| Dadabhoy Cement Industries Limited |
|
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|
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|
|
|
| Annual
Report 2001 |
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| CONTENTS |
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| COMPANY
INFORMATION |
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|
| NOTICE
OF THE MEETING |
|
|
| DIRECTORS'
REPORT |
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|
| GRAPHS |
|
|
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| AUDITORS'
REPORT TO THE MEMBERS |
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| BALANCE
SHEET |
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|
| PROFIT
AND LOSS ACCOUNT |
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|
| CASH
FLOW STATEMENT |
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|
| STATEMENT
OF CHANGES IN EQUITY |
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| NOTES
TO THE ACCOUNTS |
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| PATTERN
OF HOLDING OF THE SHARES |
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|
| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
| Mr.
Mohammad Hussain Dadabhoy |
- Chairman |
|
| Mrs.
Razia Hussain Dadabhoy |
|
|
| Mrs.
Humaira Dadabhoy |
|
|
| Mr.
Mohammad Amin Dadabhoy |
|
- Chief Executive |
|
| Ms.
Yasmeen Dadabhoy |
|
|
| Mr.
Fazal Karim Dadabhoy |
|
-- |
|
| Mr.
Naseemuddin |
|
|
| COMPANY
SECRETARY |
|
| Mr.
Abdul Wahab |
|
|
| AUDITORS |
|
| Sidat
Hyder Qamar & Company |
|
| Chartered
Accountants |
|
|
| LEGAL
ADVISOR |
|
| M.
Salim Thepdawala & Company |
|
|
| BANKERS |
|
| Allied
Bank of Pakistan Limited |
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| United
Bank Limited |
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| National
Development Finance Corporation (Now NBP) |
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| National
Bank of Pakistan |
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| Deutsche Bank |
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| Bank of Punjab |
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| REGISTERED
OFFICE & SHARES DEPARTMENT |
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| 5th
Floor, Maqbool Commercial Complex, |
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| Jinnah
Co-operative Housing Society, |
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| Block
7 & 8 Shahrah-e-Faisal, |
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| KARACHI |
|
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| FACTORY |
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| Nooriabad
Deh Kalu Kohar |
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| Dist.
Dadu (Sindh) |
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| NOTICE
OF ANNUAL GENERAL MEETING |
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| Notice
is hereby given that the 21st Annual General Meeting of Dadabhoy Cement
Industries Limited |
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| will
be held at 11.00 A.M. on Wednesday the December 11,2001 at Defence Sunset
Club, Defence |
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| Housing
Authority, Karachi, to transact the following business: |
|
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| 1)
To confirm the minute of the 20th Annual General Meeting of the company held
on |
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| December
20, 2000. |
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|
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| 2)
To receive and adopt the Audited Accounts together with Directors' and
Auditors' Report |
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| for
the year ended June 30, 2001. |
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|
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| 3)
To appoint Auditors for the ensuing year and to fix their remuneration. |
|
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| 4)
Any other business with the permission of the Chair. |
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|
By Order of the Board |
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| Karachi |
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|
(Abdul Wahab) |
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| Dated:
November 16, 2001 |
|
Company Secretary |
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| NOTE: |
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| 1.
The share transfer books of the Company will remain closed from December 05,
2001 to |
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| December
11, 2001 (both days inclusive). |
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|
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| 2.
Any member of the Company entitled to attend and vote may appoint another
member as his/ |
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| her
Proxy to attend and vote on his/her behalf: |
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|
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| 3.
Proxies must be received at the registered office of the company not less
than 48 hours before |
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| the meeting. |
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| DIRECTORS'
REPORT TO THE SHAREHOLDERS |
|
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| The
Directors take pleasure in presenting their 21st Annual Report along with the
Company's Audited |
|
| Accounts
for the year ended 30th June, 2001 and the Auditors' Report thereon. |
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|
| PRODUCTION
AND SALES |
|
| The
production and sale of cement for the year compare favourably with last year
and are given as |
|
| under:- |
|
|
|
2001 |
2000 |
|
|
|
(M/Ton) |
(M/Ton) |
|
|
|
|
| Production |
|
|
362,583 |
350,542 |
|
| Sale |
|
|
364,941 |
348,781 |
|
|
|
| PLANT
PERFORMANCE |
|
| The
Plant performance during the year was satisfactory. However, due to over
supply in the market the |
|
| plant
could operate at 61% capacity. |
|
|
| OPERATING
RESULTS |
|
| The
total sale of Rs. 1,341.692 million during the year registered an increase of
Rs. 77.233 million |
|
| (6.12%)
over the previous year. However, the net sale amounting to Rs. 782.647
million (2000 - Rs. |
|
| 776.127
million) has shown a nominal increase of Rs. 6.52 million. Inspire of the
stringent market |
|
| conditions
the sale of the company has shown increasing trend both in term of value and
quantity. |
|
|
| During
the year Government imposed Sales Tax on Cement Industry and reduced the
Excise Duty to |
|
| Rs.
1,000 per Metric Ton from Rs. 1,400 per Metric Ton. The imposition of Sales
Tax coupled with |
|
| increase
in prices of Furnace Oil adversely effected the profitability of the company. |
|
|
| CONVERSION
OF PLANT INTO COAL FIRING SYSTEM & OPTIMISATION |
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| The
cement plant of your company is the first ever-local manufactured plant. The
company has once |
|
| again
taken lead by introducing Coal Technology for Cement and other process
industries in place of |
|
| Furnace
Oil. By giving this idea company has tried to contribute its due share for
the betterment of the |
|
| economy
and to save the cement industry from total collapse. |
|
|
| Substantial
progress has been achieved by the company in respect of converting Plant to
coal firing |
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| system
and by the Grace of ALLAH at present company is using coal as a burning fuel
to the extent |
|
| of
50% of the total fuel requirement. |
|
|
| In
order to be more competitive in the market the Management also taken steps to
optimize the Plant |
|
| so
to curtail the cost of production by achieving more efficiency in consumption
of fuel. |
|
|
| MARKET
REVIEW & FUTURE PROSPECTS |
|
| Cement
Industry in Pakistan continues to be in crisis. Primary reason that the
installed capacity of |
|
| the
production in the country far exceeds the demand. The existing over capacity
in the Industry has |
|
| resulted
in an industry-wise lower capacity utilization. |
|
|
| In
order to restore macro-economic stability and business confidence, government
has taken number |
|
| of
steps such as mega development projects. As well as the changed scenario in
Afghanistan it is |
|
| expected
that the gap between demand and supply will reduce considerably in coming
years. |
|
|
| Furthermore,
optimization and converting the plant into coal will reduce the cost of
production and |
|
| ultimately
company will be in a position to export the cement at competitive price as
well as expected |
|
| export
to Afghanistan will create a situation where company will be able to produce
and sale more |
|
| cement. |
|
|
| AUDITORS'
OBSERVATIONS |
|
| The
Auditors of the company have qualified the report due to significance of the
matter as referred in |
|
| para
(a) of the Auditors Report. The Management has explained the status of the
matter in respective |
|
| notes
to the financial statements. The Company is negotiating a settlement with
National Bank of |
|
| Pakistan
(former NDFC) and determination of the ultimate liability of the company is
dependent upon |
|
| the
completion of said negotiations. Different options for fair and amicable
settlement and reschedul- |
|
| ing
are under consideration. The Management is fully confident that National bank
of Pakistan - the |
|
| largest
Bank would never go for the option of closure of a running industry and / or
any other action not |
|
| in
the interest of shareholders, employees and other creditors. We feel under
the able Management of |
|
| NBP
matter would be resolved amicably. |
|
|
| Regarding
advances and security it is clarified that these advances were given during
last year and as |
|
| per
the advice of the Auditors the company had duly recovered the same. However,
since the same |
|
| was
recovered during the year and remain outstanding till the signing of last
Audited Accounts there |
|
| fore,
Auditors have raised this observation. As far as security is concerned, the
shares are pledged |
|
| since
1996 and same were given to meet the requirement. It is the routine practice
in the Banking and |
|
| Industrial
Sector. Since 1996, Auditors had never raised any objection. |
|
|
| AUDITORS |
|
| M/S.
Sidat Hyder Qamar & Company Chartered Accountants, the present auditors
retire and being |
|
| eligible
offer themselves for reappointment for next year. |
|
|
| PATTERN
OF SHAREHOLDING |
|
| The
shareholding pattern of the company as on June 30, 2001 is included in the
annual report. |
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|
| MANAGEMENT
RELATIONSHIP |
|
| The
management relations remained cordial throughout the year and Board wishes to
place on record |
|
| its
appreciation for the dedicated efforts and services rendered by the officers
and workers with the |
|
| expectation
that the same zeal would be witnessed in the years to come. |
|
|
| ACKNOWLEDGEMENTS |
|
| The
board acknowledge with deep appreciation and wish to place on record, thanks
to customers who |
|
| patronize
our products and appreciate the help and support from the vendors and
contractors because |
|
| of
whose prompt services we have made good progress on our projects. |
|
|
|
For and on behalf of the Board |
|
|
|
|
|
| Karachi, |
|
MUHAMMAD AMIN DADABHOY |
|
| November
16, 2001 |
|
CHIEF EXECUTIVE |
|
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of DADABHOY CEMENT
INDUSTRIES LIMITED |
|
| as
at 30 June 2001 and the related profit and loss account, cash flow statement
and statement |
|
| of
changes in equity together with the notes forming part thereof, for the year
then ended and we |
|
| state
that we have obtained all the information and explanations which, to the best
of our |
|
| knowledge
and belief, were necessary for the purposes of our audit. |
|
|
| It
is the responsibility of the Company's management to establish and maintain a
system of |
|
| internal
control, and prepare and present the above said statements in conformity with
the |
|
| approved
accounting standards and the requirements of the Companies Ordinance, 1984.
Our |
|
| responsibility
is to express an opinion on these statements based on our audit. |
|
|
| We
conducted our audit in accordance with the auditing standards as applicable
in Pakistan. |
|
| These
standards require that we plan and perform the audit to obtain reasonable
assurance |
|
| about
whether the above said statements are free of any material misstatement. An
audit in- |
|
| cludes
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
signifi- |
|
| cant
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)
as more fully explained in notes 6.2, 6.3 and 11 (i) to the accounts,
subsequent to the |
|
| balance
sheet date, the Division Bench of Honourable High Court of Sindh and the Hon- |
|
| ourable
Supreme Court of Pakistan have dismissed the Company's Appeals filed conse- |
|
| quent
upon the dismissal by the Honourable High Court of Sindh of the various
Judicial |
|
| Applications
filed by the Company against the decree awarded by the said Court on 18 |
|
| February
1998 in favour of former National Development Finance Corporation (NDFC) [now |
|
| merged
with National Bank of Pakistan (NBP)], the lender of long term loans. The
Hon- |
|
| ourable
Supreme Court of Pakistan had, however, allowed a period of one month to the |
|
| Company
from the date of the order dated 2 October 2001 for settlement of their
account |
|
| with
former NDFC (now NBP) during which period former NDFC (now NBP) was
restrained |
|
| to
further proceed in any execution application. The aforesaid settlement is
still pending. |
|
| As
at the balance sheet date, the balance of long-term loans due to former NDFC
(now |
|
| NBP)
as appearing in these accounts is Rs. 598.913 million as against the decretal |
|
| amount
of Rs. 1,072.007 million. No provision has been made in these accounts for
the |
|
| difference
of Rs. 473.094 million between the decretal amount and the liability
accounted |
|
| for
by the Company; |
|
|
|
|
|
| b)
in our opinion, proper books of account have been kept by the Company as
required by |
|
| the
Companies Ordinance, 1984; |
|
|
|
| c)
in our opinion: |
|
|
|
| i) the balance sheet and profit and loss
account together with the notes thereon have |
|
| been
drawn up in conformity with the Companies Ordinance, 1984, and are in
agreement |
|
| with
the books of account and are further in accordance with accounting policies |
|
| consistently
applied; |
|
|
| ii)
the expenditure incurred during the year was for the purpose of the Company's |
|
|
| business; and |
|
|
|
|
| iii)
the business conducted, investments made and the expenditure incurred during |
|
| the
year were in accordance with the objects of the Company except for the fact |
|
| that
the Company has provided security and made advances as referred to in note |
|
| 14.1
and 19.1 to the accounts respectively. However, such advances have been |
|
| realised
/ adjusted during the year to comply with the provisions of the Companies |
|
| Ordinance, 1984; |
|
|
|
|
| d)
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 in view of the
signifi- |
|
|
| cance
of the matters stated in paragraph (a) above respectively do not give a true
and fair |
|
| view
of the state of the Company's affairs as at 30 June 2001 and of the profit,
its cash |
|
|
| flows
and changes in equity for the year then ended; and |
|
|
|
|
|
| e)
in our opinion, no Zakat was deductible at source under the Zakat and Ushr
Ordinance, |
|
| 1980. |
|
|
|
|
|
|
| We
further draw attention to the following matters: |
|
|
| i)
the ultimate outcome of contingencies disclosed in note 11 (ii) to (viii) to
the ac- |
|
| counts,
aggregating to Rs. 109.162 million, cannot presently be determined and, |
|
| hence,
no provision for the liability that may result therefrom has been made in the |
|
| accounts
for the current year. |
|
|
|
|
| ii)
as stated in note 2.6 to the accounts, the Company is charging depreciation
on |
|
| cost
of plant, machinery and quarry equipment on the basis of production unit |
|
| method,
whereby the rate of depreciation is computed with reference to the propor- |
|
| tion
which the actual production bears to production units estimated to be pro- |
|
| duced
during the useful economic life of such assets. The Company over the re- |
|
| cent
years is experiencing a slump in demand and hence decline in production |
|
| thereby
giving rise to unutilised capacity. In view of the above, there is a need to |
|
| review
the depreciation method currently being applied to the above assets and if, |
|
| there
has been a significant change in the expected pattern of economic benefits |
|
| from
these assets, such method be adopted as would reflect the changed pattern |
|
| as
required by IAS-16 "Property, Plant and Equipment". |
|
|
|
| iii)
as explained in notes 6.2, 6.3 and 11 (i) to the accounts and in view of the
uncer- |
|
| tainties
inherent in such disputes, the future operations of the Company is de- |
|
| pendent
upon the ultimate outcome of settlement with former NDFC (now NBP). |
|
|
| Karachi: |
|
|
Sidat Hyder Qamar & Co. |
|
| Dated:
16th November, 2001 |
|
Chartered Accountants |
|
|
|
|
|
|
|
|
| BALANCE
SHEET AS AT 30 JUNE 2001 |
|
|
|
NOTE |
2001 |
2000 |
|
|
|
(Rupees in
'000') |
|
| SHARE
CAPITAL AND RESERVES |
|
| Authorized
capital |
|
|
600,000 |
600,000 |
|
| 60,000,000
Ordinary shares of Rs., 10/- each |
|
========== |
========== |
|
|
|
|
|
| Issued,
subscribed and paid-up capital |
3 |
398,688 |
398,688 |
|
| Capital reserve |
|
|
33,224 |
33,224 |
|
| Accumulated
profit |
|
|
38,944 |
9,242 |
|
|
------------------ |
------------------ |
|
|
|
|
|
470,856 |
441,154 |
|
| SURPLUS
ON REVALUATION OF FIXED ASSETS |
4 |
791,380 |
791,380 |
|
| REDEEMABLE
CAPITAL |
|
5 |
13,454 |
18,630 |
|
| LONG
TERM LOANS - Secured |
|
6 |
457,929 |
489,357 |
|
| LONG
TERM DEPOSITS |
|
7 |
18,175 |
26,318 |
|
| DEFERRED
TAXATION |
|
27 |
50,000 |
25,000 |
|
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Current
maturities of redeemable capital and |
|
| long term loans |
|
8 |
215,065 |
186,797 |
|
| Running finance
under mark-up arrangement- secured |
9 |
-- |
4,477 |
|
| Creditors,
accrued and other liabilities |
10 |
163,913 |
232,733 |
|
| Taxation - net |
|
|
|
4,180 |
2,143 |
|
| Unclaimed
dividend |
|
|
2,110 |
6,571 |
|
| Dividend
payable |
|
|
-- |
8,654 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
385,268 |
441,375 |
|
| CONTINGENCIES
AND COMMITMENTS |
11 |
-- |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
2,187,062 |
2,233,214 |
|
|
|
|
|
========== |
========== |
|
|
| FIXED
ASSETS - TANGIBLE |
|
|
|
| Operating assets |
|
12 |
1,791,961 |
1,775,575 |
|
| Capital
work-in-progress |
|
13 |
52,339 |
24,635 |
|
| Spares
held for capital expenditure purposes |
|
25,552 |
15,833 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
1,869,852 |
1,816,043 |
|
|
|
|
|
| LONG
TERM INVESTMENTS - at cost |
14 |
71,326 |
71,326 |
|
| LONG
TERM LOANS AND DEPOSITS |
15 |
2,295 |
2,149 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores,
spares and loose tools |
|
16 |
106,372 |
109,152 |
|
| Stock-in-trade |
|
17 |
38,322 |
30,333 |
|
| Trade debts |
|
18 |
34,633 |
87,202 |
|
| Loans,
advances, deposits, prepayments and |
|
|
| other
receivables |
|
19 |
58,165 |
99,864 |
|
| Cash
and bank balances |
|
20 |
6,097 |
17,145 |
|
|
|
|
------------------ |
------------------ |
|
|
|
243,589 |
343,696 |
|
|
|
|
------------------ |
------------------ |
|
|
|
2,187,062 |
2,233,214 |
|
|
========== |
========== |
|
|
| Auditors'
Report Annexed |
|
| These
accounts should be read with the annexed notes. |
|
|
|
MOHAMMAD AMIN DADABHOY |
|
|
FAZAL KARIM DADABHOY |
|
|
Chief Executive |
|
|
Director |
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR ENDED 30 JUNE 2001 |
|
|
|
NOTE |
2001 |
2000 |
|
|
|
(Rupees in
'000') |
|
|
|
|
| Sales - Net |
|
21 |
782,647 |
776,127 |
|
| Cost of sales |
|
22 |
666,289 |
606,069 |
|
|
|
|
------------------ |
------------------ |
|
| Gross profit |
|
|
116,358 |
170,058 |
|
|
| Operating
expenses |
|
| Administrative |
|
23 |
57,710 |
59,719 |
|
| Selling
and distribution |
|
24 |
14,314 |
13,285 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
72,024 |
73,004 |
|
|
------------------ |
------------------ |
|
| Operating profit |
|
|
44,334 |
97,054 |
|
| Other income |
|
25 |
22,330 |
1,910 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
66,664 |
98,964 |
|
|
|
|
------------------ |
------------------ |
|
| Financial
charges |
|
26 |
4,964 |
10,741 |
|
| Workers'
profit participation fund |
|
|
3,085 |
4,411 |
|
|
|
------------------ |
------------------ |
|
| Profit
before taxation |
|
58,615 |
83,812 |
|
|
|
|
| Taxation |
|
|
|
| - current |
|
|
3,913 |
3,881 |
|
| -
deferred |
|
|
25,000 |
25,000 |
|
|
------------------ |
------------------ |
|
|
28,913 |
28,881 |
|
|
------------------ |
------------------ |
|
| Profit
after taxation |
|
|
29,702 |
54,931 |
|
|
|
|
------------------ |
------------------ |
|
| Accumulated
profit/(loss) brought forward |
|
9,242 |
(115,755) |
|
| Transferred
from general reserve |
|
|
-- |
90,000 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
9,242 |
(25,755) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
38,944 |
29,176 |
|
|
| Appropriations: |
|
| Interim
dividend @ Nil (2000: 5%) |
|
|
-- |
19,934 |
|
|
|
|
------------------ |
------------------ |
|
| Accumulated
profit carried forward |
|
38,944 |
9,242 |
|
|
========== |
========== |
|
|
|
|
|
|
|
|
(Rupees) |
|
|
|
|
|
|
|
| Earning
per share - Basic and diluted |
29 |
0.74 |
1.38 |
|
|
|
|
========== |
========== |
|
|
|
|
|
MOHAMMAD AMIN DADABHOY |
|
|
FAZAL KARIM DADABHOY |
|
|
Chief Executive |
|
|
Director |
|
|
|
|
|
| CASH
FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2001 |
|
|
|
NOTE |
2001 |
2000 |
|
|
|
(Rupees in
'000') |
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Profit
before taxation |
|
|
58,615 |
83,812 |
|
| Adjustments for: |
|
|
|
|
| Depreciation |
|
|
53,524 |
42,110 |
|
| Financial
charges |
|
|
4,964 |
10,741 |
|
| Gain
on sale of fixed assets |
|
|
(1,148) |
(856) |
|
| Provision
against debts considered doubtful |
|
8,041 |
17,220 |
|
| Working
capital changes |
|
33 |
14,013 |
(60,367) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
138,009 |
92,660 |
|
| Financial
charges paid |
|
|
(6,779) |
(12,623) |
|
| Taxes paid |
|
|
|
(1,876) |
(5,145) |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash inflow from operating activities |
|
129,354 |
74,892 |
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
| Capital
expenditure |
|
|
(98,810) |
(12,357) |
|
| Spares
held for capital expenditure |
|
|
(9,719) |
8,157 |
|
| Sale
proceeds of fixed assets |
|
|
2,344 |
894 |
|
| Long-term
loans and deposits |
|
|
(146) |
(13) |
|
|
|
------------------ |
------------------ |
|
| Net
cash outflow from investing activities |
|
(106,331) |
(3,319) |
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Repayments
of long term loans |
|
|
|
| and
redeemable capital |
|
|
(8,336) |
(37,060) |
|
| Payment
of dividend |
|
|
(13,115) |
(11,284) |
|
| Deposits
from dealers |
|
|
(8,143) |
(8,780) |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash outflow from financing activities |
|
(29,594) |
(57,124) |
|
|
|
|
------------------ |
------------------ |
|
| Net
(decrease)/increase in cash and cash equivalents |
(6,571) |
14,449 |
|
| Cash
and cash equivalents at beginning of the year |
|
12,668 |
(1,781) |
|
|
|
|
------------------ |
------------------ |
|
