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Pakistan National Shipping Corporation
Annual Report 2000
CONTENTS
MANAGEMENT, AUDITORS AND BANKERS
NOTICE OF MEETING
REPORT OF THE BOARD OF DIRECTORS
AUDITORS' REPORT
BALANCE SHEET
PROFIT AND LOSS ACCOUNT
STATEMENT OF CHANGES IN EQUITY
CASH FLOW STATEMENT
NOTES TO THE ACCOUNTS
PATTERN OF SHAREHOLDING
CONSOLIDATED REPORT AND ACCOUNTS OF PAKISTAN NATIONAL
SHIPPING CORPORATION AND ITS SUBSIDIARY COMPANY
STATEMENT UNDER SECTION 237 OF THE COMPANIES ORDINANCE 1984 
AUDITORS' REPORT
BALANCE SHEET
PROFIT & LOSS ACCOUNT
STATEMENT OF CHANGES IN EQUITY
CASH FLOW STATEMENT
NOTES TO THE ACCOUNTS
SHAREHOLDERS STATISTICS
MANAGEMENT, AUDITORS
AND BANKERS
Board Vice Admiral S. Tauquir H. Naqvi
HI(M), S.Bt
Chairman
Rear Admiral G.Z. Malik
Member
Mr. M. Abdullah Yusuf
Member
Dr. Zafar Altar
Member
Mr. S. Samsamul Haque
Member
Mr. Jahangir Siddiqui
Shareholder Director
Member
Mr. Muhammad Khusrow Khowaja
Shareholder Director
Member
Secretary Mr. Arif Saeed
Registered Office PNSC Building, Moulvi Tamizuddin Khan Road, Karachi-74000
Auditors A.E Ferguson & Co.
Chartered Accountants
Taseer Hadi Khalid & Co.
Chartered Accountants
Bankers National Bank of Pakistan
Habib Bank Limited
Muslim Commercial Bank Limited
United Bank Limited
Industrial Development Bank of Pakistan
NOTICE OF MEETING
Notice is hereby given that the 22nd Annual General Meeting of the shareholders of the Pakistan
National Shipping Corporation will be held at Navy Welfare Centre (Pakistan Navy Fleet Club)
near Lucky Star Hotel, Saddar, Karachi, on Wednesday the 28th February, 2001 at 11:30 a.m. to
transact the following business:
1. To confirm the Minutes of the 21 st Annual General Meeting of the Shareholders of PNSC
held on 25th January, 2000.
2. To consider and adopt the Balance Sheet, the Profit and Loss Account and the Reports of
Auditors and Directors for the year ended 30th June, 2000.
3. To appoint auditors for the year 2000-2001 and to fix their remuneration.
4. To do any other business that may be placed before the meeting with the permission of the
Chairman.
By Order of the Board
Dated: 1st February, 2001 ARIF SAEED
Secretary
Note:
1. A Shareholder entitled to attend and vote at this meeting is also entitled to appoint his/her
proxy to attend the meeting.
2. Proxy must be received at the Registered Office of the Corporation not less than 48 hours
before the time for holding the meeting.
3. Shareholders who have deposited their shares into Central Depository Company of
Pakistan Limited, are advised to bring their National 'Identity Card along with CDC
account numbers at the meeting. However, if any proxy is granted by such shareholder, the
same must also be accompanied with attested copy of the National Identity Card of the
grantor, and the signature on the proxy form should be the same as appearing on the
National Identity Card,
4. Shareholders are requested to notify any change in their address immediately.
5. The share transfer books of the Corporation will remain closed from 19th February to 28th
February, 2001 (both days inclusive).
The Board of Directors of Pakistan National Shipping Corporation is pleased to present the
twenty-second Annual Report together with the Audited Accounts of the Corporation for the year
ended 30 June 2000.
The year 1999 - 2000 was an extremely difficult year for the maritime trade in particular and
business in general. One significant factor alone that contributed to the operating loss of Rs 298.966
million suffered by the Corporation was the unprecedented increase in the international prices of oil
which almost doubled as compared to the previous year's prices. The annual expenditure on
purchase of bunkers during the year under reference thus soared to Rs 606.032 million as against
an expenditure of Rs 319.033 million under this head during the previous year. The situation was
further compounded by uncertainty, recession and financial crisis which persisted during the whole
of the year, and also by the ageing fleet,' low freight rates, non-availability of specialised carriers and
continuous depreciation in the value of Pak Rupee.
Despite the said unfavourable circumstances, your Corporation lifted 3.951 million freight
tons of cargo during the year as compared to 3.271 million freight tons last year.
As stated, due to the depressed freight rates and higher operational expenses, PNSC suffered
an operating loss of Rs.298.966 million as against the operating profit of Rs. 158.269 million last
year.
BORROWINGS
The Corporation did not contract any long-term loan during the year under review.
COMMERCIAL OPERATIONS
During the year under review, the Corporation performed a total of 533 voyages (including
.foreign chartered vessels) and lifted 3.951 million freight tons of cargo as compared to 449 voyages
and 3.271 million freight tons respectively in the previous year. Taking advantage of large volume
of crude oil imports in the country, PNSC continued lifting this commodity as in the previous year
by chartering foreign flag vessels and lifted 2.271 million tons of crude oil compared to 1.580
million tons during the preceding year. Although, the government restored First Right of Refusal to
PNSC in January 2000, PNSC could not lift iron ore and coal during the year under review, because
of non-workable freight rates. The Corporation earned a total freight revenue of Rs 3,540 million
during the year as against RS 3,711 million in the previous year, registering a decrease of 4.6 percent.
The sector-wise cargo liftings were as under:
SECTOR 1999-2000 1998-99
FRT. TONS FRT. TONS
TRAMPING 2.546 Million 2.069 Million
ASIA 0.940 Million 0.844 Million
EUROPE 0.245 Million 0.218 Million
USA/CANADA 0.220 Million 0.140 Million
The break-up of the Dry/Liquid bulk cargo lifted during tramping operations is as follows:
CARGO 1999-2000 1998-99
FRT. TONS FRT. TONS
CRUDE OIL 2.271 Million 1.580 Million
IRON ORE -- 0.051 Million
COAL/COKE -- 0.261 Million
PHOSPHATE 0.275 Million 0.177 Million
During the year, 29,268 Teus of containers were lifted as against 23,218 Teus in the previous
year.
Since PNSC had no specialized vessels in its fleet to carry dry bulk and liquid bulk
commodities, these were handled through foreign chartered vessels. Two of the three container
vessels viz. M.V. SWAT and M.V. SHALAMAR remained deployed in container feeder service
operating on Karachi - Colombo - Karachi route. The third vessel M.V. LALAZAR was inducted
into time charter business.
INSURANCE & CLAIMS
A satisfactory standard of performance of the fleet was maintained which helped PNSC in
obtaining 15% reduction in the Hull & Machinery Insurance for the year 2000.
The Corporation also succeeded in obtaining reduction in the premium rate for P&I Cover for
the year I999-2000 from Steamship Management Insurance Services Ltd. London.
STORES & SUPPLIES
In order to remain cost effective, major and costly items of stores were either imported from
abroad or purchased directly from the manufacturers.
Self catering scheme has been very effective and continued to accrue financial benefits to the
Corporation. Ships laundry expenses in foreign ports were minimized and avoided as far as possible
by making alternate arrangements which are working satisfactorily.
MAINTENANCE AND REPAIRS
Despite the constraints of ageing fleet and mandatory compliance of new Rules and Regula-
tions of the Classification Societies and Port State Control, strict vigilance/checks were maintained
to control the expenditure on repairs. Dry-dockings of the vessels were arranged through cheapest
sources.
All available indigenous resources were extensively utilized on maintenance and repairs of the
Corporation's vessels. PNSC workshop undertook maximum burden of this task.
Economy continued to be enforced in the procurement of spares and stores for the vessels.
Only essential spares/stores were provided to the vessels for meeting operational requirements.
I.S.M. CODE
Implementation of International Safety Management Code (ISM Code) is a mandatory
requirement for the shipping companies in respect of International Standard for the Safe Manage-
ment and Operation of ships, and the prevention of pollution. To keep pace with maritime regulatory
regime, PNSC has established Safety Management System (SMS). The ISM code has been
mandatory since 1-7-98 for shipping companies operating Oil Tankers, whereas it would be
mandatory for Cargo Ships including Container Ships with effect from 01.07.2002.
PNSC has developed various manuals as a requirement of the SMS, and has been granted
Interim Document of Compliance (DOC) to operate Oil Tankers. With this certification, PNSC can
acquire and operate Oil Tankers in accordance with the ISM Code.
Implementation of the system is underway on all PNSC cargo ships so that the ISM
Certification is obtained for these type of ships as well before the date of its enforcement.
SPARES AND BUNKER
The average price of bunker in the international market almost doubled as compared to the
previous year. However, to contain costs, maximum bunkers were procured though most competi-
tive sources on the operating routes of the vessels.
Efforts were also made to purchase spare parts through cheaper sources from the equipment
makers to keep vessels seaworthy, and reliable to maintain an uninterrupted operational schedule.
COMPUTERISATION
Computerisation of various applications continued during the year. Apart from processing and
maintenance of the existing computer applications, "Assets Register" has been computerized. The
Medical System is also being computerized which will further help in controlling the expenses under
this head.
PLANNING AND DEVELOPMENT
PNSC had embarked 'upon transportation of crude oil, which was previously awarded to
foreign operators. The operations have been profitable, thereby encouraging PNSC to increase
its involvement in this business.
PNSC plans to acquire one or more oil tankers in the near future. The project envisages
annual transportation of about 2.0 million tons or more crude oil imports for the local
refineries.
PNSC is earnestly taking UP the exercise of reducing and right-sizing the strength of its shore-
based staff.
PNSC has closed down all its overseas Regional offices which were located in UK, USA,
Hongkong and Dubai. This step is likely to bring about considerable savings.
PNSC has recently acquired the First Right of Refusal in respect of the Government and
Public Sector cargo subject to freight charges being competitive.
Owing to the recurring losses in operating containers feeder service, two container vessels
have been chartered out to foreign operators, whereas efforts are in hand to charter out the
third container vessel also, provided favourable rates are offered.
PNSC is continuously looking for cheaper avenues for drydockings and repairs of its ships
with the objective of achieving further economy in costs.
TURN-AROUND OF PNSC
The Management is fully seized of the problems facing the Corporation and remedial steps are
being taken to rationalise operations, improve efficiencies and cut down costs in order to make the
Corporation a profitable entity.
MANAGEMENT
On 8th March 2000, the Pakistan National Shipping Corporation's Board of Directors was re-
constituted as under:-
Vice Admiral (R) Abaid ullah Khan Chairman
Rear Admiral G. Z. Malik Member
Mr. M. Abdullah Yusuf Member
Syed Samsamul Haque Member
Mr. G. R. Arshad Member
Mr. Jahangir Siddiqui Member
Mr. Muhammad Khusrow Khowaja Member
 Subsequently, Mr. G. R. Arshad was replaced by Mr. Kamal Afsar vide Federal Government's
notification of 10K July 2000. This notification was later superseded on 9th September 2000 and Dr.
Zafar Altaf was nominated as a Member of the Board of Directors in place of Mr. Kamal Afsar.
On 3rd November 2000, Vice Admiral A.U. Khan relinquished the charge of the office of
Chairman, and Vice Admiral S. Tauquir H. Naqvi assumed the charge of the office of Chairman
with effect from 6th November 2000.
AUDITORS
The joint auditors, M/s. A. F. Ferguson & 'Co., Chartered Accountants, and M/s. Taseer Hadi
Khalid & Co., Chartered Accountants, retire and offer themselves for re-appointment.
ACKNOWLEDGEMENT
The Board wishes to place on record its appreciation of the efforts and services rendered by
the officers and staff of the Corporation, both ashore and afloat.
The Directors also thank the Shippers, Agents, Bankers for their cooperation and support. Our
gratitude is due to our valued Shareholders and also to the Director General Ports & Shipping,
Ministry of Communications, as well as the Government of Pakistan for their continued guidance
and support.
VICE ADMIRAL S. TAUQUIR H. NAQVI
H.I (M), S.Bt.
CHAIRMAN
PAKISTAN NATIONAL SHIPPING CORPORATION
FLEET AS ON JUNE 30, 2000
Vessel Name Year of Dead Weight G.R.T. N.R.T.
Built in Tons
m.v. Lalazar 1985 13,346 10,246 4,664
m.v. Swat 1983 14,355 10,917 5,758
m.v. Shalamar 1983 14,170 10,544 5,643
m.v. Islamabad 1983 18,257 12,395 6,747
m.v. Khairpur 1981 16,414 13,402 7,693
m.v. Sibi 1981 16,436 13,402 7,693
m.v. Kaghan 1981 18,050 12,030 6,686
m.v. Ayubia 1981 18,050 12,030 6,686
m.v. Sargodha 1980 18,242 12,395 6,747
m.v. Malakand 1980 18,224 12,395 6,747
m.v. Multan 1980 18,257 12,395 6,747
m.v. Bolan 1980 18,144 12,395 6,747
m.v. Hyderabad 1980 18,257 12,395 6,747
m.v. Chitral 1980 18,144 12,395 6,747
m.v. Makran 1979 23,490 16,199 8,184
------------- ------------- -------------
TOTAL 261,836 185,535 100,236
========== ========== ==========
AUDITORS' REPORT TO THE MEMBERS
We have audited the annexed balance sheet of Pakistan National Shipping Corporation as at June 30, 2000 and
the related profit and loss account, cash flow statement and statement oŁ 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 Corporation'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 Corporation 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 except for the changes as
stated in notes 1.5, 1.6 and 1.8 with which we concur;
(ii) the expenditure incurred during the year was for the purpose of the Corporation's business; and
(iii) the business conducted, investments made and the expenditure incurred during the year were in
accordance with the objects of the Corporation;
(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 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 Corporation's affairs as at June 30, 2000 and of the loss, its cash flows
and changes in equity for the year then ended; and
(d) in our opinion no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980.
Without qualifying our opinion, we wish to draw attention to note 1.2 to the financial statements which explains the
reasons for preparation of these accounts on a going concern basis.
AF FERGUSON & CO. TASEER HADI KHALID & CO.
Karachi January 22, 2001 Chartered Accountants Chartered Accountants
BALANCE SHEET AS AT JUNE 30, 2000
Note 2000 1999 Restated
(Rupees '000)
SHARE CAPITAL AND RESERVES
Authorised capital
200,000,000 (1999: 200,000,000)
ordinary shares of Rs 10 each 2,000,000 2,000,000
========== ==========
Issued, subscribed and paid-up capital 2 1,143,406 1,143,406
Capital reserves 3 126,843 126,843
------------- -------------
1,270,249 1,270,249
Accumulated loss (1,052,377) (470,004)
------------- -------------
217,872 800,245
LONG-TERM LOAN 5 -- 1,273,135
DEFERRED LIABILITIES 6 448,938 451,374
CURRENT LIABILITIES AND PROVISIONS
Current maturity of long-term loan 5 1,282,947
Creditors, provisions and accruals 7 1,074,571 769,437
Unclaimed dividends 9,763 9,874
Short-term running finance utilised under mark-up
arrangement - secured 8 146,339 41,168
------------- -------------
2,513,620 820,479
CONTINGENCIES          9
------------- -------------
3,180,430 3,345,233
========== ==========
FIXED ASSETS - TANGIBLE 10 1,827,282 2,000,231
LONG-TERM INVESTMENTS 11 4,713 4,711
LONG-TERM LOANS 12 25,940 34,439
CURRENT ASSETS
Stores and spares 13 136,859 134,779
Freight receivable 14 244,732 202,858
Agents' and owners' balances 15 224,130 103,689
Other debtors 16 64,927 57,399
Loans and advances 17 44,883 59,863
Deposits and prepayments 18 21,310 19,878
Incomplete voyages 19 166,459 107,466
Advance taxation - net of provisions 123,809 249,001
Insurance claims 20 82,448 73,172
Certificates of deposit with
financial institutions 1,600 3,000
Cash and bank balances 21 211,338 294,747
------------- -------------
1,322,495 1,305,852
------------- -------------
3,180.,430 3,345,233
========== ==========
The annexed notes form an integral part of these accounts.
Muhammad Khusrow Khowaja Vice Admiral S. Tauquir H. Naqvi
Director Chairman and Chief Executive
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED JUNE 30, 2000
Note 2000 1999 Restated
(Rupees '000)
OPERATING REVENUES
Freight (Net) 2,322,675 2,471,333
Chartering revenues 22 1,217,495 1,239,454
------------ ------------
3,540,170 3,710,787
OPERATING EXPENSES
Fleet expenses - direct 23 3,544,960 3,233,155
- indirect 24 43,892 58,340
------------ ------------
3,588,852 3,291,495
Administration and general expenses 25 250,284 261,023
------------ ------------
3,839,136 3,552,518
------------ ------------
OPERATING (LOSS) / PROFIT (298,136) 158,269
INSURANCE CLAIMS 26 4,672 26,626
OTHER 1NCOME 27 121,950 83,740
------------ ------------
(172,344) 268,635
OTHER EXPENSES 28 316,199 384,852
------------ ------------
LOSS BEFORE TAXATION (488,543) (116,217)
TAXATION 29 93,830 (13,817)
------------ ------------
LOSS AFTER TAXATION (582,373) (102,400)
ACCUMULATED LOSS BROUGHT FORWARD 4 (470,004) (367,604)
------------ ------------
ACCUMULATED LOSS CARRIED FORWARD (470,004)
Rupees Rupee
Loss per share 32 (5.09) (0.90)
========== ==========
The annexed notes form an integral part of these accounts.
Vice Admiral S. Tauquir H. Naqvi Muhammad Khusrow Khowaja
Chairman and Chief Executive Director
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED JUNE 30, 2000
Issued,  Capital Accumulated Total
subscribed reserve Loss
and paid-up 
capital
----------------------------( Rupees '000)---------------------------
Balance as at July I, 1998
As previously reported 1,143,406 126,843 (353,077) 917,172
Effects of changes in
accounting policies - Note 4 -- -- (14,527) (14,527)
------------ ------------ ------------ ------------
Restated balance as
at July 1, 1998 1,143,406 126,843 (367,604) 902,645
Loss after taxation for the year
ended June 30, 1999 ( restated
for the effects of changes in
accounting policies) -- -- (102,400) (102,400)
------------ ------------ ------------ ------------
Balance as at June 30, 1999 1,143,406 126,843 (470,004) 800,245
Loss after taxation for the year
ended June 30, 2000 -- -- (582,373) (582,373)
------------ ------------ ------------ ------------
Balance as at June 30, 2000 1,143,406 126,843 (1,052,377) 217,872
========== ========== ========== ==========
The annexed notes form an integral part of these accounts.
Vice Admiral S. Tauquir H. Naqvi Muhammad Khusrow Khowaja
Chairman and Chief Executive Director
CASH FLOW STATEMENT
FOR THE YEAR ENDED JUNE 30, 2000
Note 2000 1999 Restated
(Rupees '000)
Cash flow from operating activities
Cash (used in) / generated from operations 33 (65,440) 472,900
Staff retirement gratuity paid (15,102) (12,671)
Employees' 'compensated absences paid (30,762) (28,885)
Post retirement medical benefits paid (14,672) (17,880)
Interest paid (10,566) (117,875)
Tax refunds /(paid) 31,362 (64,380)
Long-term loans-net 8,499 9,996
------------ ------------
Net cash (outflow)/inflow from operating activities (96,681) 241,205
Cash, flow from investing activities
Fixed capital expenditure (101,652) (98,381)
Proceeds from disposal of fixed assets 437 304
Interest received 7,442 7,313
Dividend received 585 2,087
------------ ------------
Net cash outflow from investing activities (93,188) (88,677)
Cash flow from financing activities
Repayment of long-term loans -- (22,212)
Dividend paid (111) --
------------ ------------
Net cash outflow from financing activities (111) (22,212)
------------ ------------
Net (decrease) / increase in cash and cash equivalents (189,980) 130,316
Cash ,and cash equivalents at beginning of the year 256,579 126,263
------------ ------------
Cash and cash equivalents at end of the year 34 66,599 256,579
========== ==========
The annexed notes form an integral part of these accounts.
Vice Admiral S. Tauquir H. Naqvi Muhammad Khusrow Khowaja
Chairman and Chief Executive Director
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED JUNE 30, 2000
1 THE CORPORATION'S OPERATIONS AND ITS SIGNIFICANT ACCOUNTING
POLICIES
1.1  Pakistan National Shipping Corporation was established under the provisions of the
Pakistan National Shipping Corporation Ordinance, 1979 and is listed on all the Stock
Exchanges of Pakistan.
1.2 During the year the Corporation has incurred a loss after taxation of Rs 582.373 million
and its current liabilities exceeded its current assets by Rs 1,191.125 million.
The management is making its best efforts to turn around the Corporation and steps taken
include the following:
Efforts are being made to reschedule the term loan of USS 24.5 million from
National Bank of Pakistan, Bahrain. In this respect a request has also been made to
the Ministry of Finance.
A decision has been made by the cabinet committee of economic co-operation
council to grant the right of first refusal to the Corporation.
The management has requested for support from the Federal Government which is
the principal shareholder of the Corporation.
Plans are being made to induct an oil tanker in the Corporation's fleet to diversify
its operations.
Significant accounting policies of the Corporation are summarised below:
1.3 Basis of preparation
These financial statements have been prepared in accordance with the accounting stan-
dards issued by the International Accounting Standards Committee (IASC) and interpre-
tations issued by the Standing Interpretations Committee of the IASC , as adopted in
Pakistan and the requirements of the Companies Ordinance, 1984.
1.4 Accounting convention
These accounts have been prepared under the historical cost convention except that part
of the Corporation's fleet has been included at revalued amount referred to in note 1.8 and
that certain exchange differences on loans obtained for acquisition of vessels referred to
in note 1.12 have been incorporated in the cost of fleet.
1.5 Staff retirement benefits
The Corporation operates:
a) a contributory provident fund for all employees;
b) an unfunded gratuity scheme for all its employees other than those who joined the
Corporation after October 16, 1984 and are entitled only to the contributory provident
fund benefits. Annual provisions to cover the obligations under the scheme, based on
actuarial estimates are charged to income currently.
Projected Unit Credit Method with the following significant assumptions was used for the
valuation of this scheme:
Expected rate of increase in salary level 9.1 percent per annum.
Discount rate of interest !2.0 percent per annum.
The following are the fair values of the scheme's assets and liabilities for past services of
the employees :
June 30
2000 1999 1998
Rupees in '000
Present value of defined benefit obligation 232,014 234,160 234,744
Less · fair value of plan assets 256,212 259,675 225,318
------------ ------------ ------------
Unrecognised actuarial (gain) / loss (24,198) (25,515) 9,426
========== ========== ==========
The unrecognised actuarial gains or losses arising at each valuation date are recognised as
income or expense in the following year.
The following is a reconciliation of movement in the net recognised liability for gratuity
including the amounts charged in the profit and loss account in respect of the scheme:
2000 1999 1998
Rupees in '000
Net recognised liability as at July 1 259,675 225,318 202,612
Charge for the year / adjustment to reserves  11,639 47,028 32,401
------------ ------------ ------------
271,314 272,346 235,013
Less · payments made during the year 15,102 12,671 9,695
------------ ------------ ------------
Net recognised liability as at June 30 256,212 259,675 225,318
========== ========== ==========
The following amounts have been charged in the profit and loss account in respect of these
benefits:
June 30
2000 1999
Rupees in '000
Current service cost 9,055 9,433
Interest cost 28,099 28,169
Recognition of actuarial (gain) / loss (25,515) 9,426
------------ ------------
11,639 47,028
========== ==========
The Corporation was previously using Aggregate Actuarial Cost Method for valuation of
its gratuity scheme. During the year the valuation was carried out using the Projected Unit
Credit Method in line with the requirements of International Accounting Standard 19 -
Employee Benefits which became applicable during the current year. The effect of the
above change in method for the periods till June 30, 1998, amounting to Rs 7.599 million,
has been adjusted in the accumulated loss brought forward for the year ended June 30,
1999, as disclosed in note 4 to these accounts, and the comparative information has
accordingly been restated. Had the method not been changed, the loss before taxation for
the year would have been higher by Rs 37.235 million.
The Corporation's crew staff is also entitled to gratuity in accordance With the Pakistan
Maritime Board Regulations. However, these employee benefits are recognised upon
payment as the amounts involved are not material.
c) The Corporation provides lumpsum medical allowances and free hospitalisation
benefits to its retired employees in accordance with the service regulations. The
revised IAS- 19 requires that liabilities in respect of post retirement benefits given
by an enterprise to its employees should be accounted for in the period in which
these benefits are earned. Previously these benefits were accounted for on payment
basis. In order to comply with the requirements of revised IAS-19, the management
has decided to change the accounting policy for recognising these benefits. Accord-
ingly, the Corporation has decided to provide for the liabilities in respect of this post
employment medical benefit scheme for the employees based on actuarial recom-
mendation. An amount of Rs 78.254 million, representing the Corporation's liability
till June 30, 1998 has been adjusted in the accumulated loss brought forward for the
year ended June 30, 1999, as disclosed in note 4 to these accounts and the
comparative information has been restated.
Projected Unit Credit Method with the following significant assumptions was used for the
valuation of this scheme:
Expected rate of increase in medical allowances 9.0 percent per annum.
Discount rate of 12.0 percent per annum.
Expected rate of medical cost trend 9.0 percent per annum.
The fair value of the scheme's assets and liabilities for past services of the employees were
as follows:
June 30
2000 1999 1998
Rupees in '000
Present value of defined benefit obligation 79,082 80,788 81,572
Less · fair value of plan assets 80,390 78,105 78,254
------------ ------------ ------------
Unrecognised actuarial (gain)/loss (1,308) 2,683 3,318
========== ========== ==========
The unrecognised actuarial gains or losses arising at each valuation date are recognised as
income or expense in the following year.
The following is a reconciliation of movement in the net recognised liability for post
employment medical benefits including the amounts charged in the profit and loss account
in respect of the scheme:
2000 1999 1998
Rupees in '000
Net recognised liability as at July 1 78,105 78,254 80,452
Charge for the year adjustment to reserves 16,957 17,731 14,079
------------ ------------ ------------
95,062 95,985 94,531
Less: payments made during the year 14,672 17,880 16,277
------------ ------------ ------------
Net recognised liability as at June 30 80,390 78,105 78,254
========== ========== ==========
The following amounts have been charged in the profit and loss account during the year
in respect of these benefits:
June 30
2000 1999
Rupees in '000
Current service cost 4,579 4,624
Interest cost 9,695 9,789
Recognition of actuarial loss 2,683 3,318
------------ ------------
16,957 17,731
========== ==========
Had the accounting policy not been changed, the loss before taxation for the year would
have been lower by Rs 2.285 million.
The staff retirement benefits are payable to staff upon completion of prescribed qualifying
period of service under these schemes.
1.6 Employees' compensated absences
The revised IAS- 19 requires that liability in respect of accumulated absences of
employees should be accounted for in the periods in which these absences are earned.
According to the previous accounting policy of the Corporation, these absences were
accounted for on payment basis. Accordingly, the management has decided to change the
accounting policy and has made a provision in respect of accumulated compensated
absences as at June 30. 2000 based on actuarial recommendation. An amount of Rs
114.165 million, representing the Corporation's liability till June 30, 1998 has been
adjusted in the accumulated loss brought forward for the year ended June 30, 1999, as
disclosed in note 4 to the accounts and the comparative information has been restated.
The following is a reconciliation of movement in the net recognised liability for employ-
ees' compensated absences including the amounts charged in the profit and loss account
in respect of the scheme:
2000 1999
Rupees in '000
Net recognised liability as at July 1 113,594 114,165
Charge for the year adjustment to reserves 29,504 28,314
------------ ------------
143,098 142,479
Less: payments made during the year 30,762 28,885
------------ ------------
Net recognised liability as at June 30 112,336 113,594
========== ==========
Had the accounting policy not been changed, the loss before taxation for the year would
have been higher by Rs 1.258 million.
1.7 Taxation
Provision for current taxation is based on taxable income at the current rates of taxation
after taking into account tax credits and rebates available, if any, or one half percent of
turnover, whichever is higher
The Corporation accounts for deferred taxation on all material timing differences using the
liability method. However, deferred tax is not provided if it can be established with
reasonable probability that these timing differences will not reverse in the foreseeable
future. A net deferred tax debit balance, if any, is not recognised in the accounts.
Net deferred tax debit balance as at June 30, 2000 amounted to Rs 161,285 thousand
(1999: Rs 86,369 thousand).
1.8 Fixed assets
The Corporation's fleet is stated at revalued amount ,less accumulated depreciation except
for vessels acquired subsequent to revaluation. These vessels and all other assets are
at cost less accumulated depreciation except assets under a. acquisition which are stated
cost accumulated to the balance sheet date. Cost in relation to fleet comprises of cost
acquisition, exchange differences referred to in note 1.12 and interest on foreign currency
loans obtained to finance purchase of vessels upto the date of acquisition of vessels.
Other related expenses incidental to the purchase of vessels accumulated to the date the
vessel is commissioned into service are also included in the cost. Maintenance and
normal repairs are charged to income as and when incurred.
Major renewals and improvements are capitalised and the assets so replaced, if any, are
retired. 'For the purpose of maintaining seaworthiness of its vessels, the Corporation is
required to carry out repairs and maintenance of each vessel at dry docks twice within
every five years according to the specifications of Lloyds of London or A.B of U.S.A. It
is the practice of the Corporation to carry out continuous survey and repairs on a round-
the-year basis to meet this requirement and as such no provisions are made for these
expenses. The Corporation was previously charging these expenses to income as and when
incurred. However, during the current year the management has decided to capitalise
these costs and to depreciate. them over a period of thirty to sixty months. The change in
accounting policy is based on the management's estimate of the expected period over
which the economic benefits associated with these costs will flow to the Corporation. The
effect of change in accounting policy for the period till June 30, 1998 amounting to Rs.
170.293 million, has been adjusted in the accumulated loss brought forward for the year
ended June 30, 1999, as disclosed in note 4 to these accounts, and the comparative
information has been restated. Had the policy not been changed, the loss before taxation
for the year would have been lower by Rs 4.748 million.
Gains and losses on disposal of assets are included in income currently.
Depreciation is charged to income applying the straight line method whereby the cost
of an asset is written off over its estimated service life except in the case of vessel
fleet, the cost or revalued amount of which is written off on the basis of its operating
life with effect from the year a, vessel is commissioned and after taking into account
the estimated residual value. In case a vessel's operating life is extended beyond its
previously assessed useful life by virtue of major renovation, such renovation cost is
capitalised and depreciated over the extended operating life after taking into account
the residual value of the vessel. Depreciation on vessel fleet is calculated and charged
in a year on the basis of the number of days of completed voyages. The net exchange
difference capitalised is depreciated over the remaining life of the respective vessel.
However, as explained in detail in note 10.1, the exchange loss incurred during the year
has been charged to the profit and loss account.
Depreciation on additions is charged from the month in which the asset is put to use
and on disposals upto the month of disposal.
The cost of leasehold land is amortised in equal installments over the lease period.
1.9 Investments
Listed investments are stated at the lower of cost and market value, whereas unlisted
investments are stated at the lower of cost and break-up value. Decrease in the cost
of investments is charged to income currently.
1.10 Stores and spares
Stores are valued at the weighted average cost while spares are valued at cost determined
on the first-in first-out basis. Stores and spares in transit are valued at cost accumulated
to the balance sheet date.
Certain spares having low value and high consumption levels are charged to income
at the time of purchase.
1.11 Insurance claims
Cost of repairs recoverable as hull claims is taken to insurance claims receivable.
Other claimable expenses relating to hull are charged to income currently and claims
filed thereagainst are taken to income when such claims are accepted by the underwriters.
Afloat medical expenses, cargo claims and other relevant recoverable amounts from
underwriters are taken to insurance claims.
1.12 Foreign currency translation
Assets and liabilities in foreign currencies are translated into rupees at the rates of
exchange approximating those prevailing at the balance sheet date. Foreign currency
transactions are translated into rupee at the last month's average rate of exchange .
Exchange differences are taken to profit and loss account except for exchange
differences arising in respect of foreign currency loans obtained to finance purchase of
vessels, which are capitalised in accordance with note 1.8 above.
1.13 Revenue recognition
Freight earnings and related expenditure in respect of voyages other than own
vessels time charter voyages are accounted for on the basis of completed voyages.
Voyages are taken as complete when a vessel arrives at the last port of discharge
on or before the balance sheet date.
With respect to own vessels time charter voyages, freight earnings and related
expenditure are accounted for on the basis of number of days to the balance sheet
date.
Dividend income is recognised when the Corporation's right to receive the dividend
is established.
Income from certificates of deposits is recognised on accrual basis on the assumption that
the certificates will be retained to maturity.
1.14 Incomplete voyages
Freight earnings and related expenses including bunker and other lubricants on
the vessels in respect of voyages not completed are carried forward. Earnings
expenses in such cases comprise only those transactions which have been reported
year end and do not' necessarily include all earnings and expenses incurred to the balance
sheet date.
Diesel, fuel and lubricants on board are valued at cost determined on the first-in first-
out basis.
2000 1999
(Rupees '000)
2 ISSUED, SUBSCRIBED AND PAID-UP CAPITAL
24,130,789 ordinary shares of Rs I0 each issued as
fully paid to shareholders of former NSC
and PSC in consideration of their
shareholdings in those companies 241,308 241,308
25.900,000 ordinary shares of Rs 10 each issued as
fully paid to the Government of Pakistan
for cash received in the year 1985 259,000 259,000
64.309,800 ordinary shares of Rs 10 each issued as
fully paid to the Government of Pakistan
on financial restructuring of the Corporation
in the year 1989-90 643,098 643,098
------------ ------------ ------------
114,340,589 1,143,406 1,143,406
========== ========== ==========
3 CAPITAL RESERVES
Transferred from shareholders' equity at the
time of merger of former NSC and PSC 126,843 126,843
========== ==========
4 ADJUSTMENT TO OPENING ACCUMULATED LOSS RESULTING FROM
CHANGES IN ACCOUNTING POLICIES AS REFERRED TO IN NOTES 1.5, 1.6
AND 1.8
2000 1999
(Rupees '000)
Opening accumulated loss, as previously reported (469,250) (353,077)
Adjustments resulting from changes in accounting policies in respect of:
Staff retirement gratuity 4,571 7,599
Post retirement medical benefits (7,8,105) (78,254)
Employees' compensated absences (83,594) (114,165)
Drydock costs 156,374 170,293
------------ ------------
(754) (14,527)
------------ ------------
Revised opening accumulated loss (470.004) (367,604)
========== ==========
5 LONG-TERM LOAN - SECURED
Lender Interest Rate
National Bank of 2.95% above 6 months
Pakistan -Bahrain LIBOR per annum 1,282,947 1,273,135
USS 24.53 million
(1999: USS 24.53 million)
Less : Current maturity of long-term loan 1,282,947 --
------------ ------------
-- 1,273,135
========== ==========
The above loan is secured by a guarantee given by State Bank of Pakistan on behalf
of the Corporation and is repayable in lumpsum by December 2000. However, the
Corporation has approached the National Bank of Pakistan (NBP) and Ministry of Finance
for rescheduling of the above loan. Pending finalisation of the rescheduling arrangements
with NBP, the management is confident that the Corporation will not be required to make
any repayments towards the above balance in the year 2000-2001.
2000 1999 Restated
(Rupees '000)
6 DEFERRED LIABILITIES
Staff gratuity 256,212 259,675
Post retirement medical benefits 80,390 78,105
Employees' compensated absences 112,336 113,594
------------ ------------
448,938 451,374
========== ==========
7 CREDITORS, PROVISIONS AND ACCRUALS
Creditors 309,279 275,423
Agents' and owners' balances 147,337 160,453
Accrued liabilities 404,238 236,232
Accrued interest on secured long-term loan 124,941 3,980
Deposits (Note 7.1) 16,745 14,572
Workers' Profit Participation Fund (Note 7.2) 8,330 18,301
Other liabilities 63,701 60,476
------------ ------------
1,074,571 769,437
========== ==========
Amount payable to National Tanker Company (Pvt) Ltd, an associated  undertaking, at the
end of the year amounted to Rs 2.1 million (1999: Rs NIL).
7.1 These deposits are interest flee and are repayable on demand or on completion of specific
contracts.
2000 1999
(Rupees '000)
7.2 Workers' Profit Participation Fund
Balance at July 1 18,301 17,746
Interest on funds utilised during the year (Note 28) 1,585 2,055
------------ ------------
19,886 19,801
Less: Amount paid 11,556 1,500
------------ ------------
Balance at June 30 8,330 18,301
========== ==========
8 SHORT-TERM RUNNING FINANCE UTILISED
UNDER MARK-UP ARRANGEMENT - SECURED
The facility for running finance available from a bank upto December 31, 2000 amounted
to Rs 150 million (1999: Rs 150 million) and carried mark-up at the rate of Re 0.41 per
Rs 1,000 per day ( 1999: Re 0.48 per Rs 1,000 per day). The arrangement is secured by
mortgage of three of the Corporation's vessels.
9. CONTINGENCIES
(a) The contingent liability in respect of claims not admitted by the Corporation
amounts to Rs 317,897 thousand (1999:Rs 384,467 thousand). These include Rs
38,383 thousand (1999: Rs 38,728 thousand) approximately in respect of insurance
claims which, if accepted, will be borne by the Corporation as the P&I Club,
Oceanus Mutual Underwriting Association (Bermuda) Limited has gone into
liquidation. Out of the remaining claims an amount of Rs 224,050 thousand
(1999: Rs 225,700 thousand) approximately would be recoverable from the P&I
Club, Steamship Mutual Underwriting Association, in the event these claims are
accepted by the Corporation.
(b) The Corporation has not accepted liability in respect of customs duty approximating
Rs 2,500 thousand (1999: Rs 2,500 thousand) relating to the sale of the vessel mv
Bhambore during the year ended June 30, 1978. The duty was claimed from the
Corporation and the matter has been taken up with the appropriate government
agencies.
(c) The former owners of East &' West Steamship Company and Trans Oceanic
Steamship Company Limited had initiated litigation that involved the Government
of Pakistan and the Corporation.
Following the Supreme Court's adjudication of the East & West Steamship Company's
matter in favour of the former owners, the Government provisionally assessed
additional compensation due to the former owners at approximately Rs 97
million. Although a major portion of this amount has been settled by the
Government, the Government holds the Corporation liable for this amount by
virtue of the net assets of the East & West Steamship Company having become
vested in the Corporation. The Corporation disclaims any liability in respect of
the above mentioned amount and any accretions to it upto final determination and
settlement of the matter.
(d) One of the customers of the Corporation has filed claims amounting to
approximately Rs 100.126 million for failure to deliver vessel on time, failure to
ship minimum quantity as specified in the charter party, short delivery of cargo
and various other disputes. The Corporation is currently negotiating with the
customer for waiver of these claims. Pending resolution of these negotiations,
no provision has been made in these accounts for the aforesaid liability.
(e) The Customs Authorities of a country have served notice to the Corporation
showing intention to impose penalty of US $ 1.339 million against the alleged
transportation of certain prohibited equipment from a foreign port to Karachi on one
of the Corporation's vessel. The management contends that the related cargo was
not transported through the Corporation's vessel. Accordingly, no provision has been
made in these accounts in respect of the above claim.
(f) During the year the Corporation has identified that funds of the Staff Contributory
Provident Fund have been misappropriated by certain trustees of this Fund. A
detailed investigation is currently being carried out to ascertain the total amount
misappropriated. Pending completion of the investigation, it is not possible to
determine the effect, if any, which this misappropriation may have on these financial
statements and therefore no provision has been made in respect of any eventual loss
which the Corporation might have to bear.
10. FIXED ASSETS - TANGIBLE
10.1 The following is a statement of fixed assets:
Cost and Additions/ Cost and Accumu- Charge for Accumulated Written Annual
revaluation (deletions) revaluation lated dep- the year/ depreciation down value rate of
as at at June 30, 2000 reciation (Accumulated amortization at June 30, deprecia-
July 1, 1999 amortization depreciation at June 30, 2000 2000 tion %
(RESTATED) at July 1, 1999 on deletions)
(RESTATED)
-----------------------------------------------------------------------Rupees '000------------------------------------------------------------------
Leasehold land 13,344 -- 13,344 3,169 134 3,303 10,041 1
Building on leasehold land 67,977 -- 67,977 46,331 2,844 49,175 18,802 2.5 to 15
Fleet
Cost and revaluation 3,028,566 -- 3,028,566 1,253,721 162,907 1,416,628 1,611,938 4
Dry dock costs 399,319 90,221 489,540 242,945 94,969 337,914 151,626 20 and 40
------------ ------------ ------------ ------------ ------------ ------------ ------------
3,427,885 90,221 3,518,106 1,496,666 257,876 1,754,542 1,763,564
Vehicles 27,775 -- 26,944 23,778 2,239 25,234 1,710 20
(831) (783)
Office machines and appliances 9,649 82 9,712 7,830 805 8,619 1,093 15
(19) (16)
Furniture and fixtures 13,030 105 13,135 11,396 526 11,922 1,213 10 to 15
Motor launch and Jetty 18 -- 18 18 -- 18 -- 10 to 15
Equipment on board 67,590 10,154 77,744 43,073 8,405 51,478 26,266 10 to 15
Container fittings                  3,468 -- 3,468 3,468 -- 3,468 -- 15
Beach huts 348 -- 348 161 21 15 166 15
Workshop machinery
and equipment 8,259 499 8,388 4,451 552 4,853 3,535 5 to 10
(370) (150)
Computer equipment 15,354 591 15,945 14,125 928 15,053 892 25
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total 3,654,697 101,652 3,755,129 1,654,466 274,330 1,927,847 1,827,282
(1,220) (949)
========== ========== ========== ========== ========== ========== ==========
1999 3,556,847 98,381 3,654,697 1,340,517 314,163 1,654,466 2,000,231
(531) (214)
========== ========== ========== ========== ========== ========== ==========
Effect of change in accounting policy, as referred to in note 1.8 included in additions and
depreciation for the year ended June 30, 2000 amounts to Rs 90.221 million and Rs 94.969
million (1999: Rs 77.009 million and Rs 90.928 million) respectively.
During the year the management has decided to revise the useful life of vessels from 23
to 25 years. Had the estimate not been changed the loss before taxation for the year would
have been higher by Rs. 46.536 million.
During the year the management has decided to revise the depreciation rate on computers
from 15 to 25%. Had the estimate not been changed the loss before taxation for the year
would have been lower by Rs 0.107 million.
Cost of fleet includes an amount of Rs 449.27 million representing exchange losses till
June 30, 1998 on loan obtained for acquisition of three vessels. The exchange losses
incurred during the year amounting to Rs 9.812 million (1999:133.612 million ) has been
charged to the profit and' loss account as the management considers that in view of the
current depressed freight rates their capitalisation would result in the book value of the
vessels exceeding the net recoverable value of these assets.
Cost and accumulated depreciation of fleet include Rs 1,440 thousand each in respect of
mv Ilyas Bux which has not been revalued. This vessel was seized by the Indian authorities
during the 1965 war and the Corporation does not have physical possession or control over
it.
Three vessels are mortgaged to secure bank guarantees issued on behalf of the
Corporation and to secure the running finance facility as described in note 8.
2000 1999 Restated
(Rupees '000)
10.2 The depreciation charge for the year
has been allocated as follows:
Fleet expenses - direct (Note 23) 266,281 306,711
Fleet expenses - indirect (Note 24) 552 572
Administration and general expenses (Note 25) 7,497 6,880
------------ ------------
274,330 314,163
========== ==========
10.3 Adjustments to balances as on July 1, 1999 resulting from change in accounting policy as
referred to in note 1.8 are as follows:
WRITTEN 
COST ACCUMULATED DOWN
DEPRECIATION VALUE
-------------------Rupees '000-----------------------
Opening balances as
previously reported 3,234,537 1,188,500 2,046,037
Adjustment resulting from
change in accounting policy 322,310 152,017 170,293
------------ ------------ ------------
Restated opening balances 3,556,847 1,340,517 2,216,330
========== ========== ==========
10.4 The Corporation's fleet was revalued on June 30, 1987 and produced a net deficit of Rs
688,332 thousand which was charged to the profit and loss account in that year. Had
there been no revaluation, the written down value of the Corporation's fleet would
have been higher by Rs 20,518 thousand (1999: Rs 54,746 thousand).
10.5 Disposal of fixed assets
Particulars Cost Accumulated Written Sale Profit / Mode of Particulars of
depreciation down value proceeds (loss) disposal buyer
Vehicle 190 190 103 103 Tender Mr. Talha Kazmi
113 113 42 42 Tender Mr. Ahsan Raza
113 113 36 36 Tender Mr. Karoran Hussain
95 95 60 60 Insurance National Insurance
claim Corporation
320 272 48 193 145 Negotiation Mr. S Ahmed
----------- ----------- ----------- ----------- -----------
831 783 48 434 386
Office machines
and appliances 19 16 3 3 Negotiation Mr. Qaiser Hussain
(ex-employee)
Workshop
machinery
and equipment 370 150 220 -- (220) Written off --
----------- ----------- ----------- ----------- -----------
Total 1,220 949 271 437 166
========== ========== ========== ========== ==========
11. LONG-TERM INVESTMENTS
Percentage
holding (if over 2000 1999
10%) (Rupees '000)
(i) Joint stock companies:
Listed
6,930 (1999: 6,930) ordinary shares
of Rs 10 each fully paid of Siemens
(Pakistan) Engineering Company
Limited, market value Rs 610
thousand (1999: Rs 562 thousand) 88 88
60,690 (1999: 50,575) ordinary shares
of Rs 10 each fully paid of Pakistan
State Oil Company Limited, market
value Rs 9,847 thousand
(1999: Rs 4,678 thousand) 40 40
------------ ------------
128 128
Aggregate amount of market value in
respect of listed companies' shares is
Rs 10,457 thousand
(1999:Rs 5,240 thousand)
Unlisted
10,000 (1999: i0,000) ordinary shares
of Rs 10 each of Pakistan Tourism
Development Corporation Limited
(Less than 10 percent share in the
investee company's equity) 100 100
[Chief Executive: Mr. Mehdi]
------------ ------------
100 100
------------ ------------
228 228
(ii) Associated undertakings - unlisted:
1,677,083 (1999: 1,677,083) ordinary shares of Rs 10
each fully paid of National Tanker Company (Private)
Limited [value based on net assets of investee
Rs 44,765 thousand (1999: Rs 48,764 thousand)
(Last audited accounts - year ended June 30, 2000)] 50 2,510 2,510
1,200 (1999: 1.200) ordinary shares of Rs 100 each fully
paid of Pakistan Co-operative Ship Stores (Private)
Limited - subsidiary [value based on net assets of investee
Rs 1,208 thousand (1999: Rs 1,179 .thousand) (Last
audited accounts - year ended June 30, 2000)] 55 121 121
50 (1999: 50) ordinary shares of Rs 100 each of
Shipping Management Limited (in liquidation) -- 5 5
12,250 (1999: 12,250) ordinary .shares of Rs 100 each
fully paid of Muhammadi Engineering Works Limited
[value based on net assets of investee Rs 1,600 thousand
(1999: Rs 1,600 thousand) (Last audited accounts -
year ended December 31, 1982)] 49 848 848
12,250 (1999: 12,250) ordinary shares of Rs 100 each
fully paid of Muhammadi Shipping Agency Limited
[value based on net assets of investee Rs 969 thousand
(1999: Rs 969 thousand) (Last audited accounts -
year ended December 31, 1973)] 49 824 824
4,881 (1999: 4,881) ordinary shares of Rs 100 each fully
paid of Pakistan Victualling Company Limited. [value based
on net assets of investee Rs 352 thousand (1999: Rs 352
thousand) (Last audited accounts - year ended
December 31, 1973)] 49 328 328
400 (1999: 400) ordinary shares of Rs 100 each fully paid
of Pakistan Ship Chandling Company Limited [value based
on net assets of investee Rs 20 thousand (1999: Rs 20
thousand) (Last audited accounts - year ended
December 31, 1973)] 40 27 27
4,88t (1999: 4,881) ordinary shares of Rs I00 each fully
paid of Pakistan Stevedoring Company Limited [value
based on net assets of investee Rs 360 thousand (1999:
Rs 360 thousand) (Last audited accounts - year ended
December 31, 1973)] 49 328 328
100,000 (1999: 100,000) ordinary shares of Rs 10 each
allotted as fully paid of Premier Container Terminal Limited
[value based on net assets of investee Rs 1,000 thousand
(1999: Rs 1,000 thousand) (Last audited accounts - year
ended June 30, 1996)] 20 1,000 1,000
------------ ------------
5,991 5,991
Less: Provision for decrease in the value of investments 1,512 1,512
------------ ------------
4,479 4,479
(iii) Others:
600 (1999: 600) units of Rs 10 each of National Investment
Trust [market value Rs 6.4 thousand (1999: RS 4.5 thousand)] 61 61
Less: Provision for decrease in value of investment -- 2
------------ ------------
6 4
------------ ------------
4,713 4,711
========== ==========
2000 1999
(Rupees '000)
12. LONG-TERM LOANS - CONSIDERED GOOD
Vehicle loans to
Executives 1,378 1,782
Other employees net of provision
for doubtful balances Rs 121 thousand
(1999: Rs 121 thousand) 1,618 2,231
------------ ------------
2,996 4,013
House building loans to
Executives 15,226 20,314
Other employees net of provision
for doubtful balances Rs 15 thousand
(1999: Rs 15 thousand) 14,509 17,774
------------ ------------
29,735 38,088
Other loans
Executives 341 616
Other employees 150 316
------------ ------------
491 932
------------ ------------
33,222 43,033
Less: Due within one year
Executives 4,353 5,180
Other employees 2,929 3,414
------------ ------------
7,282 8,594
------------ ------------
25,940 34,439
=========== ===========
The maximum aggregate amount due from executives at the end of any month during
the year was Rs 26,047 thousand (1999: Rs 31,493 thousand).
The aggregate amount outstanding for a period exceeding three years is Rs 25,589
thousand {1999: Rs 24,790 thousand).
Vehicle loans represent loans to employees for purchase of vehicles and are secured
against borrowers' personal guarantees and mortgage of vehicles. These loans are interest
free and are recoverable over 72 monthly installments.
House building loans represent loans to employees for purchase of plots of land,
residential accommodation or construction and renovation of houses. These loans
are recoverable over 180 monthly installments. An amount of Rs 25,933 thousand
(1999: Rs 32,959 thousand) is secured against mortgage. Interest on such loans to
officers is charged at various rates while no interest is being charged on loans given
to staff.
Other loans represent loans to employees for purchase of furniture, fixtures and
repairing of house etc. These loans are interest free, unsecured and are recoverable over
25 to 64 monthly installments.
2000 1999
(Rupees '000)
13. STORES AND SPARES
Stores
at depots 15,628 15,781
at buildings 171 168
on board 33,719 29,597
in transit -- 3
------------- -------------
49,518 45,549
Spares
at buildings 658 876
onboard 82,942 87,959
in transit 3,741 395
------------- -------------
136,859 134,779
========== ==========
14. FREIGHT RECEIVABLE - UNSECURED
Considered good 244,732 202,858
Considered doubtful 235,881 231,474
------------- ------------
480,613 434,332
Less: Provision for doubtful receivables 235,881 231,474
------------- -------------
244,732 202,858
========== ==========
Amount receivable from National Tanker Company (Pvt) Ltd, an associated undertaking,
at the end of the year amounted to Rs 76,190 thousand (1999: Rs 11,340 thousand).
15. AGENTS' AND OWNERS' BALANCES
Considered good  
secured 26,896 9,974
unsecured 197,234 93,715
------------- -------------
224,130 103,689
Considered doubtful 13,087 157,910
------------- -------------
237,217 261,599
Less: Provision for doubtful balances 13,087 157,910
------------- -------------
224,130 103,689
========== ==========
16. OTHER DEBTORS
Rent receivable
considered good 4,029 8,895
considered doubtful 3,984 2,484
------------ ------------
8,013 11,379
Less: Provision for doubtful receivables 3,984 2,484
------------ ------------
4,029 8,895
Accrued income on deposits 469 372
Others
considered good 60,429 48,132
considered doubtful 49,195 40,591
------------ ------------
109,624 88,723
Less: Provision for doubtful receivables 49,195 40,591
------------ ------------
60,429 48,132
------------ ------------
64,927 57,399
=========== ===========
Amounts due from Muhammadi Engineering and National Tanker Company (Pvt) Ltd.,
associated undertakings, at the year-end aggregated to Rs 7,953 thousand (1999: Rs 7,971
thousand). The maximum amount due from these associated undertakings at the end of
any month during the year was Rs 8,680 thousand (1999: Rs 7,971 thousand).
Others include Rs 54,529 thousand (1999: Rs 54,529 thousand) gross receivable from Pan
Islamic Steamship Company Limited.
Pan Islamic Steamship Company Limited has disputed the validity of this amount. The
dispute is pending adjudication by the Directorate of Ports and Shipping, Government of
Pakistan. The net exposure to the Corporation in this respect has been fully provided for
in the books of account.
2000 1999
(Rupees '000)
17. LOANS AND ADVANCES
Considered good
Amounts due from:
Directors -- 47
Executives 25,957 46,655
Other employees 10,623 10,443
Contractors and suppliers 931 1,283
Others 7,372 1,435
------------ ------------
44,883 59,863
Considered doubtful 837 750
------------ ------------
45,720 60,613
Less: Provision for doubtful advances 837 750
------------ ------------
44,883 59,863
========== ==========
The maximum aggregate amounts due from the Directors and Executives at the end of
any month during the year were Rs Nil and Rs 25,957 thousand respectively (1999: Rs
359 thousand and Rs 46,655 thousand).
1999 2000
(Rupees '000)
18. DEPOSITS AND PREPAYMENTS
Trade:
Considered good 1,283 1,847
Considered doubtful 173 --
------------ ------------
1,456 1,847
Less: Provision for doubtful deposits 173 --
------------ ------------
1,283 1,847
Others:
Considered good 18,202 16,577
Considered doubtful 263 --
------------ ------------
18,465 16,577
Less: Provision for doubtful deposits 263 --
------------ ------------
18,202 16,577
Prepayments 1,825 1,454
------------ ------------
21,310 19,878
========== ==========
19. INCOMPLETE VOYAGES
Cost
Salaries and allowances 2,417 4,179
Diesel, fuel and lubricants 145,975 132,692
Stores and spares issued 7,650 11,236
Insurance 9,665 13,369
Other fleet expenses - direct and indirect 16,891 31,256
Charter hire expenses 10,816 20,491
------------ ------------
193,414 213,223
Less: Net freight 26,955 105,757
------------ ------------
166,459 107,466
========== ==========
20. INSURANCE CLAIMS
Considered good 82,448 73,172
Considered doubtful 120,805 120,462
------------ ------------
203,253 193,634
Less: Provision for doubtful claims 120,805 120,462
------------ ------------
82,448 73,172
========== ==========
Included in the above claims are amounts aggregating Rs 110,304 thousand (1999: Rs
109,961 thousand) net of insurance premium which are recoverable from the P&I Club,
Oceanus Mutual Underwriting Association (Bermuda) Limited. The Club has gone into
liquidation, therefore a provision has been made for this amount in these. accounts.
21. CASH AND BANK BALANCES
Cash at bank:
In current accounts including foreign
currency balances equivalent to Rs 116,251
thousand (1999: Rs 120,217 thousand) 140,231 137,670
In deposit accounts including foreign
currency balances equivalent to Rs 67,822
thousand (1999: Rs 90,003 thousand) 70,537 152,047
Cash in hand 70 69
Cash in transit 500 4,961
------------ ------------
211,338 294,747
========== ==========
Deposit accounts include:
a) Rs 10,259 thousand (1999: Rs 43,466 thousand) held as security by National Bank
of Pakistan against guarantees issued on behalf of the Corporation.
b) A term deposit receipt of Rs 2,715 thousand (1999: Rs 1,600 thousand) held
by Habib Bank Limited as security against guarantees issued on behalf of the
Corporation.
1999 2000
(Rupees '000)
22. CHARTERING REVENUES
Own vessels:
Voyage charter revenues 58,585 80,226
Time charter revenues 69,087 140,426
------------ ------------
127,672 220,652
Foreign flag vessels:
Time charter revenues 518,529 355,601
Voyage charter revenues 279,825 388,737
Slot charter revenues 291,469 274,464
------------ ------------
1,089,823 1,018,802
------------ ------------
1,217,495 1,239,454
========== ==========
23. FLEET EXPENSES - DIRECT
Stevedoring and transshipment expenses 324,921 383,226
Container leasing and other charges 33,267 62,745
Diesel, fuel and lubricants consumed 606,032 319,033
Port, light, canal and customs dues 449,235 368,878
Charter hire and related expenses (Note 23.2) 928,589 863,949
Fleet communication expenses 13,415 13,054
Agency commission and brokerage 141,369 145,360
Salaries and allowances (Note 23.1) 191,451 212,625
Victual ling expenses 34,055 32,947
Insurance 122,531 128,339
Claims 15,258 3,058
Stores and spares consumed 169,223 129,228
Repairs. maintenance and special surveys 196,863 211,858
Depreciation (Note 10.2) 266,281 306,711
------------- -------------
3,492,490 3,181,011
Sundry expenses:
Crew expenses (Note 23.3) 15,504 18,075
Vessel general expenses (Note 23.4) 36,966 34,069
------------- -------------
52,470 52,144
------------- -------------
3,544,960 3,233,155
========== ==========
23.1 The above include Rs 3.935 million (1999: Rs 2.498 million) in respect of staff provident
fund contribution.
23.2 CHARTER HIRE AND RELATED EXPENSES
2000 1999
(Rupees '000)
Foreign flag vessels:
Time charter expenses 479,299 281,049
Voyage charter expenses 272,003 382,377
Slot charter expenses 177,287 200,523
------------- -------------
928,589 863,949
========== ==========
23.3 CREW EXPENSES
Car, taxi and launch hire 7,138 7,319
Laundry charges 379 676
Repatriation charges 2,123 4,207
Franchise, medical and others 5,864 5,770
Other miscellaneous expenses -- 103
------------- -------------
15,504 18,075
========== ==========
23.4 VESSEL GENERAL EXPENSES
Vessel survey 1,761 1,033
Advertisement 6,126 7,613
Fumigation 501 440
Fresh water 18,530 17,311
Other miscellaneous expenses 10,048 7,672
------------- -------------
36,966 34,069
========== ==========
24. FLEET EXPENSES - INDIRECT
Conference establishment expenses 940 1,291
Agents' and other general expenses (Note 24.2) 12,594 14,048
Depreciation (Note 10.2) 552 572
Salaries and allowances - Regional offices (Note 24.1) 18,751 21,586
General establishment expenses - Regional offices 11,296 14,944
Rent, rates and taxes - Regional offices 8,247 9,498
Gain on exchange (8,488) (3,599)
------------- -------------
43,892 58,340
========== ==========
24.1 The above include Rs 0.277 million (1999: Rs 0.287 million) in respect of staff provident
fund contribution.
24.2 AGENTS' AND OTHER GENERAL EXPENSES
Printing and stationery 294 538
Advertisement and publicity 3,069 2,672
Telephone, telex and postage 7,234 9,889
Bank charges and commission 1,165 --
Other miscellaneous expenses 832 949
------------- -------------
12,594 14,048
========== ==========
2000 1999 Restated
(Rupees '000)
25. ADMINISTRATION AND GENERAL EXPENSES
Salaries and allowances (Note 25.1) 166,824 173,561
General establishment expenses (Note 25.2) 65,214 70,761
Rent, rates and taxes 6,074 5,533
Scholarship and training expenses
254 425
Ministry of communication expenses 1,500 --
Auditors' remuneration (Note 30) 955 986
Gifts and donations 208 878
Insurance 1,738 1,987
Depreciation (Note 10.2) 7,497 6,880
Directors' fee
20 12
------------- -------------
250,284 261,023
=========== ===========
Donations given during the year amounted to Rs Nil (1999: Rs 450 thousand).
25.1 The above include Rs 7.756 million (1999: Rs 7.876 million) in respect of staff provident
fund contribution.
25.2 GENERAL ESTABLISHMENT EXPENSES
Repairs and maintenance 3,392 1,423
Medical 12,213 15,409
Contribution to employees welfare fund 14 14
Contribution to group term insurance 528 729
Haj expenses 475 510
Security charges 1,803 --
Sports Club and Milad etc. 1,747 2,594
Travelling and conveyance 4,392 8,751
Entertainment and canteen subsidy 4,245 5,428
Books, periodicals and subscription 1,365 2,104
Uniform and liveries 107 316
Printing and stationery 2,279 1,800
Telephone, telex and postage 9,561 9,093
Light, power and water 11,355 9,697
Computer expenses 2,943 2,473
Advertisement and publicity 1,084 1,764
Office and vehicle repairs 7,323 8,129
Sundries 388 527
------------ ------------
65,214 70,761
========== ==========
26. INSURANCE CLAIMS
Excess recovery from hull', cargo and other claims 4,027 25,644
Others 645 982
------------ ------------
4,672 26,626
========== ==========
2000 1999
(Rupees '000)
27. OTHER INCOME
Rental income 61,752 53,207
Interest on:
loans and advances 813 775
other receivables 253 392
------------ ------------
1,066 1,167
Income from bank deposits
and certificates of deposit 6,473 6,094
Sale of scrap, dunnage etc. 19 83
Agency commission:
associated company 2,271 2,142
others 2,570 867
------------ ------------
4,841 3,009
Profit on disposal of fixed assets 166 --
Dividend income 585 2,087
Balances no longer payable written back 11,731 4,479
Provisions no longer required written back 11,014 4,565
Sundries:
associated company 281 473
others 24,022 8,576
------------ ------------
24,303 9,049
------------ ------------
121,950 83,740
========== ==========
2000 1999 Restated
(Rupees '000)
28. OTHER EXPENSES
Financial charges:
Interest on:
Long-term loans 120,961 103,479
Workers' profit participation fund 1,585 2,055
Mark-up on short-term running finance 8,981 13,234
Bank charges 4,393 5,318
------------ ------------
135,920 124,086
Legal and professional charges 2,251 2,360
Provision for doubtful debts:
trade 25,924 10,265
others 10,972 21,443
------------ ------------
36,896 31,708
Provision against damages claim 73,220 --
Provision for staff retirement gratuity 11,639 47,028
Provision for employees' compensated absences 29,504 28,314
Provision for post retirement medical benefits 16,957 17,731
Loss on disposal of fixed assets -- 13
Exchange loss on foreign currency loan
obtained for the acquisition of vessels 9,812 133,612
------------ ------------
316,199 384,852
========== ==========
2000 1999
(Rupees '000)
29. TAXATION
Current year 18,793 18,737
Prior years 75,037 (32,554)
------------ ------------
93,830 (13,817)
========== ==========
29.1 Provision for current taxation for the year represents minimum tax at 0.5 percent of
turnover under section 80 D of the Income Tax Ordinance, 1979.
30. AUDITORS' REMUNERATION
2000 1999
A.F. Taseer Total A.F. Taseer Total
Ferguson Hadi Khalid Ferguson Hadi Khalid
& Co. & Co. & Co. & Co.
-------------------------------------------------(Rupees '000)-----------------------------------------------
Audit fee 400 400 800 400 400 800
Tax  and sundry advisory
services 70 70 100 -- 100
Out of pocket expenses 38 47 85 46 40 86
------------ ------------ ------------ ------------ ------------ ------------
508 447 955 546 440 986
========== ========== ========== ========== ========== ==========
31. REMUNERATION OF DIRECTORS AND EXECUTIVES
The aggregate amounts charged in the accounts for the year for remuneration including all
benefits to the Chairman, Directors and Executives of the Corporation were as follows:
Chairman Director Executives
2000 1999 2000 1999 2000 1999
-------------------------------------------------(Rupees '000)-----------------------------------------------
Managerial remuneration 204 204 562 711 110,839 112.26
Contribution towards
provident fund -- -- 100 148 11,084 11,226
House rent -- -- 407 431 57,522 58,977
Other allowances 96 96 294 318 37,274 38,543
Conveyance -- -- -- -- 11,819 12,105
Entertainment 8 8 18 21 . 3.236 3,340
Medical 111 77 49 166 I0. t 36 10,360
Utilities 150 211 239 237 12.15 13,816
Personal staff subsidy -- -- -- -- 1248 1,317
Club membership fee
and expenses 27 21 58 79 64 58
Personal accident
insurance 2 2 4 4 1 2
----------- ----------- ----------- ----------- ----------- -----------
598 619 1,731 2.12 255,374 262,006
========== ========== ========== ========== ========== ==========
Number of persons 1 1 4 5 605 616
========== ========== ========== ========== ========== ==========
In addition the Chairman, Directors and certain Executives are provided with free use
of the Corporation's cars and certain items of household furniture and fixtures in
accordance with their entitlements. The Chairman is also provided with Corporation
owned and maintained furnished accommodation.
Aggregate amount charged in the accouters for the year for fee to two directors was Rs
20 thousand (1999: Rs 12 thousand to two directors).
2000 1999 Restated
(Rupees '000)
32. LOSS PER SHARE
Loss for the year after taxation (582,373) (102,400)
========== ==========
Number of shares
Average ordinary shares in issue during the year 114,340,589 114,340,589
Rupees Rupee
Loss per share (5.09) (0.90)
========== ==========
2000 1999 Restated
(Rupees '000)
33. CASH (USED IN) / GENERATED FROM OPERATIONS
Loss before taxation (488,543) (116,217)
Adjustment for non cash charges and other items:
Depreciation 274,330 314,163
(Profit) / loss on disposal of fixed assets (166) 13
Provision for staff retirement gratuity 11,639 47,028
Provision for employees. compensated absences 29,504 28,314
Provision for post retirement medical benefits 16,957 17,731
Dividend income (585) (2,087)
Interest income (7,539) (7,261)
Interest expense 131,527 118,768
Provision against diminution in value
of investment written back - (net) (2)
Working capital changes (Note 33.1) (42,374) (61,243)
Unrealised exchange loss on loan
obtained for acquisition of vessels 9,812 133,691
------------- -------------
(65,440) 472,900
========== ==========
2000 1999
(Rupees '000)
33.1 Working capital changes
(Increase)/decrease in current assets
Stores and spares (2,080) 3,025
Freight receivable (41,874) (31,627)
Agents' and owners' balances (120,441) 15,824
Other debtors (net) (7,431) 27,748
Loans and advances 14,980 (28,816)
Deposits and prepayments (1,432) (377)
Incomplete voyages (58,993) (37,275)
Insurance claims (9,276) (12,899)
------------- -------------
(226,547) (64,397)
Increase in current liabilities
Creditors, provisions and accruals (net) 184,173 3,154
------------- -------------
(42,374) (61,243)
========== ==========
34. CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise of the following items as included in the balance
sheet:
Certificates of deposit with banks and
financial institutions 1,600 3,000
Cash and bank balances 211,338 294,747
Short-term running finance utilised under mark-up
arrangement- secured (146,339) (41,168)
------------- -------------
66,599 256,579
========== ==========
35. FINANCIAL ASSETS AND LIABILITIES
Interest bearing Non Interest bearing
Maturity Maturity Total Maturity Maturity Total Grand
upto one after one upto one after one Total
year year year year
-----------------------------------------------------------(Rupees '000)--------------------------------------------------------
Financial Assets
Long-term investments -- -- -- -- 4,713 4,713 4,713
Loans to employees 3,704 11,522 15,226 3,578 14,418 17,996 3,322
Freight receivable -- -- -- 244,732 -- 244,732 244,732
Agents' and owners' balances -- -- -- 224,130 -- 224,130 224,130
Other debtors -- -- -- 64,906 -- 64,906 64,906
Deposits -- -- -- 19,485 -- 19,485 19,485
Insurance claims -- -- -- 82,448 -- 82,448 82,448
Certificates of deposit with 
financial institutions  1,600 -- 1,600 -- -- -- 1,600
Cash and bank balances 70,537 -- 70,537 140,801 -- 140,801 211,338
------------ ------------ ------------ ------------ ------------ ------------ ------------
75,841 1.1,522 87,363 780,080 19,131 799,211 886,574
========== ========== ========== ========== ========== ========== ==========
Financial Liabilities
Current maturity of long-term loan 1,282,947 -- 1,282,947 -- -- -- 1,282,947
Deferred liabilities  -- -- -- -- 448,938 448,938 448,938
Short-term running finance 
utilised under mark-up arrangement 146,339 -- 146,339 -- -- -- 146,339
Creditors, provisions and accruals -- -- -- 1,066,241 -- 1,066,241 1,066,241
Unclaimed dividends -- -- -- 9,763 -- 9,763 9,763
------------ ------------ ------------ ------------ ------------ ------------ ------------
1,429,286 -- 1,429,286 1,076,004 448,938 1,524,942 2,954,228
========== ========== ========== ========== ========== ========== ==========
35.1 Concentration of credit risk
Credit risk represents the accounting loss that would be recognised at the reporting date
if counter parties failed completely to perform as contracted. Out of the total financial
assets of Rs 886.574 million the financial assets which are subject to credit risk amounted
to Rs 886.004 million. The management of the Corporation believes that it is not exposed
to major concentration of credit risk.
35.2 Foreign exchange risk management
Foreign currency risk arises on receivables and payables transactions at foreign ports and
on. long-term foreign currency loan. Foreign currency risks are not covered as a deliberate
management decision.
35.3 Fair value of financial assets
The fair value of all financial assets and financial liabilities is estimated to approximate
their carrying value.
36. GENERAL
36.1 Transactions with associated undertakings
2000 1999
(Rupees '000)
Freight income 79,212 315,412
Agency fee and commission 2,271 2,142
Dividend income -- 1,677
Service charges received 281 --
Purchase of services 275,961 150,668
Rental income 3,609 3,609
Transactions with associated undertakings relating to acquisition and rendering of services
are carried out on commercial terms and conditions. Services, rent and allied expenses are
charged between associated undertakings on the basis of mutually agreed terms.
36.2 Capacity
(a) The carrying capacity of the Corporation's fleet is detailed below:
Bales Grain Dead weight
(cubic meters) (cubic meters) (metric tons)
2000 325,342 346,937 261,836
1999 325,342 346,937 261,836
(b) During the year, the Corporation's vessels undertook 192 voyages including
21 laid-up voyages (1999:166 voyages including 14 laid-up voyages)
(c) During the year, the Corporation's vessels carried 1,342 thousand freight tons
of cargo (1999:1,150 thousand freight tons). This information cannot be related
in any meaningful way with the information in (a) above, as the actual' liftings
depend on availability of cargo, type of cargo carried and voyages undertaken.
2000 1999
36.3 Number of employees
Number of employees at June 30 1,021 1,458
37. Corresponding figures
The comparatives have been adjusted to take into account the effects of change in
accounting policies which the Corporation implemented during the year as referred to in
notes 1.5 , 1.6 and 1.8 to these accounts.
Vice Admiral S. Tauquir H. Naqvi Muhammad Khusrow Khowaja
Chairman and Chief Executive Director
PATTERN OF SHAREHOLDING AS AT JUNE 30, 2000
NUMBER OF
SHAREHOLDERS SHAREHOLDING TOTAL SHARES HELD
13195 1 to 100 565,058
3882 101 to 500 991,970
915 501 to 1,000 859,247
862 1001 to 5,000 1,940,566
109 5,001 to 10,000 832,202
30 10,001 to 15,000 383,106
26 15,001 to 20,000 452,432
28 20,001 to 25,000 674,430
7 25,001 to 30,000 196,662
7 30,001 to 35,000 226,733
4 35,001 to 40,000 146,911
3 40,001 to 45,000 131,400
6 45,001 to 50,000 296,715
1 55,001 to 60,000 55,950
2 60,001 to 65,000 121,500
4 65,001 to 70000 271,282
3 70,001 to 75000 220,711
2 85,001 to 90,000 170,238
1 100,001 to 105,000 102,367
1 115,001 to 120,000 119,990
1 150.00 to 155,000 151,340
1 155.00 to 160,000 159,000
1 255.00 to 260,000 255,500
1 460.00 to 465,000 460,142
1 635.00 to 640,000 635,886
1 680.00 to 685,000 680,123
1 1,325,001 to 1,330,000 1,328,544
1 101,910,001 to 101,915,000 101,910,584
----------- -----------
19,096 114,340,589
========== ==========
CATEGORY OF SHAREHOLDERS NO. SHARES HELD %
Federal Government/S.E.C.P. 2 101,910,596 89.13
Individuals 18,971 7,674,224 6.71
NIT/Investment Companies 2 1,096,028 0.96
State Life/Insurance Companies 9 1,375,472 1.20
Private/Joint Stock Companies 89 643,776 0.57
Banks/Financial Institutions 9 896,765 0.78
Foreign/Non Resident Companies 8 622,378 0.54
Modaraba Companies 6 121,350 0.11
----------- ----------- -----------
19,096 114,340,589 100.00
========== ========== ==========
The above two statements include 378 shareholders holding 2,254,525 shares through the Central
Depository Company of Pakistan Limited.
CONSOLIDATED REPORT AND ACCOUNTS OF 
PAKISTAN NATIONAL SHIPPING CORPORATION AND ITS SUBSIDIARY COMPANY
STATEMENT UNDER SECTION 237 OF THE COMPANIES ORDINANCE, 1984
STATEMENT UNDER SUB SECTION 1 (e)
The extent of the interest of Pakistan National Shipping Corporation in its subsidiary, Pakistan
Co-operative Ship Stores (Private) Limited as at the end of the last of the financial years of that
subsidiary was 55%.
2000 1999
Rupees Rupees
The net aggregate amount of revenue profits less losses of the subsidiary
Company so far as it concerns members of the holding Company and
has not been dealt with in the accounts of the holding company for the
year ended June 30, 2000 is as follows:
for the last of financial years of the subsidiary 30,047 88,266
========== ==========
for the previous financial 3,ear, since it became the holding
company's subsidiary. 1,313,040 1,224,774
========== ==========
The net aggregate amount of revenue profits less losses of the subsidiary
company so far as these have been dealt with or provision made for
losses in the accounts of the holding Company for the year ended June
30, 2000 is as follows:
for the last of the financial years of the subsidiary Nil Nil
========== ==========
for the previous financial years since it became the holding
company's subsidiary. Nil Nil
========== ==========
Vice Admiral S. Tauquir H. Naqvi Muhammad Khusrow Khowaja
Chairman and Chief Executive Director
AUDITORS' REPORT TO THE MEMBERS
We have examined the annexed consolidated financial statements comprising consolidated Balance Sheet
of Pakistan National Shipping Corporation (the holding company) and its subsidiary company Pakistan
Co-operative Ship Stores (Private) Limited as at June 30, 2000 and the related consolidated Profit and
Loss Account, the consolidated statement of changes in equity and the consolidated Cash Flow Statement
together with the notes forming part thereof, for the year then ended. We have also expressed a separate
opinion on the financial statements of Pakistan National Shipping Corporation whereas its subsidiary
company, Pakistan Co-operative Ship Stores (Private) Limited was audited by another firm of Chartered
Accountants, whose report has been furnished to us and our opinion in so far as it relates to the amounts
included for such company, is based solely on the report of such other auditors. These financial
statements are the responsibility of the holding company's management. Our responsibility is to express
an opinion on these financial statements based on our examination.
Our examination was made in accordance with generally accepted auditing guidelines and accordingly
included such tests of accounting records and such other auditing procedures as we considered necessary
in the circumstances.
In our opinion the consolidated financial statements examined by us present fairly the financial position
of Pakistan National Shipping Corporation and its subsidiary company as at June 30, 2000 and the results
of their operations, cash flows and changes in equity for the year then ended.
Without qualifying our opinion, we wish to draw attention to note 1.2 to the financial statements which
explains the reasons for preparation of these accounts on a going concern basis.
AF FERGUSON & CO. TASEER HADI KHALID & CO.
Karachi January 22,  2001 CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANTS
CONSOLIDATED BALANCE SHEET AS AT JUNE 30, 2000
Note 2000 1999 Restated
(Rupees '000)
SHARE CAPITAL AND RESERVES
Authorised capital
200,000,000 (1999: 200,000,000)
ordinary shares of Rs 10 each 2,000,000 2,000,000
========== ==========
Issued, subscribed and paid up capital 4 1,143,406 1,143,406
Capital reserve 5 126,843 126,843
Other reserves 6.1 23 23
Accumulated loss (1,036,594) (426,839)
------------ ------------
233,678 843,433
Minority Interest 7 885 921
LONG -TERM LOAN 8 -- 1,273,135
DEFERRED LIABILITIES 9 448,938 451,374
CURRENT LIABILITIES AND PROVISIONS
Current maturity of long-term loan 1,282,947 --
Creditors, provisions and accruals 10 1,074,586 769,447
Unclaimed dividends 9,763 9,874
Short-term running finance utilised under mark-up
arrangement - secured 11 146,339 41,168
------------ ------------
2,513,635 820,489
CONTINGENCIES          12
------------ ------------
3,197,136 3,389,352
========== ==========
FIXED ASSETS - TANGIBLE 13 1,827,323 2,000,274
LONG-TERM INVESTMENTS
cost or market value 14 2,082 2,080
share in net assets 15 17,108 44,578
------------ ------------
19,190 46,658
LONG-TERM LOANS 16 25,940 34,439
CURRENT ASSETS
Stores and spares 17 136,859 134,779
Freight receivable 18 244,732 202,858
Agents' and owners' balances 19 224,130 103,689
Other debtors 20 64,952 57,471
Loans and advances 21 44,883 59,863
Deposits and prepayments 22 21,362 19,930
Incomplete voyages 23 166,459 107,466
Advance taxation - net of provisions 124,006 249,051
Insurance claims 24 82,448 73,172
Certificates of deposit with financial institutions 2,825 4,750
Cash and bank balances 25 212,027 294,952
------------ ------------
1,324,683 1,307,981
------------ ------------
3,197,136 3,389,352
========== ==========
The annexed notes form an integral part of these accounts.
Vice Admiral S. Tauquir H. Naqvi Muhammad Khusrow Khowaja
Chairman and Chief Executive Director
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED JUNE 30, 2000
Note 2000 1999 Restated
(Rupees '000)
OPERATING REVENUES
Freight (Net) 2,322,675 2,471,333
Chartering Revenues 26 1,217,495 1,239,454
------------ ------------
3,540,170 3,710,787
OPERATING EXPENSES
Fleet expenses - direct 27 3,544,960 3,233,155
- indirect 28 43,892 58,340
------------ ------------
3,588,852 3,291,495
Administration and general expenses 29 250,338 261,108
------------ ------------
3,839,190 3,552,603
------------ ------------
OPERATING (LOSS) / PROFIT (299,020) 158,184
INSURANCE CLAIMS 30 4,672 26,626
OTHER INCOME 31 122,098 82,445
SHARE OF (LOSS) / PROFIT IN ASSOCIATED
UNDERTAKINGS 32 (15,422) 31,497
------------ ------------
(187,672) 298,752
OTHER EXPENSES 33 316,241 384,861
------------ ------------
LOSS BEFORE TAXATION (503,913) (86,109)
TAXATION 34 105,878 14,396
------------ ------------
LOSS BEFORE MINORITY INTEREST (609,791) (100,505)
MINORITY INTEREST 7 (36) 12
------------ ------------
LOSS FOR THE YEAR (609,755) (100,517)
ACCUMULATED LOSS BROUGHT FORWARD 6 (426,839) (326,322)
------------ ------------
ACCUMULATED LOSS CARRIED FORWARD (1,036,594) (426,839)
========== ==========
Rupees Rupee
Loss per share 37 (5.33) (0.88)
========== ==========
The annexed notes form an integral part of these accounts.
Vice Admiral S. Tauquir H. Naqvi Muhammad Khusrow Khowaja
Chairman and Chief Executive Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED JUNE 30, 2000
Issued,  Capital Other Accumulated
subscribed reserve Reserves Loss Total
and paid-up 
capital
------------------------------------( Rupees '000)--------------------------------------
Balance as at July 1, 1998
As previously reported 1,143,406 126,843 23 (311,795) 958,477
Effects of changes in
accounting policies - Note 6 -- -- -- (14,527) (14,527)
------------ ------------ ------------ ------------ ------------
Restated balance as at
July 1, 1998 1,143,406 126,843 23 (326,322) 943,950
Loss after taxation for the year
ended June 30, 1999 ( restated
for the effects of changes in
accounting policies) -- -- -- (100,517) (100,517)
------------ ------------ ------------ ------------ ------------
Balance as at June 30, 1999 1,143,406 126,843 23 (426,839) 843,433
========== ========== ========== ========== ==========
Loss after taxation for the year
ended June 30, 2000 -- -- -- (609,755) (609,755)
------------ ------------ ------------ ------------ ------------
Balance as at June 30, 2000 1,143,406 126,843 23 (1,036,594) 233,678
========== ========== ========== ========== ==========
The annexed notes form an integral part of these accounts.
Vice Admiral S. Tauquir H. Naqvi Muhammad Khusrow Khowaja
Chairman and Chief Executive Director
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED JUNE 30, 2000
Note 2000 1999 Restated
(Rupees '000)
Cash flow from operating activities
Cash (used in) / generated from operations 35 (65,462) 472,875
Staff retirement gratuity paid (15,102) ( 12,671 )
Employees' compensated absences paid (30,762) (28,885)
Post retirement medical benefits paid (14,672) (17,880)
lnterest paid (10,566) (117,875)
Taxes refunds / (paid) 31,215 (64,544)
Long - term loans 8,499 9,996
------------ ------------
Net cash (outflow) / inflow from operating activities (96,850) 241,016
Cash flow from investing activities
Fixed capital expenditure (101,652) (98,381 )
Proceeds from disposal of fixed assets 437 304
Interest received 7,570 7,657
Dividend received 585 2,087
------------ ------------
Net cash outflow from investing activities (93,060) (88,333)
Cash flow from financing activities
Repayment of long-term loans -- (22,212)
Dividends paid (111) --
------------ ------------
Net cash outflow from financing activities (111) (22,212)
Net (decrease) / increase in cash and cash equivalents (190,021) 130,471
Cash and cash equivalents at beginning .of the year 258,534 128,063
------------ ------------
Cash and cash equivalents at the end of the year · 36 68,513 258,534
The annexed notes form an integral part of these ========== ==========
accounts.
Vice Admiral S. Tauquir H. Naqvi Muhammad Khusrow Khowaja
Chairman and Chief Executive Director
NOTES TO THE CONSOLIDATED ACCOUNTS
FOR THE YEAR ENDED JUNE 30, 2000
1. THE GROUP AND ITS OPERATIONS:
1.1 The Group consists of:
Pakistan National Shipping Corporation (the Corporation ); and
Pakistan Co-operative Ship Stores (Private) Limited.
The Corporation owns 55% of the share capital of the subsidiary company.
The Corporation is engaged in providing shipping and other related services.
1.2 During the year the Corporation has incurred a loss of Rs 609.791 million and its current
liabilities exceeded its current assets by Rs 1,188.952 million.
The management is making its best efforts to turn around the Corporation and steps taken
include the following:
Efforts are being made to reschedule the term loan of USS 24.5 million from
National Bank of Pakistan, Bahrain. In this respect a request has also been made to
the Ministry of Finance.
A decision has been made by the Cabinet Committee of Economic Co-operation
Council to grant the right of first refusal to the Corporation.
The management has requested for support from the Federal Government which is
the principal shareholder of the Corporation.
Plans are being made to induct an oil tanker in the Corporation's fleet to diversify
its operations.
2. BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the Corporation and
Pakistan Co-operative Ship Stores (Private) Limited. The financial statements of the
subsidiary company have been consolidated on a line by line basis.
All inter company balances and transactions have been eliminated.
3. ACCOUNTING POLICIES
Significant accounting policies of the Group are summarised below:
3.1 Basis of preparation
These financial statements have been prepared in accordance with the accounting stan-
dards issued by the International Accounting Standards Committee (IASC) and interpre-
tations issued by the Standing Interpretations Committee of the IASC , as adopted in
Pakistan and the requirements of the Companies Ordinance, 1984.
3.2 Accounting convention
These accounts have been prepared under the historical cost convention except that part
of the Corporation's fleet has been included at revalued amount referred to in note 3.6 and
that certain exchange differences on loans obtained for acquisition of vessels referred to
in note 3.10 have been incorporated in the cost of fleet.
3.3 Staff retirement and other benefits
The Corporation operates:
a) a contributory provident fund for all employees of the Corporation;
b) an unfunded gratuity scheme for all employees of the Corporation other than those
who joined the Corporation after Octob4r 16, 1984 and are entitled only to the
contributory provident fund benefits. Annual provisions to cover the obligations
under the scheme, based on actuarial estimates are charged to income currently.
Projected Unit Credit Method with the following significant assumptions was used for the
valuation of this scheme:
Expected rate of increase in salary level 9.1 percent per annum.
Discount rate .increment of 12 .0 percent per annum.
The following are the fair values of the scheme's assets and liabilities for past services of
the employees:
June 30
2000 1999 1998
(Rupees '000)
Present value of defined benefit obligation 232,014 234,160 234,744
Less: fair value of plan assets 256,212 259,675 225,318
------------- ------------- -------------
Unrecognised actuarial (gain) / loss (24,198) (25,515) 9,426
========== ========== ==========
The unrecognised actuarial gains or losses arising at each valuation date are recognised as
income or expense in the following' year.
The following is a reconciliation of movement in the net recognised liability for gratuity
including the amounts charged in the profit and loss account in respect of the scheme:
June 30
2000 1999 1998
(Rupees '000)
Net recognised liability as at July 1 259,675 225,318 202,612
Charge for the year / adjustment to reserves  11,639 47,028 32,401
------------- ------------- -------------
271,314 272,346 235,013
Less: Payments made during the year 15,102 12,671 9,695
------------- ------------- -------------
Net recognised liability as at June 30 256,212 259,675 225,318
========== ========== ==========
The following amounts have been charged in the profit and loss account in respect of these
benefits: 
June 30
2000 1999
  (Rupees '000)
Current service cost 9,055 9,433
Interest cost 28,099 28,169
Recognition of actuarial gain/(loss) (25,515) 9,426
------------- -------------
11,639 47,028
========== ==========
The Corporation was previously using Aggregate Actuarial Cost Method for valuation of
its gratuity scheme. During the year the valuation was carried out using the Projected Unit
Credit Method in line with the requirements of International Accounting Standard 19 -
Employee Benefits which became applicable during the current year. The effect of the
above change in method for the periods till June 30, 1998, amounting to Rs 7.599 million,
has been adjusted in the accumulated loss brought forward for the year ended June 3.0,
1999, as disclosed in note 6 to these accounts, and the comparative information has
accordingly been restated. Had the method not been changed, the loss before taxation for
the year would have been higher by Rs 37.235 million.
The Corporation's crew staff is also entitled to gratuity in accordance with the Pakistan
Maritime Board Regulations. However, these employee benefits are recognised upon
payment as the amounts involved are not material.
c) The Corporation provides lumpsum medical allowances and' free hospitalisation
benefits to its retired employees in accordance with the service regulations. The
revised IAS- 19 requires that liabilities in respect of post retirement benefits given
by an enterprise to its employees should be accounted for in the period in which
these benefits are earned. Previously these benefits were accounted for on payment
basis. In order to comply with the requirements of revised IAS-19, the management
has decided to change the accounting policy for recognising these benefits. Accord-
ingly, the Corporation has decided to provide for the liabilities in respect of this post
retirement medical benefit scheme for the employees based on actuarial recommen-
dation. An amount of Rs 78.254 million, representing the Corporation's liability till
June 30, 1998 has been adjusted in the accumulated loss brought forward for the
year ended June 30, 1999, as disclosed in note 6 to these accounts and the
comparative information has been restated.
Projected Unit Credit Method with the following significant assumptions was used for the
valuation of this scheme:
Expected rate of increase in medical allowances 9.0 percent per annum.
Discount rate of 12 .0 percent per annum.
Expected rate of medical cost trend 9.0 percent per annum.
The fair value of the scheme's assets and liabilities for past services of the employees were
as follows:
June 30
2000 1999 1998
(Rupees '000)
Present Value of defined benefit obligation 79,082 80,788 81,572
Less: fair value of plan assets 80,390 78,105 78,254
------------ ------------ ------------
Unrecognised actuarial (gain)/loss (1,308) 2,683 3,318
========== ========== ==========
The unrecognised actuarial gains or losses arising at each valuation date are recognised as
income or expense in the following year.
The following is a reconciliation of movement in the net recognised liability. for post
employment medical benefits including the amounts charged in the profit and loss account
in respect of the scheme:
2000 1999 1998
(Rupees '000)
Net recognised liability as at July 1 78,105 78,254 80,452
Charge for the year / adjustment to reserves 16,957 17,731 14,079
------------ ------------ ------------
95,062 95,985 94,531
Less: payments made during the year 14,672 17,880 16,277
------------ ------------ ------------
Net recognised liability as at June 30 80,390 78,105 78,254
========== ========== ==========
The following amounts have been charged in the profit and loss account during the year
in respect of these benefits:
June 30
2000 1999
  (Rupees '000)
Current service cost 4,579 4,624
Interest cost 9,695 9,789
Recognition of actuarial loss 2,683 3,318
------------ ------------
16,957 17,731
========== ==========
Had the accounting policy not been changed, the loss before taxation for the year would
have b6en lower by Rs 2.285 million.
The staff retirement benefits are payable to staff upon completion of prescribed qualifying
period of service under these schemes. ·
3.4 Employees' compensated absences
The revised IAS- 19 requires that liability in respect of accumulated absences of
employees should be accounted for in the periods in which these absences are earned.
According to the .previous accounting policy of the Corporation , these absences were
accounted for on payment basis. Accordingly, the management has decided to change the
accounting policy and has made a provision in respect of accumulated compensated
absences as at June 30, 2000 based on actuarial recommendation. An amount of Rs
114.165 million, representing the Corporation's liability till June 30, 1998 has been
adjusted in the accumulated loss brought forward' for the year ended June 30, 1999, as
disclosed in note 6 to the accounts and the comparative information has been restated.
The following is a reconciliation of movement in the net recognised liability for employ-
ees' compensated absences including the amounts charged in the profit and loss account
in respect of the scheme:
2000 1999
  (Rupees '000)
Net recognised liability as at July 1 113,594 114,165
Charge for the year / adjustment to reserves 29,504 28,314
------------ ------------
143,098 142,479
Less: payments made during the year 30,762 28,885
------------ ------------
Net recognised liability as at June 30 112,336 113,594
========== ==========
Had the accounting policy not been changed, the loss before taxation for the year would
have been higher by Rs 1.258 million.
3.5 Taxation
Provision for current taxation is based on taxable income at the current rates of taxation
after taking into account tax credits and rebates available, if any, or one half percent of
turnover, whichever is higher.
The Group accounts for deferred taxation on all material timing differences using the
liability method. However, deferred tax is not provided if it can be established with
reasonable probability that these timing differences will not reverse in the foreseeable
future. A net deferred tax debit balance, if any, is not recognised in the accounts.
Net deferred tax debit balance as at June 30, 2000 amounted to Rs 161,285 thousand
(1999: Rs 86,396 thousand).
3.6 Fixed assets
The Corporation's fleet is stated at revalued amount less accumulated depreciation except
for vessels acquired subsequent to revaluation. These vessels and all other assets are stated
at cost less accumulated depreciation / amortization except assets under acquisition which
are stated at cost accumulated to the balance sheet date. Cost in relation to fleet comprise
of cost of acquisition, exchange differences referred to in note 3.10 and interest on foreign
currency loans obtained to finance purchase of vessels upto the date of acquisition of
vessels.
Other related expenses incidental to the purchase of vessels accumulated to the date the
vessel is commissioned into service are also included in the cost. Maintenance and
normal repairs are charged to income as and when incurred.
Major renewals and improvements are capitalised and the assets so replaced, if any, are
retired. For the purpose of maintaining seaworthiness of its vessels, the Corporation is
required to carry out repairs and maintenance of each vessel at dry docks twice within
every five years according to the specifications of Lloyds of London or A.B of U.S.A. It
is the practice of the Corporation to carry out continuous survey and repairs on a round-
the-year basis to meet this requirement and as such no provisions are made for these
expenses. The Corporation was previously charging these to income as and when incurred.
However, during the current year the management has decided to capitalise these costs
and to depreciate them over a period of thirty to sixty months. The change in accounting
policy is based on the management's estimate of the expected period over which the
economic benefits associated with these costs will flow to the Corporation. The effect
of change in accounting policy for the period till June .30, 1998 amounting to Rs.
170.293 million, has been adjusted in the accumulated loss brought forward for the year
ended June 30, 1999, as disclosed in note 6 to these accounts, and the comparative
information has been restated. Had the policy not been changed, the loss before taxation
for the year would have been lower by Rs 4.748 million.
Gains and losses on disposal of assets are included in income currently.
Depreciation is charged to income applying the straight line method whereby the cost
of an asset is written off over its estimated service life except in the case of vessel
fleet, the cost or revalued amount of which is written off on.. the basis of its operating
life with effect from the year a vessel is commissioned and after taking into account
the estimated residual value. In case a vessel's operating life is extended beyond its
previously assessed useful life by virtue of major renovation, such renovation cost is
capitalised and depreciated over the extended operating life after taking into account
the residual value of the vessel. Depreciation on vessel fleet is calculated and charged
in a year on the basis of the number of days of completed voyages. The net exchange
difference capitalised is depreciated over the remaining life of the respective vessel.
However, as explained in detail in note 13.1, the exchange loss incurred during the year
has been charged to the profit and loss account.
Depreciation on additions is charged from the month in which the asset is put to use
and on disposals upto the month of disposal.
The cost of leasehold land is amortised in equal installments over the lease period.
3.7 Investments
(i) Investments in associated undertakings
The investment of the Group in National Tanker Company (Pvt) Limited has been
accounted for using the equity method. The Group holds 50% shares in National
Tanker Company (Pvt) Limited.
Investments in associated undertaking whose operational activities have ceased and
latest financial statements are not available are carried at lower of cost or breakup
values.
(ii) Other Investments
Listed investments are stated at the lower of cost and market value, whereas unlisted
investments are stated at the lower of cost and break-up value. Decrease in the
cost of investments is charged to income currently.
3.8 Stores and spares
Stores are valued at the weighted average cost while spares are valued at cost determined
on the first-in first-out basis; Stores and spares in transit are valued at cost accumulated
to the balance sheet date.
Certain spares having low value and high consumption levels are charged to income
at the time of purchase.
3.9 Insurance claims
Cost of repairs recoverable as hull claims is taken to insurance claims receivable.
Other claimable expenses relating to hull are charged to income currently and claims
filed thereagainst are taken to income when such claims are accepted by the underwriters.
Afloat medical expenses, cargo claims and other relevant recoverable amounts from
underwriters are taken to insurance claims.
3.10 Foreign currency translation
Assets and liabilities in foreign currencies are translated into rupees at the rates of
exchange approximating those prevailing at the balance sheet date. Foreign currency
transactions are translated into rupees at the last month's average rate of exchange.
Exchange differences are taken to profit and loss account except for exchange differences
arising in respect of foreign currency loans obtained to finance purchase of vessels,
which are capitalised in accordance with note 3.6 above.
3.11 Revenue recognition
Freight earnings and related expenditure in respect of voyages other than own
vessels time charter voyages are accounted for on the basis of completed voyages.
Voyages are taken as complete when a vessel arrives at the last port of discharge
on or before the balance sheet date.
With respect to own vessels time charter voyages, freight earnings and related
expenditure are accounted for on the basis of number of days to the balance sheet
date.
Dividend income is recognised when the Group's right to receive the dividend is
established.
Income from certificates of deposits is recognised on accrual basis on the assump-
tion that the certificates will be retained to maturity.
3.12 Incomplete voyages
Freight earnings and related expenses including bunker and other lubricants on board
the vessels in respect of voyages not completed are carried forward. Earnings and
expenses in such cases comprise only those transactions which have been reported by the
year end and do not necessarily include all earnings and expenses incurred to the balance
sheet date.
Diesel, fuel and lubricants on board are valued at cost determined on the 'first-in first-out
basis.
2000 1999
(Rupees '000)
4. ISSUED, SUBSCRIBED AND PAID-UP CAPITAL
24,130,789 ordinary shares of Rs 10 each issued
as fully paid to shareholders of former
NSC and PSC in consideration of their
shareholdings in those companies 241,308 241,308
25,900,000 ordinary shares of Rs 10 each issued
as fully paid to the Government of
Pakistan for cash received in the year 1985 259,000 259,000
64,309,800 ordinary shares of Rs 10 each issued as
fully paid to the Government of Pakistan
on financial restructuring of Pakistan
National Shipping Corporation in the
year 1989-90 643,098 643,098
----------- ----------- -----------
114,340,589 1,143,406 1,143,406
========== ========== ==========
5. CAPITAL RESERVES
Transferred from shareholders' equity at the
time of merger of former NSC and PSC in PNSC 126,843 126,843
========== ==========
6. ADJUSTMENT TO OPENING ACCUMULATED LOSS RESULTING FROM
CHANGES IN ACCOUNTING POLICIES AS REFERRED TO IN NOTES 3.3, 3.4
AND 3.6
2000 1999
(Rupees '000)
Opening accumulated loss, as previously reported (426,085) (311,795)
Adjustments resulting from changes in accounting
policies in respect of:
Staff retirement gratuity 4,571 7,599
Post retirement medical benefits (78,105) (78,254)
Employees' compensated absences (83,594) (114,165)
Drydock costs 156,374 170,293
------------ ------------
(754) (14,527)
------------ ------------
Revised opening accumulated loss (426,839) (326,322)
========== ==========
6.1 OTHER RESERVES - SHARE OF GROUP IN THE RESERVES OF
PAKISTAN CO-OPERATIVE SHIP STORES (PRIVATE) LIMITED
Share Premium Account 1 1
General Reserve 22 22
------------ ------------
23 23
========== ==========
7. MINORITY INTEREST
Share of minority in:
Share capital 100 100
Share Premium Account 1 1
General Reserve 18 18
Un-appropriated profits brought forward 802 790
Current year's results (36) 12
------------ ------------
885 921
========== ==========
8. LONG-TERM LOAN - SECURED
Lender Interest
National Bank of 2.95% above 6 months 1,282,947 1,273,135
Pakistan -Bahrain LIBOR per annum
USS 24.53 million
(1999: USS 24.53 million)
Less : Current maturity of long-term loan 1,282,947 --
------------ ------------
-- 1,273,135
========== ==========
The above loan is secured by a guarantee given by State Bank of Pakistan on behalf
of Pakistan National Shipping Corporation and is repayable in lumpsum by December
2000. However, the Corporation has approached the National Bank of Pakistan (NBP) and
Ministry of Finance for rescheduling of the above loan. Pending finalisation of the
rescheduling arrangements with NBP, the management is confident that the Corporation
will not be required to make any repayments towards the above balance in the year 2000-
2001.
2000 1999 Restated
(Rupees '000)
9. DEFERRED LIABILITIES
Staff gratuity 256,212 259,675
Post retirement medical benefits 80,390 78,105
Employees' compensated absences 112,336 113,594
------------ ------------
448,938 451,374
========== ==========
2000 1999
(Rupees '000)
10. CREDITORS, PROVISIONS AND ACCRUALS
Creditors 309,279 275,423
Agents' and owners' balances 147,337 160,453
Accrued liabilities 404,253 236,242
Accrued interest on secured long-term loan 124,941 3,980
Deposits (note 10.1) 16,745 14,572
Workers' Profit Participation Fund (Note 10.2) 8,330 18,301
Other liabilities 63,701 60,476
------------ ------------
1,074,586 769,447
========== ==========
Amount payable to National Tanker Comply (Pvt) Ltd, an associated undertaking, at the
end of the year amounted to Rs 2.1 million (1999: Rs NIL ).
10.1 These deposits are interest free and are repayable on demand or on completion of specific
contracts.
10.2 Workers' Profit Participation Fund
2000 1999
(Rupees '000)
Balance at July 1 18,301 17,746
Interest on funds utilised during the year (Note 33) 1,585 2,055
------------ ------------
19,886 19,801
Less: Amount paid 11,556 1,500
------------ ------------
Balance at June 30 8,330 18,301
========== ==========
11. SHORT-TERM RUNNING FINANCE UTILISED
UNDER MARK-UP ARRANGEMENT
The facility for running finance available from a bank upto December 31, 2000 amounted
to Rs 150 million (1999: Rs 150 million) and carded mark-up at the rate of Re 0.41 per
Rs 1,000 per day ( 1999: Re 0.48 per Rs' 1,000 per day). The arrangement is secured by
mortgage of three of the Corporation's vessels.
12. CONTINGENCIES
(a) The contingent liability in respect of claims not admitted by the Corporation
amounts to Rs 317,897 thousand (1999: Rs 384,467 thousand). These include
Rs 38,383 thousand (1999: Rs 38,728 thousand) approximately in respect of
insurance claims which, if accepted, will be borne by the Corporation as the P&I
Club, Oceanus Mutual Underwriting Association (Bermuda) Limited has gone into
liquidation. Out of the remaining claims an amount of Rs 224,050 thousand
(1999: Rs 225,700 thousand) approximately would be recoverable from the P&I
Club, Steamship Mutual Underwriting Association, in the event these claims are
accepted by the Corporation.
(b) The Corporation has not accepted liability in respect of customs duty approximating
Rs 2,500 thousand (1999: Rs 2,500 thousand) relating to the sale of the vessel my
Bhambore during the year ended June 30, 1978. The duty was claimed from the
Corporation and the matter has been taken up with the appropriate government
agencies.
(c) The former owners of East & West Steamship Company and Trans Oceanic
Steamship Company Limited had initiated litigation that involved the Government
of Pakistan and the Corporation.
Following the Supreme Court's adjudication of the East & West Steamship Company's
matter in favour of the former owners, the Government provisionally .. assessed
additional compensation due to the former owners at approximately Rs 97
million. Although a major portion of this amount has been settled by the
Government, the Government holds the Corporation liable for this amount by
virtue of the net assets of the East & West Steamship Company having become
vested in the Corporation. The Corporation disclaims any liability in respect of
the above mentioned amount and any accretions to it upto final determination and
settlement of the matter.
(d) One of the customers of the Corporation has filed claims amounting to
approximately RS 100.126 million for failure to deliver vessel on time, failure to
ship minimum quantity as specified in the charter party, short delivery of cargo
and various other disputes. The Corporation is currently negotiating with the
customer for waiver of these claims. Pending resolution of these negotiations,
no provision has been made in these accounts in respect of the above claim.
(e) During the year the management of the Corporation has identified that funds of the
Staff Contributory Provident Fund have been misappropriated by certain trustees of
this Fund. A detailed investigation is currently being carried out to ascertain the
total amount misappropriated. Pending completion of the investigation, it is not
possible to determine the effect, if any, which this misappropriation may have on'
these financial statements and therefore no provision has been made in respect of
any eventual loss which the Corporation might have to bear.
13. FIXED ASSETS - TANGIBLE
13.1 The following is a statement of fixed assets:
Cost and Additions/ Cost and Accumu- Charge for Accumulated Written Annual
revaluation (deletions) revaluation lated dep- the year/ depreciation down value rate of
as at at June 30, 2000 reciation (Accumulated amortization at June 30, deprecia-
July 1, 1999 amortization depreciation at June 30, 2000 2000 tion %
(RESTATED) at July 1, 1999 on deletions)
(RESTATED)
-----------------------------------------------------------------------Rupees '000------------------------------------------------------------------
Leasehold land 13,344 -- 13,344 3,169 134 3,303 10,041 1
Building on leasehold land 68,248 -- 68,248 46,562 2,846 49,408 18,802 2.5 to 15
Fleet
Cost and revaluation 3,028,566 -- 3,028,566 1,253,721 162,907 1,416,628 1,611,938 4
Dry dock costs 399,319 90,221 489,540 242,945 94,969 337,914 151,626 20 and 40
------------ ------------ ------------ ------------ ------------ ------------ ------------
3,427,885 90,221 3,518,106 1,496,666 257,876 1,754,542 1,763,564
Vehicles 27,775 -- 26,944 23,778 2,239 25,234 1,710 20
(831) (783)
Office machines and appliances 9,678 82 9,741 7,856 805 8,645 1,096 10 to 15
(19) (16)
Furniture and fixtures 13,040 105 13,145 11,406 526 11,932 1,213 10 to 15
Electrical fittings 7 -- 7 7 -- 7 -- 10
Motor launch and Jetty 18 -- 18 18 -- 18 -- 10 to 15
Equipment on board 67,590 10,154 77,744 43,073 8,405 51,478 26,266 10 to 15
Container fittings                  3,468 -- 3,468 3,468 -- 3,468 -- 15
Beach huts 348 -- 348 161 21 182 166 15
Workshop machinery
and equipment 8,259 499 8,388 4,451 552 4,853 3,535 5 to 10
(370) (150)
Computer equipment 15,354 591 15,945 14,125 928 15,053 892 25
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total 3,655,014 101,652 3,755,446 1,654,740 274,332 1,928,123 1,827,323
(1,220) (949)
========== ========== ========== ========== ========== ========== ==========
1999 3,557,164 98,381 3,655,014 1,340,789 314,165 1,654,740 2,000,274
(531) (214)
========== ========== ========== ========== ========== ========== ==========
Effect of change in accounting policy , as referred to in note 3.6 included in additions and
depreciation for the year ended June 30, 2000 amounts to Rs 90.221 million and Rs 94.969
million (1999: Rs 77.009 million and Rs 90.928 million ) respectively.
During the year the management has decided to revise the useful life of vessels from 23 to 25
years. Had the estimate not been changed the loss before taxation for the year would have been
higher by RS. 46.536 million.
During the year the management has decided to revise the depreciation rate on computers from
15 to 25%. Had the estimate not been changed the loss before taxation for the year would have
been lower by Rs 0.107 million.
Cost of fleet includes an amount of Rs 449.27 million representing exchange losses till June 30,
1998 on loan obtained for acquisition of three vessels. The exchange losses incurred during the
year amounting to Rs 9.812 million (1999:133.612 million ) has been charged to the profit and
loss account as the management considers that in view of the current depressed freight rates their
capitalisation would result in the book value of the vessels exceeding the net recoverable value
of these assets.
Cost and accumulated depreciation of fleet include Rs 1,440 thousand each in respect of mv Ilyas
Bux which has not been revalued. This vessel was seized by the Indian authorities during the
1965 war and the Corporation does not have physical possession or control over it.
Three vessels are mortgaged to secure bank guarantees issued on behalf of the Group
and to secure the running finance facility as described in note 11.
13.2 The depreciation charge for the year
has been allocated as follows:
2000 1999 Restated
(Rupees '000)
Fleet expenses - direct (Note 27) 266,281 306,711
Fleet expenses - indirect (Note 28) 552 572
Administration and general expenses (Note 29) 7,499 6,882
------------ ------------
274,332 314,165
========== ==========
13.3 Adjustments to, balances as on July 1, 1999 resulting from change in accounting policy as
referred to in note 3.8 are as follows:
COST ACCUMULATED WRITTEN
DEPRECIATION DOWN
VALUE
--------------------Rupees '000---------------------
Opening balances as
previously reported 3,234,854 1,188,772 2,046,082
Adjustment resulting from
change in accounting policy 322,310 152,017 170,293
------------ ------------ ------------
Restated opening balances 3,557,164 1,340,789 2,216,375
========== ========== ==========
13.4 The Corporation's fleet was revalued on June 30, 1987 and produced a net deficit of Rs
688,332 thousand which was charged to the profit and loss account in that year.
Had there been no revaluation, the written down value of the fleet would have
been higher by Rs 20,518 thousand (1999: Rs 54,746 thousand). 
14. LONG-TERM INVESTMENTS
Percentage 2000 1999
holding (Rupees '000)
(if over 10%)
(i) Joint stock companies:
Listed
6,930 (1999: 6,930) ordinary shares of Rs 10 each
fully paid of Siemens (Pakistan) Engineering Company
Limited, market value Rs 610 thousand
(1999: Rs 562 thousand) 88 88
60,690 (1999: 50,575) ordinary shares of Rs 10 each
fully paid of Pakistan State Oil Company Limited,
market value Rs 9,847 thousand
(1999: Rs 4,678 thousand) 40 40
------------ ------------
128 128
Aggregate amount of market value in respect of listed
companies' shares is Rs 10.457 thousand
(1999:Rs 5.240 thousand)
Unlisted
10,000 (1999: 10,000) ordinary shares of Rs 10 each of
Pakistan Tourism Development Corporation Limited
(Less than ! 0 percent share in the investee company's
equity) [Chief Executive: Mr. Mehdi] 100 100
------------ ------------
100 100
------------ ------------
228 228
(ii) Associated undertakings - unlisted (stated at
lower of cost/break-up value):
50 (1999: 50) ordinary shares of Rs 100 each of
Shipping Management Limited (in liquidation) -- 5 5
12,250 (1999: 12,250) ordinary shares of Rs 100
each fully paid of Muhammadi Engineering Works
Limited [value based on net assets of investee
Rs 1,600 thousand (1999: Rs 1.600 thousand) 49 848 848
(Last audited accounts - year ended December 31, 1982)]
12,250 (1999: 12,250) ordinary shares of Rs 100
each fully paid of Muhammadi Shipping Agency Limited
[value based on net assets of investee Rs 969 thousand
(1999: Rs 969 thousand) 49 824 824
(Last audited accounts - year ended December 31, 1973)]
4,881 (1999: 4,881) ordinary shares of Rs 100 each fully
paid of Pakistan Victualling Company Limited [value
based on net assets of investee Rs 352 thousand
(1999: Rs 352 thousand) 49 328 328
(Last audited accounts- year ended December 31, 1973)]
400 (1999: 400) ordinary shares of Rs 100 each fully paid
of Pakistan Ship Chandling Company Limited [value
based on net assets of investee Rs 20 thousand
(1999: Rs 20 thousand) 40 27 27
(Last audited accounts - year ended December 31, 1973)]
4,881 (1999: 4,881) ordinary shares of Rs 100 each fully
paid of Pakistan Stevedoring Company Limited [value based
on net assets of investee Rs 360 thousand
(1999: Rs 360 thousand) 49 328 328
(Last audited accounts -- year
ended December 31, 1973)]
100,000 (1999: 100,000) ordinary shares of Rs 10 each
allotted as fully paid of Premier Container Terminal Limited
[value based on net assets of investee Rs 1,000 thousand
(1999: Rs 1,000 thousand) 20 1,000 1,000
------------ ------------
(Last audited accounts - year ended June 30, 1996)] 3,360 3,360
Less: Provision for decrease in the value of investments 1,512 1,512
------------ ------------
1,848 1,848
(iii) Others:
600 (1999: 600) units of Rs 10 each of National Investment 6 6
Trust [market value Rs 6.4 thousand (1999: Rs 4.5 thousand)]
Less: Provision for decrease in value of investment -- 2
------------ ------------
6 4
------------ ------------
2,082 2,080
========== ==========
15. INVESTMENT IN ASSOCIATED UNDERTAKING - ACCOUNTED FOR UNDER
EQUITY METHOD OF ACCOUNTING
2000 1999
(Rupees '000)
Share of the Group in the net assets of
National Tanker Company (Private) Limited 50 17,108 44,578
========== ==========
The share of the group in the net assets has been determined on the basis of the draft
financial statements for the year ended June 30, 2000. These financial statements have not
been approved by the Board of Directors so far.
16. LONG-TERM LOANS - CONSIDERED GOOD
Vehicle loans to
Executives 1,378 1,782
Other employees net of provision
for doubtful balances Rs 121 thousand
(1999: Rs 121 thousand) 1,618 2,231
------------- -------------
2,996 4,013
House building loans to
Executives 15,226 20,314
Other employees net of provision
for doubtful balances Rs 15 thousand
(1999: Rs 15 thousand) 14,509 17,774
Other loans 29,735 38,088
Executives 341 616
Other employees 150 316
------------- -------------
491 932
------------- -------------
33,222 43,033
Less: Due within one year
Executives 4,353 5,180
Other employees 2,929 3,414
------------- -------------
7,282 8,594
------------- -------------
25,940 34,439
========== ==========
The maximum aggregate amount due from executives at the end of any month during
the year was Rs 26,047 thousand (1999: Rs 31,493 thousand).
The aggregate amount outstanding for a period exceeding three years is Rs 25,589
thousand (1999: Rs 24,790 thousand).
Vehicle loans represent loans to employees for purchase of vehicles and are secured
against borrowers' personal guarantees and mortgage of vehicles. These loans are interest
free and are recoverable over 72 monthly installments.
House building loans represent loans to employees for purchase of plots of land,
residential accommodation or construction and renovation of houses. These loans
are recoverable over 180 monthly installments. An amount of Rs 25;933 thousand
(1999: Rs 32,959 thousand) is secured against mortgage. Interest on such loans to
officers is charged at various rates while no interest is being charged on loans given to
staff.
Other loans represent loans to employees for purchase of furniture, fixtures and
repairing of house etc. These loans are interest free, unsecured and are recoverable over
25 to 64 monthly installments.
2000 1999
(Rupees '000)
17. STORES AND SPARES
Stores
at depots 15,628 15,781
at buildings 171 168
on board 33,719 29,597
in transit -- 3
------------ ------------
49,518 45,549
Spares
at buildings 658 876
on board 82,942 87,959
in transit 3,741 395
------------ ------------
136,859 134,779
========== ==========
18. FREIGHT RECEIVABLE - UNSECURED
Considered good 244,732 202,858
Considered doubtful 235,881 231,474
------------ ------------
480,613 434,332
Less: Provision for doubtful receivables 235,881 231,474
------------ ------------
244,732 202,858
========== ==========
Amount receivable from National Tanker Company (Pvt) Ltd, an associated undertaking,
at the end of the year amounted to Rs 76,190 thousand (1999: Rs 11,340 thousand).
2000 1999
(Rupees '000)
19. AGENTS' AND OWNERS' BALANCES
Considered good
secured 26,896 9,974
unsecured 197,234 93,715
------------ ------------
224,130 103,689
Considered doubtful 13,087 157,910
------------ ------------
237,217 261,599
Less: Provision for doubtful balances 13,087 157,910
------------ ------------
224,130 103,689
========== ==========
20. OTHER DEBTORS
Rent receivable
considered good 4,029 8,895
considered doubtful 3,984 2,484
------------ ------------
8,013 11,379
Less: Provision for doubtful receivables 3,984 2,484
------------ ------------
4,029 8,895
Accrued income on deposits 477 427
Others
considered good 60,446 48,149
considered doubtful 49,195 40,591
------------ ------------
109,641 88,740
Less: Provision for doubtful receivables 49,195 40,591
------------ ------------
60,446 48,149
------------ ------------
64,952 57,471
========== ==========
Amounts due from Muhammadi Engineering and National Tanker Company (Pvt) Ltd.,
associated undertakings, at the year-end aggregated to Rs 7,953 thousand (1999: Rs 7,971
thousand). The maximum amount due from these associated undertakings at the end of
any month during the year was Rs 8,680 thousand (1999: Rs 7,971 thousand).
Others include Rs 54,529 thousand (1999: Rs 54,529 thousand) gross receivable from Pan
Islamic Steamship Company Limited.
Pan Islamic Steamship Company Limited has disputed the validity of this amount. The
dispute is pending adjudication by the Directorate of Ports and Shipping, Government of
Pakistan. The net exposure to the Group in this respect has been fully provided for in the
books of account.
2000 1999
(Rupees '000)
21. LOANS AND ADVANCES
Considered good
Amounts due from:
Directors -- 47
Executives 25,957 46,655
Other employees 10,623 10,443
Contractors and suppliers 931 1,283
Others 7,372 1,435
------------ ------------
44,883 59,863
Considered doubtful 837 750
------------ ------------
45,720 60,613
Less: Provision for doubtful advances 837 750
------------ ------------
44,883 59,863
========== ==========
The maximum aggregate amounts due from the Directors and Executives at the end of
any month during the year were Rs Nil and Rs 25,957 thousand respectively (1999:
Rs 359 thousand and Rs 46,655 thousand).
22. DEPOSITS AND PREPAYMENTS
Trade:
Considered good 1,332 1,896
Considered doubtful 173 --
------------ ------------
1,505 1,896
Less: Provision for doubtful deposits 173 --
------------ ------------
1,332 1,896
Others:
Considered good 18,205 16,580
Considered doubtful 263 --
------------ ------------
18,468 16,580
Less: Provision for doubtful deposits 263 --
------------ ------------
18,205 16,580
Prepayments 1,825 1,454
------------ ------------
21,362 19,930
========== ==========
23. INCOMPLETE VOYAGES
Cost
Salaries and allowances 2,417 4,179
Diesel, fuel and lubricants 145,975 132,692
Stores and spares issued 7,650 11,236
Insurance 9,665 13,369
Other fleet expenses 16,891 31,256
Charter hire expenses 10,816 20,491
------------ ------------
193,414 213,223
Less: Net freight 26,955 105,757
------------ ------------
166,459 107,466
========== ==========
24. INSURANCE CLAIMS
Considered good 82,448 73,172
Considered doubtful 120,805 120,462
------------ ------------
203,253 193,634
Less: Provision for doubtful claims 120,805 120,462
------------ ------------
82,448 73,172
========== ==========
Included in the above claims are amounts aggregating Rs 110,304 thousand (1999: Rs
109,961 thousand) net of insurance premium which are recoverable from the P&I Club,
Oceanus Mutual Underwriting Association (Bermuda) Limited. The Club has gone into
liquidation, therefore a provision has been made for this amount in these accounts.
2000 1999
(Rupees '000)
25. CASH AND BANK BALANCES
Cash at bank:
In current accounts including foreign
currency balances equivalent to Rs 116,251
thousand (1999: Rs 120,217 thousand) 140,235 137,674
In deposit accounts including foreign'
currency balances equivalent to Rs 67,822
thousand (1999: Rs 90,003 thousand) 71,219 152,245
Cash in hand 73 72
Cash in transit 500 4,961
------------ ------------
212,027 294,952
========== ==========
Deposit accounts include:
a) Rs 10,259 thousand (1999: Rs 43,466 thousand) held as security by National Bank
of Pakistan against guarantees issued on behalf of the Corporation.
b) A term deposit receipt of Rs 2,715 thousand (1999: Rs 1,600 thousand) held
by Habib Bank Limited as security against guarantees issued on behalf of the
Corporation.
2000 1999
(Rupees '000)
26. CHARTERING REVENUES
Own vessels:
Voyage charter revenues 58,585 80,226
Time charter revenues 69,087 140,426
------------ ------------
127,672 220,652
Foreign flag vessels:
Time charter revenues 518,529 355,601
Voyage charter revenues 279,825 388,737
Slot charter revenues 291,469 274,464
------------ ------------
1,089,823 1,018,802
------------ ------------
1,217,495 1,239,454
========== ==========
2000 1999 Restated
(Rupees '000)
27. FLEET EXPENSES - DIRECT
Stevedoring and transshipment expenses 324,921 383,226
Container leasing and other charges 33,267 62,745
Diesel, fuel and lubricants consumed 606,032 319,033
Port, light, canal and customs dues 449,235 368,878
Charter hire and related expenses (Note 27.2) 928,589 863,949
Fleet communication expenses 13,415 13,054
Agency commission and brokerage 141,369 145,360
Salaries and allowances (Note 27.1) 191,451 212,625
Victualling expenses 34,055 32,947
Insurance 122,531 128,339
Claims 15,258 3,058
Stores and spares consumed 169,223 129,228
Repairs, maintenance and special surveys 196,863 211,858
Depreciation (Note 13.2) 266,281 306,711
------------- -------------
Sundry expenses: 3,492,490 3,181,011
Crew expenses (Note 27.3) 15,504 18,075
Vessel general expenses (Note 27.4) 36,966 34,069
------------- -------------
52,470 52,144
------------- -------------
3,544,960 3,233,155
========== ==========
27.1 The above include Rs 3.935 million (1999: Rs 2.498 million) in respect of staff provident
  fund contribution.
2000 1999
(Rupees '000)
27.2 CHARTER HIRE AND RELATED EXPENSES
Foreign flag vessels:
Time charter expenses 479,299 281,049
Voyage charter expenses 272,003 382,377
Slot charter expenses 177,287 200,523
------------- -------------
928,589 863,949
========== ==========
27.3 CREW EXPENSES
Car, taxi and launch hire 7,138 7,319
Laundry charges 379 676
Repatriation charges. 2,123 4,207
Franchise, medical and others 5,864 5,770
Other miscellaneous expenses -- 103
------------- -------------
15,504 18,075
========== ==========
27.4 VESSEL GENERAL EXPENSES
Vessel survey 1,761 1,033
Advertisement 6,126 7,613
Fumigation 501 440
Fresh water 18,530 17,311
Other miscellaneous expenses 10,048 7,672
------------- -------------
36,966 34,069
========== ==========
28. FLEET EXPENSES - INDIRECT
Conference establishment expenses 940 1,291
Agents' and other general expenses (Note 28.2) 12,594 14,048
Depreciation (Note 13.2) 552 572
Salaries and allowances - Regional offices. (Note 28.1) 18,751 21,586
General establishment expenses -Regional offices 11,296 14,944
Rent, rates and taxes - Regional offices 8,247 9,498
Gain on exchange (8,488) (3,599)
------------- -------------
43,892 58,340
========== ==========
28.1 The above include Rs 0.277 million (1999: Rs 0.287 million) in respect of staff provident
fund contribution.
2000 1999
(Rupees '000)
28.2 AGENTS' AND OTHER GENERAL EXPENSES
Printing and stationery 294 538
Advertisement and publicity 3,069 2,672
Telephone, telex and postage 7,234 9,889
.Bank charges and commission 1,165 0
Other miscellaneous expenses 832 949
------------- -------------
12,594 14,048
========== ==========
2000 1999 Restated
(Rupees '000)
29. ADMINISTRATION AND GENERAL EXPENSES
Salaries and allowances (Note 29.1) 166,824 173,561
General establishment expenses (Note 29.2) 65,294 70,840
Rent, rates and taxes 6,041 5,534
Scholarship and training expenses 254 425
Ministry of communication expenses 1,500
Auditors' remuneration 960 989
Gifts and donations 208 878
Insurance 1,738 1,987
Depreciation (Note 13.2) 7,499 6,882
Directors' fee 20 12
------------- -------------
250,338 261,108
========== ==========
Donations given during the year amounted to Rs Nil (1999: Rs 450 thousand).
29.1 The above include Rs 7.756 million (1999: Rs 7.876 million) in respect of staff retirement
  benefits.
2000 1999
(Rupees '000)
29.2 GENERAL ESTABLISHMENT EXPENSES
Repairs and maintenance 3,392 1,423
Medical 12,213 15,412
Contribution to employees welfare fund 14 14
Contribution .to group term insurance 528 729
Haj expenses 475 510
Security charges 1,803 --
Sports Club and Milad etc. 1,747 2,594
Travelling and conveyance 4,400 8,758
Entertainment and canteen subsidy 4,245 5,428
Books, periodicals and subscription 1,365 2,104
Uniform and liveries 107 316
Printing and stationery 2,282 1,800
Telephone, telex and postage 9,561 9,096
Light, power and water 11,355 9,697
Computer expenses 2,943 2,473
Advertisement and publicity 1,084 1,764
Office and vehicle repairs 7,323 8,129
Sundries 457 593
------------ ------------
65,294 70,840
========== ==========
30. INSURANCE CLAIMS
Excess recovery from hull, cargo and other claims 4,027 25,644
Others 645 982
------------ ------------
4,672 26,626
========== ==========
31. OTHER INCOME
Rental income 61,819 53,274
Interest on:
loans and advances 813 775
other receivables 253 392
------------ ------------
1,066 1,167
Income from bank deposits
and certificates of deposit 6,554 6,409
Sale of scrap, dunnage etc, 19 83
Agency commission:
associated company 2,271 2,142
others 2,570 867
------------ ------------
4,841 3,009
Profit on disposal of fixed assets 166 --
Dividend income 585 410
Balances no longer payable written back 11,731 4,479
Provisions no longer required written back 11,014 4,565
Sundries:
associated company 281 473
others 24,022 8,576
------------ ------------
24,303 9,049
------------ ------------
122,098 82,445
========== ==========
32. SHARE OF PROFITS IN ASSOCIATED UNDERTAKING
Profit before tax (12,056) 62,993
Prior year adjustment (note 32.1) (18,788) --
------------ ------------
(30,844) 62,993
%age holding of the Group 50% 50%
------------ ------------
Holding of Group (15,422) 31,497
========== ==========
32.1 Prior year adjustment relates to change in financial statements of the associated undertak-
ing for the year ended June 30, 1999 subsequent to finalisation of the group's accounts.
2000 1999 Restated
(Rupees '000)
33. OTHER EXPENSES
Financial charges:
Interest on:
Long-term loans 120,961 103,479
Workers profit participation fund 1,585 2,055
Mark-up on short-term running finance 8,981 13,234
Bank charges 4,393 5,318
------------ ------------
135,920 124,086
Legal and professional charges 2,293 2,369
Provision for doubtful debts:
trade 25,924 10,265
others 10,972 21,443
------------ ------------
36,896 31,708
Provision against damages claim 73,220 --
Provision for staff retirement gratuity 11,639 47,028
Provision for employees compensated absences 29,504 28,314
Provision for post retirement medical benefits 16,957 17,731
Loss on disposal of fixed assets -- 13
Exchange loss on foreign currency loan
obtained for acquisition of vessels 9,812 133,612
------------ ------------
316,241 384,861
========== ==========
34. TAXATION
Current year 31,229 46,930
Prior years 74,649 (32,534)
------------ ------------
105,878 14,396
========== ==========
34.1 Provision for current taxation for the year represents minimum tax at 0.5 percent of
  turnover under section 80 D of the Income Tax Ordinance, 1979.
35. CASH (USED IN ) / GENERATED FROM OPERATIONS,
Loss before taxation and minority interest (503,913) (86,109)
Adjustment for non cash charges and other items:
Share of loss / (profits) in associated undertaking 15,422 (31,497)
Depreciation 274,332 314,165
(Profit)/loss on disposal of fixed assets (166) 13
Provision for staff retirement gratuity 11,639 47,028
Provision for employees compensated absences 29,504 28,314
Provision for post retirement medical benefits 16,957 17,731
Dividend income (585) (410)
Interest income (7,620) (7,576)
Interest expense 131,527 118,768
Provision against diminution in value of
investment written back - (net) (2) --
Working capital changes (Note 35.1) (42,369) (61,243)
Unrealised exchange loss on loan
obtained for acquisition of vessels 9,812 133,691
------------ ------------
(65,462) 472,875
========== ==========
2000 1999
(Rupees '000)
35.1 Working capital changes
(Increase)/decrease in current assets
Stores and spares (2,080) 3,025
Freight receivable (41,874) (31,627)
Agents' and owners' balances (120,441) 15,824
Other debtors (net) (7,431) 27,748
Loans and advances 14,980 (28,816)
Deposits and prepayments (1,432) (377)
Incomplete voyages (58,993) (37,275)
Insurance claims (9,276) (12,899)
------------ ------------
(226,547) (64,397)
Increase in current liabilities
Creditors, provisions and accruals (net) 184,178 3,154
------------ ------------
(42,369) (61,243)
========== ==========
36. CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise of the following items as included in the balance
sheet:
Certificates of deposit with banks and
financial institutions 2,825 4,750
Cash and bank balances 212,027 294,952
Short-term running finance utilised
under mark-up arrangement - secured (146,339) (41,168)
------------ ------------
68,513 258,534
========== ==========
2000 1999 Restated
(Rupees '000)
37. LOSS PER SHARE
Loss for the year (609,755) (100,517)
========== ==========
Number of shares
Average ordinary shares in issue during the year 114,340,589 114,340,589
========== ==========
Rupees Rupee
Loss per share (5.33) (0.88)
========== ==========
38.  FINANCIAL ASSETS AND LIABILITIES
Interest bearing Non Interest bearing
Maturity upto Maturity after Total Maturity upto Maturity after Total
one year one year one year one year Grand Total
---------------------------------------------------------(Rupees'000)----------------------------------------------------------
Financial Assets
Long-term investments -- -- -- -- 19,190 19,190 19,190
Loans to employees 3,704 11,522 15,226 3,578 14,418 17,996 33,222
Freight receivable -- -- -- 244,732 -- 244,732 244,732
Agents' and owners' balances -- -- -- 224,130 -- 224,130 224,130
Other debtors -- -- -- 64,931 -- 64,931 64,931
Deposits -- -- -- 19,537 -- 19,537 19,537
Insurance claims -- -- -- 82,448 -- 82,448 82,448
Certificates of deposit with
financial institutions 2,825 -- 2,825 -- -- -- 2,825
Cash and bank balances 71,219 -- 71,219 140,808 -- 140,808 212,027
------------ ------------ ------------ ------------ ------------ ------------ ------------
77,748 11,522 89,270 780,164 33,608 813,772 903,042
========== ========== ========== ========== ========== ========== ==========
Financial Liabilities
Current maturity of long-term loan  1,282,947 -- 1,282,947 -- -- -- 1,282,947
Long term liabilities -- -- -- -- 448,938 448,938 448,938
Short - term running finance
utilised under mark-up arrangement 146,339 -- 146,339 -- -- -- 146,339
Creditors, provisions and accruals -- -- -- 1,066,256 -- 1,066,256 1,066,256
Unclaimed dividends -- -- -- 9,763 -- 9,763 9,763
------------ ------------ ------------ ------------ ------------ ------------ ------------
1,429,286 -- 1,429,286 1,076,019 448,938 1,524,957 2,954,243
========== ========== ========== ========== ========== ========== ==========
38.1 Concentration of credit risk
Credit risk represents the accounting loss that would be recognised' at the reporting date
if counter parties failed completely to perform as contracted. Out of the total financial
assets of Rs 903.043 million the financial assets which are subject to credit risk amounted
to Rs 902.469 million. The management of the Group believes that it is not exposed to
major concentration of credit risk. To manage exposure to credit risk, the Group applies
credit limits to its customers and also obtains collaterals.
38.2 Foreign exchange risk management
Foreign currency risk arises on receivables and payables transactions at foreign ports and
on long-term foreign currency loan. Foreign currency risks are not covered as a deliberate
management decision.
38.3 Fair value of financial assets
The fair value of all financial assets and financial liabilities is estimated to approximate
their carrying value.
39. GENERAL
39.1 Transactions with associated undertakings
2000 1999
(Rupees '000)
Freight income 79,212 315,412
Agency fee and commission 2,271 2,615
Dividend income -- 1,677
Service charges received 281 --
Purchase of services 275,961 150,668
Rental income 3,609 3,609
Transaction with associated undertakings relating to acquisition and rendering of services
are carried out on commercial terms and conditions. Services, rent and allied expenses are
charged between associated undertakings on the basis of mutually agreed terms.
39.2 Capacity
(a) The carrying capacity of the Corporation's fleet is detailed below:
Bales Grain Dead weight
(cubic meters) (cubic meters) (metric tons)
2000 325,342 346,937 261,836
1999 325,342 346,937 261,836
(b) During the year, the Corporation's vessels undertook 192 voyages including
21 laid-up voyages (1999:166 voyages including 14 laid-up voyages).
(c) During the year, the Corporation's vessels carried 1,342 thousand freight tons
of cargo (1999:1,150 thousand freight tons). This information cannot be related
in any meaningful way with the information in (a) above, as the actual liftings
depend on availability of cargo, type of cargo carried and voyages undertaken.
39.3 Number of employees
2000 1999
Number of employees at June 30 1,021 1,458
40. Corresponding figures
The comparatives have been adjusted to take into account the effects of change in
accounting policies which the Corporation implemented during the year as referred to in
notes 3.3 , 3.4 and 3.6 to these accounts.
Vice Admiral S. Tauquir H. Naqvi Muhammad Khusrow Khowaja
Chairman and Chief Executive Director
PAKISTAN CO-OPERATIVE SHIP STORES (PRIVATE)
SHAREHOLDERS STATISTICS AS AT 30TH JUNE, 2000
NO. OF SHAREHOLDERS SHAREHOLDING TOTAL SHARES HELD
4 holding from 1 to 100 shares 4
3 holding from 101 to 200 shares 600
1 holding from 201 to 400 shares 400
1 holding from 401 to 1.500 shares 1196
----------- -----------
9 *2200*
========== ==========
CATEGORIES OF SHAREHOLDERS NUMBER SHARES  PERCENTAGE
HELD
Individual 4 4 0.18
Investment Companies -- -- --
Insurance Companies -- -- --
Joint Stock Companies 4 1796 81.64
Financial Institution -- -- --
Modaraba -- -- --
Other - Administrator, Abandoned
Properties Organisation 1 400 18.80
----------- ----------- -----------
9 *2200 100.00
========== ========== ==========
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