the

regulations, shall for identification purpose have to produce their original

National Identity Card (NIC) or original passport at the time of attending the meeting.

In case of corporate entity, the Board of Directors' resolution/power of attorney

with specimen signature of the nominee shall be produced at the time of the meeting.

4. Members are required to notify the change of address, if address, if any, immediately.

BY ORDER OF THE BOARD

Lahore,

S. ZAMANAT ABBAS

June 04, 2001

Company Secretary

Directors' Report

The Directors are pleased to present the annual report together with the audited accounts of the Company for the year

ended December 31, 2000.

STATE OF COMPANY'S AFFAIRS

The Management Report on page 8 comments on the business of the Company during the year and has the approval of the directors.

RESULTS FOR THE YEAR

Rupees

Profit for the year before providing for taxation

992,476

Provision for taxation

(769,200)

------------------

Profit after taxation

223,276

Unappropriated profit brought forward

848,082

------------------

Available for appropriation

1,071,358

Appropriated as under:

Transfer from general reserve

200,000

Proposed dividend @ Rs 0.10 per share (1%)

(1,200,000)

------------------

(1,000,000)

------------------

Unappropriated profit carried forward

71,358

==========

MATERIAL CHANGES SINCE THE BALANCE SHEET DATE

There have been no material changes since December 31, 2000 and the Company has not entered into any commitments which would

affect the financial position of the Company at that date.

BOARD OF DIRECTORS

Owing to the resignation of Mr. Nasim Beg, Director, in December, 2000 Mr. Farooq Hassan, was appointed in his place for remainder

of the term. The Board wishes to place on record its warm appreciation for the valuable contribution made by Mr. Nasim Beg during

his tenure as Director.

BUSINESS OF THE COMPANY

The Company's business is that of manufacture and sale of pumps and valves. In addition, castings are manufactured for sale to third parties.

PATTERN OF SHAREHOLDING

The information about the pattern of shareholding appears as an appendix to the accounts on page 31.

HOLDING COMPANY

The holding company is Canadian Kay Pump Limited incorporated in Toronto, Canada. Their particulars appear in note 3 to the accounts.

Auditors

The present auditors, M/s. A.F. Ferguson & Co., being eligible, have offered themselves for re-appointment.

Lahore,

Arif Ijaz

Dr. Agus Susanto

May 15, 2001

Chief Executive

Chairman

Management Report

Herewith, company account for the period under review: year 2000. As

pointed out in the six monthly report of June 2000 gross margin and hence the

profitability of the company came under severe strain.

The general economic scenario of Pakistan needs no further elaboration.

Our main market segments are large-scale manufacturing and govt. sponsored

development sectors. Large scale manufacturing in 2000 exhibited a

negative trend of growth so no significant new order from industry was obtained.

We focused on the growing textile sector but the expanding textile sector where

more spinning and weaving capacity was initiated does not result in pump orders.

Similarly on the government side all key government utilities like Karachi Water

and Sewerage Board, Lahore Development Authority and Rawalpindi

Development Authority were severely strapped for funds. The Public Health

Departments of the provincial governments were also running 50%

under budget resulting in high and mounting receivables.

Given this scenario your company took a lot of measures in the year 2000 to

strategically cut costs. A lot of action plans were initiated starting mid 2000

whose full benefits will be realized in 2001. Some of the significant ones are:

a) Freezing of all increase in salaries and emoluments of all non-unionized

employees for the year 2001.

b) 5 % of voluntarily reduction in the salaries and wages of all non-

unionized employees.

c) Reduction in management and supervisory staff by 10%.

d) Monitoring and lowering material cost through strategic buying (Nayab Project).

e) Reduction in high inventory levels.

f) Massive collection efforts to bring down receivables.

As a result of these measures we were able to post a plus minus zero for the

year 2000. Export was also targeted as a strategic sector. The first quarter of 2001

has seen a very high turnover but sadly the margins in export are again limited

due to massive international competition. Unfortunately we do not foresee any

immediate upturn of the economy and thus the planning for 2001 is also to

somehow keep the Company in the black.

On the positive side KSB Pakistan was the First Company in the KSB GROUP to

be awarded the, "Made by KSB" ownership. This means that all products

exported out of Pakistan now carry the logo, "Made by KSB". Pakistan was

selected from an audit of KSB companies in India, Brazil and China for a

commitment to "Total Quality Management" (TQM). We are also one of

the first overseas Company in the group to successfully implement and run an

integrated ERP IT Systems. In spite of the very trying conditions the employees of

this company took the salary cuts and the downsizing very bravely and we did

not encounter any motivational and administrative problems. I am thankful to

all employees for their valued commitment.

At this stage where dark clouds are still seen on the economic horizon this Company has to

brace itself with very tight controls and lower costs. Fortunately we are very much on the way.

Lahore,

Arif Ijaz

May 15, 2001

Chief Executive

Auditors' Report to the Members

We have audited the annexed balance sheet of KSB Pumps Company Limited as

at December 31, 2000 and the related profit and loss account, cash flow

statement and statement of changes in equity 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.

It is the responsibility of the Company's management to establish and maintain a

system of internal control, and prepare and present the above said statements in

conformity with the approved accounting standards and the requirements of the

Companies Ordinance, 1984. Our responsibility is to express an opinion on

these statements based on our audit.

We conducted our audit in accordance with the auditing standards as applicable

in Pakistan. These standards require that we plan and perform the audit to obtain

reasonable assurance about whether the above said statements are free of any

material misstatement. An audit includes examining, on a test basis, evidence

supporting the amounts and disclosures in the above said statements. An audit

also includes assessing the accounting policies and significant estimates made

by management, as well as, evaluating the overall presentation of the above said

statements. We believe that our audit provides a reasonable basis for our

opinion and, after due verification, we report that:

(a) in our opinion, proper books of account have been kept by the

Company as required by the Companies Ordinance, 1984;

(b) in our opinion:

(i) the balance sheet and profit and loss account together with

the notes thereon have been drawn up in conformity with

the Companies Ordinance, 1984 and are in agreement

with the books of account and are further in accordance with

accounting policies consistently applied.

(ii) the expenditure incurred during the year was for the

purpose of the Company's business; and

(iii) the business conducted, investments made and the

expenditure incurred during the year were in accordance

with the objects of the Company;

the explanations given to us, the balance sheet, profit and loss

account, cash flow statement and statement o changes in equity

together with the notes forming part thereof conform with approved

accounting standards as applicable in Pakistan and 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 December 31, 2000 and of the profit, its cash

flows and changes in equity for the year then ended; and

(d) in our opinion Zakat deductible at source under the Zakat and Ushr

Ordinance, 1980 (XVIII of 1980), was deducted by the Company and

deposited in the Central Zakat Fund established under section 7 of that

Ordinance.

Lahore,

A.F. Ferguson & Co.

May 16, 2001

Chartered Accountants

Balance Sheet as at December 31 2000

December

2000

1999

Note

Rupees

CAPITAL AND RESERVES

SHARE CAPITAL

Authorised

15,000,000 ordinary shares of Rs 10 each

150,000,000

------------------

Issued, subscribed and paid up

120,000,000

GENERAL RESERVES

116,300,000

116,500,000

UNAPPROPRIATED PROFIT

71,358

848,082

------------------

236,371,358

237,348,082

DEFERRED LIABILITIES

Employees' benefits

14,381,051

13,295,431

CURRENT LIABILITIES

Short term running finances-secured

141,053,161

79,158,421

Creditors, accrued and other liabilities

181,712,779

206,115,884

Proposed dividend

1,200,000

12,000,000

------------------

323,965,940

297,274,305

CONTINGENCIES AND COMMITMENTS

------------------

574,718,349

547,917,818

==========

FIXED CAPITAL EXPENDITURE

Operating fixed assets- tangible

67,927,398

77,286,897

Capital work in progress

332,944

592,057

------------------

68,260,342

77,878,954

LONG TERM LOANS AND DEPOSITS

1,176,318

870,617

DEFERRED TAXATION

10,270,000

2,700,000

CURRENT ASSETS

Stores, spares and loose tools

35,336,664

39,490,906

Stock in trade

144,820,757

132,966,437

Trade debts

204,200,992

198,961,999

Loans, advances, deposits, prepayments and other

13,288,469

23,971,826

Income Tax Recoverable

70,991,906

45,368,401

Cash and bank balances

26,372,901

25,708,678

------------------

495,011,689

466,468,247

------------------

574,718,349

547,917,818

==========

The annexed notes form an integral part of these accounts.

Arif Ijaz

Dr. Agus Susanto

Chief Executive

Chairman

Profit and Loss Account for the year ended December 31 2000

Year to

Six months

December

to December

Note

31, 2000

31, 1999

Rupees

Sales

531,835,615

315,980,543

Cost of sales

418,914,085

227,366,925

------------------

Gross profit

112,921,530

88,613,618

Administration, selling and general expenses

107,554,517

54,825,512

------------------

Operating profit

5,367,013

33,788,106

Other income

16,231,537

11,153,438

------------------

21,598,550

44,941,544

------------------

Financial charges

19,827,969

5,863,078

Other charges

778,105

2,860,500

------------------

20,606,074

8,723,578

------------------

Profit before taxation

992,476

36,217,966

Provision for taxation

769,200

8,400,000

------------------

Profit after taxation

223,276

27,817,966

Unappropriated profit brought forward

848,082

30,250

------------------

Available for appropriation

1,071,358

27,848,216

Appropriations

Transfer from/to general reserve

200,000

(15,000,134)

Final dividend @ Rs. 0.10 per share (1999: Rs. 1.00 per share)

(1,200,000)

(12,000,000)

------------------

Unappropriated profit carried forward

71,358

848,082

------------------

Earnings per share

0.019

2.318

==========

The annexed notes form an integral part of these accounts.

Arif Ijaz

Dr. Agus Susanto

Chief Executive

Chairman

Cash Flow Statement for the Year ended December 31 2000

Year to

Six months

December

to December

31, 2000

31, 1999

Note

Rupees

CASH FLOW FROM OPERATING ACTIVITIES

Cash generated from operations

32,320,606

20,748,103

Employees retirement benefits paid

(5,214,069)

(378,026)

Financial charges paid

(18,008,566)

(4,920,162)

Taxes paid

(33,962,705)

(19,786,071)

Net (Increase)/decrease in long term loans and advances

(305,701)

168,695

------------------

Net cash outflow from operating activities

(25,170,435)

(4,167,461)

CASH FLOW FROM INVESTING ACTIVITIES

Fixed capital expenditure

(9,968,664)

(8,722,831)

Sale proceeds of fixed assets

3,814,248

9,500

------------------

Net cash outflow from investing activities

(6,154,416)

(8,713,331)