| Pakland Cement Limited |
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| Annual
Report 2000 |
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| CONTENTS |
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| Company
Information |
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| Notice
of Meeting |
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| Report
of the Directors |
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| Auditors'
Report to the Members |
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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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| Statement
of Changes in Equity |
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| Notes
to the Accounts |
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| Pattern
of Holding of Shares |
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| COMPANY
INFORMATION |
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| BOARD
OF DIRECTORS |
Tariq Mohsin Siddiqui |
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|
(Chairman & Chief
Executive) |
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|
Shamim Mushtaq Siddiqui |
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Muhammad Salim Arif |
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Muhammad Aqueel Abbasi |
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Jameel Ahmed Siddiqui |
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|
Sadaf Khan |
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|
M. Afzalullah Siddiqui
(Nominee - NIT) |
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| COMPANY
SECRETARY |
Mohammad Adil |
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| REGISTERED
OFFICE |
Trade Centre, A-14 |
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Block 7/8, KCHS |
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Shahra-e-Faisal |
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Karachi-75350 |
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| FACTORY |
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Deh Dhando, Dhabeji |
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| BANKERS |
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Al Faysal Investment Bank
Limited |
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Allied Bank of Pakistan
Limited |
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ANZ Grindlays Bank |
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Askari Commercial Bank
Limited |
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Citibank N.A. |
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Crescent Investment Bank
Limited |
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Faysal Bank Limited |
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Habib Bank Limited |
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National Bank of Pakistan |
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National Development
Finance Corporation |
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Standard Chartered Bank |
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Union Bank Limited |
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United Bank Limited |
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| AUDITORS |
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Ford, Rhodes, Robson,
Morrow |
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Chartered Accountants |
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Finlay House |
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I. I. Chundrigar Road |
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Karachi |
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S.M. Suhail & Co |
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Chartered Accountants |
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1014, Uni Centre, 10th
Floor |
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I. I. Chundrigar Road |
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Karachi |
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| NOTICE
OF MEETING |
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| Notice
is hereby given that the 21st Annual General Meeting of Pakland Cement
Limited will |
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| be
held at Tipu Sultan Hall, Bangalore Town, Tipu Sultan Road, Karachi on
Tuesday, 27th |
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| February
2001 at 2:00 p.m. to transact the following business: |
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| 1.
To confirm the minutes of the 20th Annual General Meeting held on 15th March
2000. |
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|
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| 2.
To receive and consider the Audited Accounts for the year ended June 30, 2000
and |
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| the
report of the directors and auditors thereon. |
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| 3.
To appoint auditors and to fix their remuneration. |
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| 4.
To transact any other business with the permission of the chair. |
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By Order of the Board |
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| Karachi: |
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|
Mohammad Adil |
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| February
05, 2001 |
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Company Secretary |
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| Notes: |
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| 1.
Share Transfer Books of the company will be closed from 20th February 2001 to
27th |
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| February
2001, both days inclusive. |
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| 2.
Any member of the company entitled to attend and vote may appoint another
member |
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| as
his/her proxy to attend and vote instead of him/her. |
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| 3.
Proxies must be received at the Registered Office of the company at Trade
Centre, |
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| A-14,
Block 7/8, K.C.H.S., Karachi, not less than 48 hours before the time of
holding |
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| the meeting. |
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| 4.
Any individual Beneficial Owner of Central Depository Company, entitled to
vote at this |
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| meeting,
must bring his/her National Identity Card with him/her to prove his/her |
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| identity,
and in case of proxy must enclose an attested copy of his/her National |
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| Identity
Card. Representatives of corporate members should bring the usual |
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| documents
required for such purpose. |
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| 5.
Members are requested to promptly notify the company of any change in their |
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| addresses. |
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| REPORT
OF THE DIRECTORS |
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| FOR
THE YEAR ENDED JUNE 30, 2000 |
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| The
Board of Directors of your company is pleased to present to you this Annual |
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| Report,
together with the audited accounts of your company, for the year ended June |
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| 30, 2000. |
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| Overview
of the Cement Industry |
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| In
the year under review, the trend of increased consumption of cement has |
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| continued.
However lack of infrastructure projects, and a sluggish economy has |
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| contained
the growth rate. Hence only a small improvement in the capacity utilization |
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| ratio
has been witnessed by the industry. |
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| It
is heartening to see that, inspite of stiff competition in the market place
and a |
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| downward
pressure on prices, the retail prices managed to maintain a minimum |
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| bottom
line during the year under review. However, the massive increase in cost of |
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| furnace
oil warrants an immediate upward price revision. |
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| You
would be pleased to know that, Masha Allah, your company, has managed to |
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| increase
its profitability, inspite of sluggish economy, stiff competition and
increasing |
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| cost of inputs. |
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|
| Optimization
& Expansion Projects. |
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| As
informed earlier, the capacity optimization of the existing production line
of our |
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| plant
to 3,000 TPD level has been completed. However, on commissioning, we faced |
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| certain
technical problems, such problems often arise even in most carefully chosen |
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| designs.
The optimization system of your company has been designed by IHI of |
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| Japan,
who are one of the world's leading engineering companies. However |
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| operations
at 3,000 TPD level are unstable and fuel inefficient. While efforts are |
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| being
made to have it corrected by IHI. Pakland, as an alternate measure, has had |
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| the
plant and the optimization, fully appraised by KHD of Germany. KHD have |
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| confirmed
that rectification in design to stabilize the production can be achieved in |
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| 5
- 6 months. Your management is making necessary arrangements to debottleneck |
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| and
stabilize the operations at 3,000 TPD capacity at the earliest. |
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| This
stabilization plan will further enhance the operating results of your
company, |
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| very
substantially. |
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| Operating
Results |
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| The
net sales revenue in the year under review has increased to Rs.860.15 million |
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| compared
to Rs.732.35 million in prior year. Higher sales revenue and other prudent |
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| measures
have resulted in a pre-tax net profit of Rs.31.131 million compared to last |
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| years
Rs.6.4 million. |
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| To
control the inventory carrying costs, production was synchronized with sales. |
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| Production
of cement and clinker in the year under review was 353,999 and 341,267 |
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| tons,
respectively. |
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| Appropriation
of Profit |
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| The
appropriation of the available profit is recommended as under: |
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|
(Rs '000') |
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| Net
profit for the year |
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26,830 |
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| Cumulated
loss brought forward |
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(34,124) |
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| Transfer
to general reserve |
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-- |
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| Accumulated
loss carried forward |
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(7,294) |
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| Future Outlook |
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| With
stabilization of optimization, Line-1 will achieve 3,000 tons per day
production |
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| capacity.
In addition a significant reduction in fuel and energy cost will also be |
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| achieved.
Thus further improving the operating results of your company. |
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|
| Expansion
Project |
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| In
the year under review, your company has continued its strategy of focussing
on |
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| optimization
and its stabilization. Completion status of the expansion project is as |
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| follows. |
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| Civil Works |
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| More
than 85% of civil works have been achieved. In certain areas 100% of |
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| the
civil works have been completed. |
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| Plant
and Equipment |
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| Most
of the imported plant and machinery has arrived and fabrication, |
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| erection
and installation activities will be undertaken in due course. |
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| Investment
in Saadi Cement Limited |
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| Your
company has invested Rs 800 million in the equity of Saadi Cement Limited |
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| which
is establishing a cement plant comprising of two lines capable of |
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| manufacturing
3,600 tons per day of high quality cement using dry process |
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| suspension
pre-heater with pre-calcination technology. |
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| As
informed earlier, the financial arrangements for the completion of Saadi
Line-I |
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| had
been completed. However, NDFC, one of the major financier had failed to fully |
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| disburse
the completion package. As a result the Saadi completion got delayed. Now |
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| Saadi
Cement has once again packaged the funds required for completion and the |
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| project
is now expected to be in production within the current financial year. |
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| Personnel |
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| The
professionalism, dedication and entrepreneurial skills of our team, has been
a |
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| major
contributor to the, efficient operations and consistent superior quality of |
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| product. |
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| Auditors |
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| Messrs
Ford Rhodes, Robson Morrow, Chartered Accountants and Messrs S.M. |
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| Suhail
& Co., Chartered Accountants, retire and offer themselves for
reappointment. |
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|
| Acknowledgments |
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| The
Board of Directors wishes to place on record its thanks to our customers who |
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| patronize
our products and appreciates the vendors and contractors because of |
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| whose
prompt service we have made good progress on our projects. |
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| We
specially thank the financial institutions who have stood by us and extended
their |
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| support
and cooperation in difficult times. |
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| We
are confident of a long-term and mutually beneficial business relationship
with all |
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| our associates. |
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By Order of the Board |
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| Karachi |
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|
Tariq Mohsin Siddiqui |
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| February
05, 2001 |
|
Chairman |
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| AUDITORS'
REPORT TO THE MEMBERS |
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| We
have audited the annexed balance sheet of Pakland Cement Limited as at June
30, |
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| 2000
and the related profit and loss account, cash flow statement and statement of
changes in |
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| equity
together with the notes forming part thereof for the year then ended and we
state that |
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| 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. |
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| It
is the responsibility of the company's management to establish and maintain a
system of |
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| internal
controls, and prepare and present the above said statements in conformity
with the |
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| approved
accounting standards and the requirements of the Companies Ordinance, 1984.
Our |
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| responsibility
is to express an opinion on these statements based on our audit. |
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| We
conducted our audit in accordance with the auditing standards as applicable
in Pakistan. |
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| These
standards require that we plan and perform the audit to obtain reasonable
assurance |
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| about
whether the above said statements are free of any material misstatement. An
audit |
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| 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 |
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| significant
estimates made by management, as well as, evaluating the overall presentation
of |
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| 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; |
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|
|
|
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| (b)
in our opinion; |
|
|
|
|
| (i)
the balance sheet and profit and loss account together with notes thereon
have |
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| 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 except for the change as stated in note |
|
| 2.3
with which we concur; |
|
|
|
|
| (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, cash flow statement and |
|
| statement
of changes in equity together with the notes forming part thereof, conform |
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| 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 |
|
| June
30, 2000 and of the profit, its cash flows and the changes in equity for the
year |
|
| then ended; |
|
|
|
|
|
|
| (d)
in our opinion no zakat was deductible at source under the Zakat and Ushr
Ordinance, |
|
| 1980
(XVIII of 1980); |
|
|
|
|
| (e)
without qualifying our opinion, we draw attention to the following matters: |
|
|
| (i)
for the reasons given in note 6.2 and pending the outcome of the litigation
in |
|
| this
matter, no provision has been made against the diminution in the value of |
|
| Rs.600
million in the shares of Saadi Cement Limited; |
|
|
|
|
|
| (ii)
certain liabilities have been treated as long term on the basis of the
reasons |
|
| given
in note 3 to the accounts; |
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|
|
|
|
|
| (iii)
amounts receivable in respect of other charges paid to KPT Rs.146.087 million |
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| as
shown in note 13.3 and excise duty recoverable Rs.8.995 million, sales tax |
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| receivable
Rs.16.220 million, receivable from a leasing company amounting to |
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| Rs.5.343
million and receivable from KESC Rs.16.353 million as shown in note |
|
| 14.4
to the financial statements are subject to the successful outcome of the |
|
| efforts
being made by the company to recover the same. Pending the outcome |
|
| of
these efforts no provision for the same has been made in these financial |
|
| statements; |
|
|
|
|
| (iv)
amount receivable in respect of insurance claims of Rs. 18.232 million as |
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| shown
in note 14.2 to the accounts are subject to the successful outcome of the |
|
| efforts
being made by the company to recover the same. Pending the outcome |
|
| of
these efforts no provision for the same has been made in these financial |
|
| statements; |
|
|
| (v)
trade debts shown in note 12 include Rs.37 million, which are outstanding for |
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| more
then one year. The company is making efforts to recover the same. |
|
| Pending
the outcome of these efforts no provision for the same has been made |
|
| in
these financial statements; |
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|
|
|
| (vi)
the ultimate outcome of the contingencies disclosed in note 29.1(a), (b), (e)
and |
|
| (g)
to the financial statements, cannot presently be determined and therefore no |
|
| provision
thereof has been made in these financial statements. |
|
|
| Karachi: |
|
S.M. Suhail & Co. |
|
Ford, Rhodes, Robson, Morrow |
|
| February
05, 2001 |
Chartered Accountants |
|
Chartered Accountants |
|
|
|
| ACCOUNTS |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 2000 |
|
|
|
|
|
June 30 |
June 30 |
|
|
|
|
2000 |
1999 |
|
|
|
Note |
Rs.'000' |
Rs.'000' |
|
| NON-CURRENT
ASSETS |
|
|
|
| TANGIBLE
FIXED ASSETS |
|
|
|
| Operating
fixed assets |
|
4 |
532,156 |
584,562 |
|
| Capital
work-in-progress |
|
5 |
3,930,443 |
3,510,459 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
4,462,599 |
4,095,021 |
|
| LONG-TERM
INVESTMENT |
|
6 |
800,000 |
800,000 |
|
| LONG-TERM
LOANS |
|
7 |
599 |
607 |
|
| LONG-TERM
DEPOSITS |
|
8 |
132,901 |
133,398 |
|
| DEFERRED
COSTS |
|
9 |
-- |
556 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores
and spares |
|
10 |
146,488 |
164.04 |
|
| Stock-in-trade |
|
11 |
121,241 |
118,109 |
|
| Trade debts |
|
12 |
75,374 |
56,456 |
|
| Loans
and advances |
|
13 |
316,529 |
319,174 |
|
| Deposits,
prepayments and other receivables |
14 |
93,474 |
76,910 |
|
| Short-term
investments |
|
15 |
1,914 |
1,368 |
|
| Cash
and bank balances |
|
16 |
6,957 |
16,708 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
761,977 |
752,763 |
|
|
|
|
------------------ |
------------------ |
|
| TOTAL
ASSETS |
|
|
6,158,076 |
5,782,345 |
|
|
|
========== |
========== |
|
|
|
|
| EQUITY
AND LIABILITIES |
|
| SHARE
CAPITAL AND RESERVES |
|
| Authorized
capital |
|
| 150,000,000
(1999: 150,000,000) |
|
| ordinary
shares of Rs. 10/- each |
|
1,500,000 |
1,500,000 |
|
|
|
========== |
========== |
|
|
|
|
| Issued,
subscribed and paid-up capital |
17 |
825,000 |
825,000 |
|
| Revenue
reserve |
|
18 |
387,706 |
360,876 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
1,212,706 |
1,185,876 |
|
|
|
|
|
|
| NON-CURRENT
LIABILITIES |
|
| LOANS
FROM DIRECTORS AND OTHERS |
19 |
307,004 |
358,699 |
|
| REDEEMABLE
CAPITAL |
|
20 |
74,634 |
76,871 |
|
| LONG-TERM
LOANS |
|
21 |
1,493,524 |
1,449,359 |
|
| LONG-TERM
DEPOSITS AND RETENTION MONEY |
22 |
35,923 |
36,603 |
|
| OBLIGATIONS
UNDER FINANCE LEASES |
23 |
1,839,008 |
1,633,537 |
|
| IMPORT
BILLS PAYABLE |
|
24 |
63,140 |
42,964 |
|
|
|
|
|
| CURRENT
LIABILITIES |
|
| Short-term loans |
|
25 |
79,715 |
25,540 |
|
| Short-term
finances |
|
26 |
326,365 |
415,837 |
|
| Current
portion of long term liabilities |
27 |
106,845 |
50,000 |
|
| Creditors,
accrued and other liabilities |
28 |
619,212 |
501,121 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
-- |
5,936 |
|
| Income
tax payable |
|
|
1,132,137 |
998,436 |
|
| CONTINGENCIES
AND COMMITMENTS |
29 |
|
|
|
|
|
------------------ |
------------------ |
|
| TOTAL
EQUITY AND LIABILITIES |
|
6,158,076 |
5,782,345 |
|
|
|
========== |
========== |
|
|
|
|
| The
annexed notes form an integral part of these accounts |
|
|
|
Chairman & Chief Executive |
|
Director |
|
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
|
|
June 30 |
June 30 |
|
|
|
2000 |
1999 |
|
|
Note |
Rs.'000' |
Rs.'000' |
|
|
|
|
| NET SALES |
|
30 |
860,147 |
732,359 |
|
| COST
OF SALES |
|
31 |
740,676 |
650,090 |
|
|
|
|
------------------ |
------------------ |
|
| GROSS
PROFIT |
|
|
119,471 |
82,269 |
|
|
|
|
|
|
| General
and administrative expenses |
32 |
35,001 |
35,846 |
|
| Selling
and distribution expenses |
|
33 |
5,396 |
4,526 |
|
| Other charges |
|
34 |
2,206 |
1,534 |
|
| Other income |
|
35 |
(9,616) |
(24,018) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
32,987 |
17,888 |
|
|
------------------ |
------------------ |
|
| OPERATING
PROFIT |
|
|
86,484 |
64,381 |
|
| FINANCIAL
CHARGES |
|
36 |
55,353 |
57,887 |
|
|
|
|
------------------ |
------------------ |
|
| PROFIT
BEFORE TAXATION |
|
|
31,131 |
6,494 |
|
| Taxation |
|
38 |
4,301 |
3,662 |
|
|
|
|
------------------ |
------------------ |
|
| PROFIT
AFTER TAXATION |
|
|
26,830 |
2,832 |
|
| ACCUMULATED
LOSS BROUGHT FORWARD |
|
(34,124) |
(36,956) |
|
|
|
|
------------------ |
------------------ |
|
| ACCUMULATED
LOSS CARRIED FORWARD |
|
(7,294) |
(34,124) |
|
|
|
|
========== |
========== |
|
| EARNINGS
PER SHARE |
|
39 |
0.33 |
0.03 |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Chairman & Chief Executive |
|
Director |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
|
|
|
June 30 |
June 30 |
|
|
|
|
2000 |
1999 |
|
|
|
|
Rs.' 000' |
Rs. '000' |
|
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
|
| Net
profit before taxation |
|
31,131 |
6,494 |
|
|
| Adjustments
for: |
|
| Depreciation |
|
|
52,732 |
58,845 |
|
| Profit
on sale and lease back |
|
|
-- |
(323) |
|
| Provision
for diminution in value of investments |
|
(546) |
(163) |
|
| Gain
on sale of fixed assets |
|
|
(1,919) |
(3,325) |
|
| Financial
charges |
|
|
55,353 |
57,887 |
|
| Liabilities
written back |
|
|
-- |
(10,593) |
|
| Amortization
of deferred cost |
|
|
556 |
558 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
106,176 |
102,886 |
|
|
| Operating
profit before working capital changes |
|
137,307 |
109,380 |
|
|
|
|
|
| Working
capital changes |
|
|
|
| (Increase)
/ decrease in current assets |
|
| Stores
and spares |
|
17,550 |
7,526 |
|
| Stock-in-trade |
|
(3,132) |
49,217 |
|
| Trade debts |
|
(18,918) |
(10,486) |
|
| Loans
and advances |
|
(12,255 |
(1,332) |
|
| Deposits,
prepayments and other receivables |
|
(12,324 |
40,956 |
|
|
|
------------------ |
------------------ |
|
|
|
(29,079 |
85,881 |
|
|
| Increase
/ (decrease) in current Liabilities |
|
| Creditors,
accrued and other liabilities |
|
(10,115) |
108,753</ |
