| Otsuka Pakistan Limited |
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| Annual
Report 2001 |
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| CONTENTS |
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| COMPANY
INFORMATION |
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| NOTICE
OF MEETING |
|
| FIVE
YEARS AT A GLANCE |
|
| DIRECTORS'
REPORT |
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| BALANCE
SHEET |
|
| PROFIT
AND LOSS ACCOUNT |
|
| CASH
FLOW STATEMENT |
|
| STATEMENT
OF CHANGES IN EQUITY |
|
| NOTES
TO THE ACCOUNTS |
|
| PATTERN
OF SHAREHOLDING |
|
| COMPARISON
OF RESULTS |
|
|
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| COMPANY
INFORMATION |
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| BOARD
OF DIRECTORS |
Yoshio Tanabe (Chairman) |
|
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|
Abid Hussain (Chief
Executive) |
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|
Hiroshi Adachi |
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|
Mehtabuddin Feroz |
|
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|
Kiyoshi Fukai (Alternate:
Hanif Sattar) |
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|
Mohammad Abdullah Feroz |
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|
Junichiro
Otsubo(Alternate: Mohammad Aslam |
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|
Nazimuddin Feroz |
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| COMPANY
SECRETARY |
Hanif Sattar |
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| AUDITORS |
|
A.F. Ferguson & Co. |
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|
Chartered Accountants |
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| LEGAL
ADVISORS |
Hassan & Humayun
Associates |
|
|
|
| BANKERS |
|
Standard Chartered
Grindlays Bank Limited |
|
|
|
The Bank of Tokyo -
Mitsubishi Limited |
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|
|
Habib Bank Limited |
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|
Allied Bank of Pakistan
Limited |
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|
Muslim Commercial Bank
Limited |
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| REGISTERED
OFFICE |
30-B, Sindhi Muslim
Co-Operative Housing |
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|
Society, Karachi - 75400 |
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Tel: 4528651 - 4 Fax:
4549857 |
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E-mail:
otsuka@khi.compol.com |
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| FACTORY |
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No. F/4 - 9, Hub
Industrial Trading |
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|
Estate, Distt. Lasbela,
Balochistan |
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Telephone No. (0202)
32363 |
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(0202) 33218 |
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|
Fax No. (0202) 33219 |
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| SHARE
REGISTRAR |
Noble Computer Services
(Pvt) Ltd. |
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|
14, Banglore Town Housing
Society |
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|
Shahrah-e-Faisal Karachi. |
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Tel: 4546978 - 4520121 |
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Fax: 4314962 |
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| NOTICE
OF MEETING |
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| Notice
is hereby given that the Thirteenth Annual General Meeting of Otsuka Pakistan
Limited will |
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| be
held on Friday, November 2, 2001 at 10:00 a.m. at Beach Luxury Hotel, Karachi
to transact the |
|
| following
business:- |
|
|
| 1.
To receive and adopt the Audited Accounts for the year ended June 30, 2001,
together with the |
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| Directors'
and Auditors' reports thereon. |
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|
|
| 2.
To declare a cash dividend @ 15% for the year ended June 30, 2001 as
recommended by the |
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| Directors. |
|
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| 3.
To appoint auditors and fix their remuneration. |
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| 4.
To transact any other business with the permission of the Chair. |
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|
By Order of the Board |
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|
Hanif Sattar |
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| Karachi:
September 21,2001 |
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Company Secretary |
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| Notes:- |
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| 1.
The Share Transfer Books of the Company will remain closed from October 26,
2001 to |
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| November
2, 2001, (both days inclusive). |
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|
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| 2.
A member entitled to attend and vote at the Annual General Meeting may
appoint a proxy to |
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| attend
and vote on his / her behalf. A proxy need not be a member of the company. |
|
|
| 3.
Instrument of appointing proxy and the power of attorney or other authority
under which it is |
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| signed
or a notarially certified copy of the power of authority must be deposited at
the Registered |
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| Office
of the Company at least 48 hours before the time of the Meeting. Form of
proxy is |
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| enclosed. |
|
|
| 4.
Shareholders are requested to promptly notify Company's Shares Registrar of
any change in |
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| their addresses. |
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|
| DIRECTORS'
REPORT |
|
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| The
Directors are pleased to present the Annual Report of the Company for the
year ended June |
|
| 30, 2001. |
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|
| Business
Review |
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| The
year under review was a difficult one for the entire country. Slow down of
economy and reduction |
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| in
purchasing power are impacting all segments of the economy. Change in
government purchase |
|
| policy
and increase in overall production capacities of Infusion Solutions in the
country compounded |
|
| the
overall problems faced by your company. |
|
|
| In
the background of above conditions, sales grew by 6% over last year. The
growth is mainly |
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| attributable
to launch of Aminovel (Amino Acid Solution) towards the end of February 2001.
Excluding |
|
| Aminovel,
your company has registered negative growth as a result of increased
competition from |
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| low
priced products and lower sales to government sector. |
|
|
| Pre-tax
profit increased by Rs. 7.1 million. This was made possible through strict
financial discipline, |
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| cost
control measures undertaken and maximization of productivity. Launch of
Aminovel also |
|
| contributed
to this improvement. |
|
|
|
|
(Rs. 000) |
|
| Financial
Results |
|
| Profit
before taxation |
|
46,050 |
|
| Provision
for taxation |
|
15,418 |
|
|
|
|
------------------ |
|
| Profit
after taxation |
|
30,632 |
|
| Un-appropriated
profit brought forward |
|
2,170 |
|
|
|
|
------------------ |
|
|
|
|
32,802 |
|
| Appropriation: |
|
|
| Proposed
dividend |
|
15,000 |
|
| Transfer
to general reserve |
|
15,000 |
|
|
|
|
------------------ |
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|
|
|
30,000 |
|
|
|
|
------------------ |
|
| Un-appropriated
profit carried forward |
|
2,802 |
|
|
========== |
|
|
| Earning
Per Share |
|
| The
earning per sham for the year ended June 30, 2001 works to Rs. 3.06 per
share. |
|
|
| Future Outlook |
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| Future
prospects of your company depend to a large extent on the revival of economy
and adoption |
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| of
long term stable fiscal policies by the Government. The current policies of
massive devaluation, |
|
| reduction
in customs duties on imported finished products and increase in sales tax on
polyethylene |
|
| for
local manufacturers will have a negative impact on the local Infusion
Solutions industry. Increase |
|
| in
production capacities of Infusion Solutions within the country will continue
to pose a challenge for |
|
| your
company. Your Directors are however, determined to steer the company out of
the difficult |
|
| situation
by adopting aggressive strategies. These include launch of new products, cost
control |
|
| programs
and maximum investment towards demand generation. |
|
|
| The
Board therefore, sees a reasonable future for your company, provided the
Government adopts |
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| industry
friendly policies including grant of price increases at reasonable intervals. |
|
|
| Pattern
of Shareholding |
|
|
| The
Pattern of shareholding of the Company as at June 30, 2001, is annexed with
this annual |
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| report. |
|
|
| Holding
Company |
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| The
Company is an indirect subsidiary of Messrs Otsuka Pharmaceutical Company
Limited, which |
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| is
incorporated in Japan. |
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| Auditors |
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| The
present Auditors Messrs A. F. Ferguson & Co., Chartered Accountants
retire at the conclusion |
|
| of
the 13th Annual General Meeting and, being eligible, offer themselves for
reappointment. |
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|
| Acknowledgement |
|
| The
Board wishes to place on record its appreciation for the hard work and
dedication of all the |
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| employees
of the Company. |
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|
On behalf of the Board |
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|
|
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| Karachi |
|
Abid Hussain |
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| Dated:
September 20, 2001 |
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Chief Executive Officer |
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|
| AUDITORS'
REPORT TO THE MEMBERS |
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| We
have audited the annexed balance sheet of Otsuka Pakistan
Limited as at June 30, 2001 and |
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| the
related profit and loss account, cash flow statement and statement of changes
in equity together |
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| with
the notes forming part thereof, for the year then ended and we state that we
have obtained all |
|
| the
information and explanations which, to the best of our knowledge and belief,
were necessary for |
|
| the
purposes of our audit. |
|
|
| It
is the responsibility of the company's management to establish and maintain a
system of internal |
|
| control,
and prepare and present the above said statements in conformity with the
approved |
|
| accounting
standards and the requirements of the Companies Ordinance, 1984. Our
responsibility |
|
| is
to-express an opinion on these statements based on our audit. |
|
|
| We
conducted our audit in accordance with the auditing standards as applicable
in Pakistan. These |
|
| standards
require that we plan and perform the audit to obtain reasonable assurance
about whether |
|
| the
above said statements are free of any material misstatement. An audit
includes examining, on a |
|
| test
basis, evidence supporting the amounts and disclosures in the above said
statements. An audit |
|
| also
includes assessing the accounting policies and significant estimates made by
management, |
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| 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 accounts have been kept by the company as
required by the |
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| Companies
Ordinance, 1984; |
|
|
| (b) In our opinion: |
|
|
| (i)
the balance sheet and profit and loss account together with the notes thereon
have |
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| been
drawn up in conformity with the Companies Ordinance, 1984, and are in |
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| agreement
with the books of account and are further in accordance with accounting |
|
| policies
consistently applied; |
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|
|
|
|
|
| (ii)
the expenditure, incurred during the year was for the purpose of the
company's |
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| business; and |
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|
|
|
|
| (iii)
the business conducted, investments made and the expenditure incurred during |
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| the
year were in accordance with the objects of the company; |
|
|
| (c)
in our opinion and to the best of our information and according to the
explanations given to |
|
| us,
the balance sheet, profit and loss account, cash flow statement and statement
of changes |
|
| in
equity together with the notes forming part thereof conform with approved
accounting |
|
| standards
as applicable in Pakistan, and, give the information required by the
Companies |
|
| Ordinance,
1984, in the manner so required, and respectively give a true and fair view
of |
|
| the
state of the company's affairs as at June 30, 2001 and of the profit, its
cash flows and |
|
| changes
in equity for the year then ended; and |
|
|
|
|
|
| (d)
in our opinion, Zakat deductible at source under the Zakat and Ushr
Ordinance, 1980, was |
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| deducted
by the company and deposited in the Central Zakat Fund established under
section |
|
| 7
of that Ordinance. |
|
|
|
|
|
|
|
A. F. Ferguson & Co. |
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| Karachi:
September 21, 2001 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 2001 |
|
|
|
Note |
2001 |
2000 |
|
|
(Rupees in
thousand) |
|
|
| SHARE
CAPITAL & RESERVES |
|
|
| Authorised
capital |
|
| 10,000,000
ordinary shares of Rs 10 each |
|
100,000 |
100,000 |
|
|
========== |
========== |
|
|
|
|
| Issued,
subscribed and paid-up capital |
3 |
100,000 |
100,000 |
|
| General Reserve |
|
|
30,000 |
15,000 |
|
| Unappropriated
profit |
|
|
2,802 |
2,170 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
132,802 |
117,170 |
|
|
| CURRENT
LIABILITIES AND PROVISIONS |
|
| Short-term
running finances utilised |
|
|
| under
mark-up arrangements |
|
4 |
10,744 |
-- |
|
|
|
|
|
|
| Creditors,
accrued and other liabilities |
5 |
94,371 |
82,170 |
|
| Taxation |
|
|
5,040 |
1,362 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
110,155 |
83,532 |
|
| COMMITMENTS |
|
6 |
------------------ |
------------------ |
|
|
|
|
242,957 |
200,702 |
|
|
========== |
========== |
|
|
|
|
|
|
| TANGIBLE
FIXED ASSETS |
|
|
|
| Operating
fixed assets |
|
7 |
53,220 |
47,024 |
|
| Capital
work-in-progress |
|
8 |
5,152 |
6,822 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
58,372 |
53,846 |
|
|
|
|
| DEFERRED
TAXATION |
|
9 |
3,014 |
1,374 |
|
| LONG-TERM
LOANS |
|
10 |
1,831 |
1,379 |
|
| LONG-TERM
DEPOSITS |
|
|
383 |
362 |
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores
and spares |
|
11 |
11,842 |
9,935 |
|
| Stock-in-trade |
|
12 |
70,376 |
44,468 |
|
| Trade debts |
|
13 |
91,153 |
72,456 |
|
| Loans
and advances |
|
14 |
2,761 |
2,222 |
|
| Trade
deposits and short-term prepayments |
15 |
2,273 |
5,593 |
|
| Other
receivables |
|
16 |
312 |
1,815 |
|
| Cash
and bank balances |
|
17 |
640 |
7,252 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
179,357 |
143,741 |
|
|
|
|
------------------ |
------------------ |
|
|
|
242,957 |
200,702 |
|
|
|
|
========== |
========== |
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Abid Hussain |
|
Mehtabuddin Feroz |
|
|
Chief Executive |
|
Director |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 2001 |
|
|
|
|
|
Note |
2001 |
2000 |
|
|
|
(Rupees in
thousand) |
|
|
| Net sales |
|
18 |
320,475 |
301,381 |
|
| Cost
of goods sold |
|
19 |
212,069 |
200,052 |
|
|
|
|
------------------ |
------------------ |
|
| Gross profit |
|
|
108,406 |
101,329 |
|
| Administration
and marketing expenses |
20 |
59,521 |
58,399 |
|
|
|
|
------------------ |
------------------ |
|
| Operating profit |
|
|
48,885 |
42,930 |
|
| Other income |
|
22 |
3,028 |
2,306 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
51,913 |
45,236 |
|
|
|
|
|
|
| Financial
charges |
|
23 |
1,429 |
2,460 |
|
| Other charges |
|
24 |
4,434 |
3,871 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
5,863 |
6,331 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
before taxation |
|
|
46,050 |
38,905 |
|
| Taxation |
|
25 |
15,418 |
14,469 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
after taxation |
|
|
30,632 |
24,436 |
|
| Unappropriated
profit brought forward |
|
2,170 |
7,734 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
available for appropriation |
|
|
32,802 |
32,170 |
|
|
|
|
|
| Appropriation: |
|
| Proposed
dividend Rs 1.50 per share |
|
| (2000:
Rs 1.50 per share) |
|
|
15,000 |
15,000 |
|
| Transfer
to General Reserve |
|
|
15,000 |
15,000 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
30,000 |
30,000 |
|
|
|
|
------------------ |
------------------ |
|
| Unappropriated
profit carried forward |
|
2,802 |
2,170 |
|
|
|
|
========== |
========== |
|
| Earnings
per share |
|
26 |
3.06 |
2.44 |
|
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Abid Hussain |
|
Mehtabuddin Feroz |
|
|
Chief Executive |
|
Director |
|
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30, 2001 |
|
|
|
Note |
2001 |
2000 |
|
|
|
(Rupees in
thousand) |
|
|
| Cash
flow from operating activities |
|
|
| Cash
generated from operations |
|
30 |
25,003 |
76,000 |
|
| Mark-up/interest
paid |
|
|
(920) |
(3,635) |
|
| Mark-up
received |
|
|
492 |
157 |
|
| Taxes paid |
|
|
(13,380) |
(12,998) |
|
| Long-term
loans |
|
|
(452) |
190 |
|
| Long-term
deposits and prepayments |
|
(21) |
391 |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash inflow from operating activities |
|
10,722 |
60,105 |
|
|
|
|
|
|
| Cash
flow from investing activities |
|
| Fixed
capital expenditure |
|
(14,722) |
(14,909) |
|
| Proceeds
from disposal of fixed assets |
|
1,545 |
1,006 |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash outflow on investing activities |
|
(13,177) |
(13,903) |
|
|
|
|
| Cash
flow from financing activities |
|
| Dividends paid |
|
|
(4,4,90) |
(4,681) |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash outflow on financing activities |
|
(4,4,90) |
(4,681) |
|
|
|
|
------------------ |
------------------ |
|
| Net
(decrease)/increase in cash and cash equivalents |
(17,356) |
41,521 |
|
| Cash
and cash equivalents at beginning of the year |
7,252 |
(34,269) |
|
|
|
|
------------------ |
------------------ |
|
| Cash
and cash equivalents at end of the year |
31 |
(10,104) |
7,252 |
|
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Abid Hussain |
|
Mehtabuddin Feroz |
|
|
Chief Executive |
|
Director |
|
|
|
| STATEMENT
OF CHANGES IN EQUITY |
|
| FOR
THE YEAR ENDED JUNE 30, 2001 |
|
|
|
Share |
General |
Unappropriated |
Total |
|
|
Capital |
Reserve |
Profit |
|
|
|
|
|
|
(Rupees in
000) |
|
|
| Balance as |
|
|
|
| at June 30, 1999 |
|
100,000 |
-- |
7,734 |
107,734 |
|
| Profit
after taxation |
|
|
| for the year |
|
|
|
| ended
June 30, 2000 |
-- |
-- |
24,436 |
24,436 |
|
| Transfer from |
|
|
|
| profit
and loss account |
-- |
15,000 |
(15,000) |
-- |
|
| Dividend paid |
|
-- |
-- |
(15,000) |
(15,000) |
|
| Balance as at |
|
------------------ |
------------------ |
------------------ |
------------------ |
|
| June
30, 2000 |
|
100,000 |
15,000 |
2,170 |
117,170 |
|
|
|
|
| Profit
after taxation |
|
|
| for the year |
|
|
|
| ended
June 30, 2001 |
-- |
-- |
30,632 |
30,632 |
|
|
|
|
| Transfer from |
|
| profit
and loss account |
-- |
15,000 |
(15,000) |
-- |
|
| Proposed
dividend |
-- |
-- |
(15,000) |
(15,000) |
|
|
------------------ |
------------------ |
------------------ |
------------------ |
|
| Balance as |
|
| at June 30, 2001 |
|
100,000 |
30,000 |
2,802 |
132,802 |
|
|
|
========== |
========== |
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Abid Hussain |
|
Mehtabuddin Feroz |
|
|
Chief Executive |
|
Director |
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 2001 |
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
| The
Company is incorporated in Pakistan as a public limited company and is listed |
|
| on
the Karachi and Lahore Stock Exchanges. It is engaged in the manufacturing, |
|
| marketing
and distribution of intravenous infusions and trading in pharmaceutical |
|
| products. |
|
|
| 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
Basis of preparation |
|
| These
accounts have been prepared in accordance with the requirements of the |
|
| Companies
Ordinance, 1984 and International Accounting Standards as applicable |
|
| in Pakistan. |
|
|
| 2.2
Accounting convention |
|
| These
accounts have been prepared under the historical cost convention except for |
|
| certain
exchange elements referred to in notes 2.6 and 2.9 which have been |
|
| incorporated
in the cost of the relevant assets. |
|
|
| 2.3
Staff retirement benefits |
|
|
| The
company operates: |
|
| a)
an approved contributory provident fund for all its permanent employees. |
|
|
| (b)
an approved funded gratuity scheme for all its permanent employees. Annual |
|
| contributions
are made to the scheme on the basis of actuarial recommendations. |
|
| Actuarial
valuation of the scheme is carried out once in every three years using |
|
| the
projected unit credit method. Actuarial gains and losses are recognized over |
|
| o
the average service life of the employees. |
|
|
|
|
|
| The
above retirement benefits are payable to staff on completion of prescribed |
|
| qualifying
period of service. |
|
|
| 2.4
Compensated absences |
|
| The
company accounts for accumulated absences of employees in the period in |
|
| which
these absences occur. |
|
|
