| Siemens (Pakistan) Engineering Company
Limited |
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| Annual
Report 2001 |
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| Corporate
Objectives |
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| *
Our prime objective is to offer our customers quality products and services
at |
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| competitive
prices to their complete satisfaction. |
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| *
We constantly endeavor to maintain our position as market leaders and
technology |
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| pace-setters
in all areas of our operations and to continuously improve our efficiency |
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| and
competitive strength. |
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| *
To enhance their creativity and job satisfaction, we provide our employees, |
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| opportunity
for personal development, limited only by their own ability and drive; |
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| we
consider this to be an important means of achieving our corporate goals. |
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| *
By continually improving our performance, we aim to generate earnings
sufficient to |
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| ensure
a secure future for the Company and to protect and increase shareholders' |
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| investment. |
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| *
Local presence, backed fully' by the high-tech engineering expertise of
Siemens |
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| world
wide, is our special strength. |
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| *
We are an integral part of national economy with a strong sense of
responsibility to |
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| society
and the environment. |
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| Siemens
- Global network of innovation |
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| Corporate
Structure |
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| Chief
Executive Officer |
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| Divisions |
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| Information & |
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Power |
Industrial, Power |
Automation, |
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Finance & |
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| Communication, |
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Transmission & |
Project & Technical |
Drives, |
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Business |
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| Medical
Solution |
Distribution |
Services |
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Standard Products |
Administration |
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| Business Units |
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Central Depts. |
Corporate Depts. |
| Information & |
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Transmission & |
Industrial Projects |
Diesel Generating |
Finance & |
Human |
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| Communication, |
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Distribution |
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Sets |
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Controlling |
Resources |
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| Public Networks |
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| Private Carriers |
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Transformers |
Process |
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Motors and |
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Security & |
Industrial |
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| Networks |
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Automation |
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Alternators |
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General Services |
Relations |
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| Enterprise |
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Switchboards |
Engineering & |
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Standard Products |
Organization & |
Quality |
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| Networks |
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Construction |
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Information |
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| Medical
Solution |
Services |
Maintenance & |
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Household |
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Audit |
Communication |
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Services |
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Appliances |
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| Special systems |
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Power Generation |
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| Rail
Transportation |
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Information |
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Technology |
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| Solar Systems |
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| Siemens
AG's other investments in Pakistan |
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| Telephone
Industries of Pakistan (Pvt) Limited, Haripur |
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Regional Offices |
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| Carrier
Telephone Industries (Pvt.) Limited, Islamabad |
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Karachi, Lahore, Islamabad, Quetta, Peshawar |
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| Rousch
(Pakistan) Power Limited, Abdul Hakim |
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| Contents |
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| Company
Information & Siemens Pakistan at a glance |
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| Directors'
Report |
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| Managing
Director's General Review |
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| Company
Performance |
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| Management
Report Business Segments |
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| Information
& Communication, Medical Solutions |
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| Power
Transmission & Distribution |
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| Industrial,
Power Projects & Technical Services |
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| Automation,
Drives, Standard Products |
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| Locally
Manufactured Products & Services |
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| Notice
of Meeting |
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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 Shareholding |
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| Siemens
Nationwide |
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| Company
Information |
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| Board
of Directors |
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| Syed
Babar Ali, Lahore |
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Chairman |
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| Sohail
Wajahat Siddiqui, Karachi |
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Managing Director |
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| Karl-Friedrich
Hunke, Munich |
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Director |
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| Tariq
Iqbal Khan, Karachi |
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Director (co-opted on
18.10.2001) |
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| Konrad
Pernstich, Erlangen |
|
Director |
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| Rolf
Schlotfeldt, Munich |
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Director |
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| Masood
Karim Shaikh, Karachi |
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Director (co-opted on
24.09.2001) |
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| Abdul
Latif Uqaili, Karachi |
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Director (upto
17.10.2001) |
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| Dr.
Amjad Waheed, Karachi |
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Director (upto
23.09.2001) |
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| Mohammad
Haleem Khan |
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Company Secretary |
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| Management |
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| Sohail
Wajahat Siddiqui |
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Chief Executive Officer |
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| Tertius
Vermeulen |
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Chief Financial Officer |
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| Parvez Iftikhar |
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Information &
Communication, |
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Medical Solutions
Division |
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| Mohammad
Ilyas |
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Power Transmission &
Distribution Division |
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| Nasim
A. Siddiqui |
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Industrial, Power
Projects & Technical |
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Services Division |
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| Sohail
Wajahat Siddiqui |
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Automation, Drives,
Standard Products |
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Division |
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| Bankers |
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| ABN
Amro Bank |
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| American
Express Bank Limited |
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| Citibank NA |
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| Deutsche
Bank AG |
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| Habib
Bank Limited |
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| Hongkong
& Shanghai Banking Corporation Limited |
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| Mashreq
Bank psc |
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| Muslim
Commercial Bank Limited |
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| Societe
Generale, The French and International Bank |
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| Standard
Chartered Bank |
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| Standard
Chartered Grindlays Bank Limited |
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| Union
Bank Limited |
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| Auditors |
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| Taseer
Hadi Khalid & Company, Karachi |
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| Legal Advisor |
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| Syed
Imran Bokhari, Advocates, Lahore |
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| Registered
Office |
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| B-72,
Estate Avenue, Sindh Industrial Trading Estates |
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| Karachi-75700 |
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| Siemens
Pakistan at a glance |
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|
Rupees in '000 |
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| As
at September 30 |
1997 |
1998 |
1999 |
2000 |
2001 |
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| Reserves
& share capital |
969,896 |
1,166,023 |
1,168,671 |
1,317,797 |
1,469,942 |
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| New orders |
|
2,273,846 |
2,862,009 |
3,295,311 |
5,371,934 |
4,130,505 |
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| Sales |
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3,065,315 |
2,632,576 |
3,327,335 |
3,582,253 |
4,460,459 |
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| Export
of goods & services |
108,860 |
150,118 |
181,368 |
304,311 |
555,168 |
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| profit after tax |
|
220,608 |
219,606 |
114,173 |
266,521 |
253,887 |
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| as
a percent of sales (%) |
7.2 |
8.3 |
3.4 |
7.4 |
5.7 |
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| as
a percent of equity (%) |
22.7 |
18.8 |
9.8 |
18.6 |
17.3 |
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| Dividend |
|
23,479 |
88,046 |
46,958 |
117,395 |
101,742 |
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| as
a percent of share capital (%) |
30 |
112.5 |
60 |
150 |
130 |
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| Earnings
per share-Rs. |
28.19 |
28.06 |
14.59 |
34.06 |
32.44 |
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| Number
of permanent employees |
1,256 |
1,218 |
1,207 |
1,221 |
1,252 |
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| Directors'
Report |
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| Dear
Shareholders, |
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| I
am pleased to present the Directors' report and the audited accounts for the
year ended September 30, 2001 along with the Auditors' report. |
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| Changes
in the Board of Directors |
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| The
election of Directors was held on December 11, 2000 in an Extra-ordinary
General Meeting of the Shareholders. All the Directors were re- |
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| elected
except for Mr. Klaus Voges and Mr. Asadullah Khawaja who retired and in their
places Mr. Konrad Pernstich and Mr. Abdul Latif Uqaili |
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| were
elected respectively. |
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| Dr.
Amjad Waheed resigned w.e.f. September 23, 2001 and in his place Mr. Masood
Karim Shaikh was co-opted. Mr. Tariq Iqbal Khan was co- |
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| opted
vice Mr. Abdul Latif Uqaili w.e.f. October 18, 2001. |
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| On
behalf of the Board I express my sincere thanks and appreciation to Mr.
Asadullah Khawaja, Dr. Amjad Waheed, Mr. Klaus Voges and Mr. |
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| Abdul
Latif Uqaili for their valuable services to the Board and welcome Mr. Masood
Karim Shaikh , Mr. Tariq Iqbal Khan and Mr. Konrad |
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| Pernstich
on the Board. |
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| Financial
Statements |
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| The
financial statements of the company have been audited and approved without
qualification by Taseer Hadi Khalid & Company. |
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| No
material changes and commitments affecting the financial position of your
Company have occurred between the end of the financial year |
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| of
the Company to which this Balance Sheet relates and the date of the
Directors' report. |
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| The
Board commends the performance of the Management of the Company in achieving
good result in the background of difficult economic |
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| environment
prevailing in the country. The Board appreciates the efforts of the
Management in increasing exports of the Company and assures |
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| its
continued support in achieving Company's objectives. |
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| The
Board endorses the contents of the Management report attached hereto. |
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| It
is proposed to appropriate the net income of the Company as under: |
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(Rupees in thousand) |
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| Net
profit for the year after taxation |
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253,887 |
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| Unappropriated
profit brought forward |
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265 |
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------------------ |
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| Available
for appropriation |
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254,152 |
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| Appropriations |
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| Transfer
to asset replacement reserve |
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(79,000) |
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| Transfer
to revenue reserve - general |
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(73,000) |
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| Proposed
final dividend @ 130% |
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|
(101,742) |
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------------------ |
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(253,742) |
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------------------ |
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| Unappropriated
profit carried forward |
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410 |
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| The
present auditors, Messrs Taseer Hadi Khalid & Company retire and being
eligible, offer themselves for re-appointment. |
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| The
Company is a subsidiary of Siemens Aktiengesellschaft, which is incorporated
in Germany. |
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| The
statement of pattern of the shareholding of the Company as at 30 September,
2001 is shown |
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| on page 47. |
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On behalf of the Board |
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|
S. Babar Ali |
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| November
22, 2001 |
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Chairman |
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| Management
Report |
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| General Review |
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| The
prevailing recessionary conditions in the country were further compounded by
the global slowdown and September 11 tragedy. The lack |
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| of
progress with the privatisation programme and the further decline in
governmental infrastructure projects together with the stagnation in |
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| private
sector capital investment led to fierce competition in a shrinking market. |
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| We
tried to offset this by diversification through export and new business
fields and strict asset management. Export Sales increased by 83% |
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| to
US $ 8.9 million compared to the previous year and our IT business expanded
exponentially. |
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| The
decline in New Orders by 23% to Rs. 4.1 billion is attributable to the lack
of expansion in the local power and distribution sector. |
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| The
sharp increase in sales of 25% to Rs. 4.5 billion is mainly due to the
execution of a power grid station project. |
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| The
gross profit and profit before tax decreased by 6% as the price erosion due
to the competitive market could only be offset partially through |
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| cost savings. |
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| Profit
after tax, however decreased by 5%, as savings achieved in financial charges
led to net financial income. This was made possible by the |
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| execution
of a comprehensive asset management programme. |
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| Despite
the adverse economic situation we continued our policy of capital investment
for modernization and improvement to remain ahead of |
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| the
competition. The investment for the year amounted to Rs. 147 million in plant
and machinery, transport and IT equipment. |
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| We
paid to the Exchequer Rs. 577 million as duties and taxes. |
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| As
a good corporate citizen we continued our contribution in the area of
environmental protection. In the field of education we give awards |
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| to
the best students of engineering universities in Pakistan besides
scholarships to students for tertiary education in Medicine, Engineering and |
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| Business fields. |
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| We
thank all our Managers, Officers and Workers for their dedicated and devoted
efforts towards achieving these results in the background |
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| of
a difficult economic situation. |
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|
Sohail Wajahat Siddiqui |
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|
Managing Director & |
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|
Chief Executive Officer |
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| Information
& Communication, Medical Solutions |
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| Sales |
Rs. 551 million |
9% |
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| New Orders |
Rs. 609 million |
5% |
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| Information
& Communication |
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| (Public
Networks) |
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| Major
orders include one from PTCL for the |
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| replacement
of various EMD Exchanges having 300,000 |
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| lines
with the world- renowned EWSD digital switching |
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| system.
We are providing the capability in selected |
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| Exchanges
in major cities of Pakistan for next |
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| generation
services such as Internet supplementary |
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| services,
ADSL, Data offload etc. Another order has |
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| been
received from PTCL for 600 S-RAL Digital Radio |
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| Terminals
to be installed to expand PTCL's Telephony |
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| infrastructure
in the country. |
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| Services |
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| This
Unit is also providing services to the customers in |
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| Pakistan
and around the world. Our service experts are |
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| now
recognized nationally as well as internationally. |
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| In
order to maintain quality service and quick response |
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| to
the customers we have established Service Centers in |
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| all
major cities of Pakistan. Our engineers are trained on |
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| various
technologies i.e. EWSD, D900, SDH, Radio, RBS, |
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| Access
Network, Intelligent Network, Internet solutions |
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| to
cater for the needs of domestic and international |
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| market. |
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| Pakistan's
domestic market has a great potential for |
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| expansion
and we have been able to train and sell the |
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| services
in the domestic market for all the above |
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| technologies.
Our engineers are in the International |
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| pool
of Service Division of Siemens AG and have |
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| successfully
executed projects in European and Asian |
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| countries. |
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| In
order to be able to react in the shortest possible time |
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| to
the market requirements and to improve the quality |
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| of
our manpower we have established a Training Center |
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| with
the latest testing equipment. |
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| Our
test exchange is utilized to test new features and |
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| network
solutions for EWSD and D900 switches. We |
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| have
added S-RAL digital microwave radio system and |
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| ONU
(Optical Network Unit) to our test facility and are |
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| in
the process of adding SDH family with Network |
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| management
system. Radio Base station is also to be |
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| added
to the facility in the near future. |
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| The
above test facility will serve as the basis for testing |
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| and
developing complete network solutions for the IT |
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| market
thereby ensuring the emergence of yet another |
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| Competence
Center in the house of Siemens. |
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| Private
Carrier Networks |
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| Pakistan
Telecommunication Industry is gradually being |
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| de-regulated,
inviting new opportunities for private |
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| investors
to set up their infrastructure to either deliver |
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| voice
and data applications or deliver content like |
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| Internet,
Video, etc. to the general public. |
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| Private
Carriers Business Unit was established with this |
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| concept
in mind back in mid-98 to serve such potential |
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| operators
in establishing their networks. We have10 ISP |
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| set-ups
in Karachi alone. The Unit provides complete, |
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| single-source
solutions for the rapidly growing |
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| information
and communication market in the private |
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| sector,
offering products, systems, service and support |
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| for
set-up and care of complete carrier networks. This |
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| includes
service and consultation for commissioning to |
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| user
training. Presently we are performing network |
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| upgrade
for Mobilink and for several ISPs. |
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| The
strategic approach is to transfer the networks of |
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| today
to the Information Highway of tomorrow. Our |
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| strategy
of 'A Universe of One (TM)'' with its optimized |
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| solutions
is the Siemens concept for present and future |
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| networks.
It covers our whole portfolio of products and |
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| services. |
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| Enterprise
Networks |
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| The
trade and industry remained stagnant affecting the |
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| growth
in this sector. |
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| Voice
Business (Hicom) |
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| Our
Hicom 150E Office Com. Release 2.2 (less than |
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| 100
line systems) was successful. Orders of more than |
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| 100
systems were received despite tough competition |
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| from
International and local manufacturing companies. |
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| Successful
launch of HICOM 150E Office pro (100 to |
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| 250
line systems) continued with greater market |
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| penetration.
25 systems were sold. We sold a higher |
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| percentage
of digital terminals per system due to |
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| success
of Optiset, the new digital telephone set. |
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| We
received orders also for Hicom 300E/H (more than |
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| 250
line systems) from prestigious organizations like |
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| President
House, Lahore International Airport, LUMS, |
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| Shell
Pakistan, Union Bank, Jang Group and Board of |
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| Intermediate
& Secondary Education. |
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| First
Call Center Solution with unified
messaging |
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| (integration
of Voice, Fax, Email and Mobile SMS) was |
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| sold
to DHL Pakistan. This is an opening of new |
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| business
segment for Enterprise Network. |
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| Partner
Business (Data) |
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| Enterprise
data networking business has shown |
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| tremendous
growth. We have supplied, installed and |
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| commissioned
data communication solutions for our |
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| customers.
These solutions included data switching |
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| solutions
on Local Area Networks and Wide Area |
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| Networks
as well as structured cabling solutions based |
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| on
copper and optic fibre cables. Our customers range |
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| from
leading edge local companies to multinational |
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| institutions. |
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| With
our local expertise and product portfolio from |
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| Siemens
Global Partners, we are in the unique position |
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| to
offer our customers best of class solutions. Our |
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| Global
Partners are market leaders in their respective |
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| fields
of specialization and offer solutions which |
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| address
demands of specific market segments. These |
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| range
from simple data switching solutions for small |
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| groups
within an office; to complex connectivity |
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| solutions
spread across the entire country using data |
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| switching
and routing to address functionality, reliability |
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| and
security issues. |
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| Mobile
Phone Business |
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| The
Government of Pakistan has announced zero |
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| custom
duty and zero sales tax on mobile phones and |
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| also
permitted import of mobile phones to recognized |
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| handset
manufacturers and their representatives. This |
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| had
a positive impact on our business. An order of |
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| 30,000
Mobile sets was received. |
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| Services |
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| The
Service Contracts for Maintenance of Telephone |
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| Systems
have grown steadily. We have introduced the |
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| facility
of Remote Maintenance for Hicom 150 systems |
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| for
our customers to cut services cost and improve the |
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| service
response resulting in better customer |
|
| satisfaction. |
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| Medical
Solutions |
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| During
the year, the business of Medical Solutions |
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| achieved
a higher growth compared to the previous |
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| years
and we were able to increase our market share. |
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| The
major share of our business came from public |
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| sector. |
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| Under
a grant by KfW we supplied and installed 73 |
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| baby
incubators in various hospitals of the Government |
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| of
the Punjab. We also supplied various medical |
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| equipment
to D.G. Health Services, Azad Kashmir, Civil |
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| Works,
Islamabad and Health Services, Northern Areas. |
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| In
private sector we received an order from Neuro Spinal |
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| and
Medical ( Pvt ) Ltd for Magnetom Concerto, a new |
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| generation
of open MRI system with permanent |
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|
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| magnet.
Also, order for Linear Accelerator, Primus was |
|
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| received
from Dr. Zia-ud-din Hospital Karachi and |
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| Cardiac
Angiography machine from Gulab Devi |
|
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| Hospital,
Lahore. |
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| Special
Systems |
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|
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| Special
feature of the year was the successful |
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|
|
| completion
of National Frequency Management & |
|
|
| Monitoring
System Project. The project entails state-of- |
|
|
| the-art
fixed and mobile monitoring stations and caters |
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| for
frequencies in the MF-HF, VHF and UHF bands, |
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| including
terrestrial, satellite and microwave signals. |
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| Presently
the project is in the operation and |
|
|
| maintenance
phase and our engineers are successfully |
|
|
| maintaining
it. Another project nearing completion is |
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| UHF
Extended Range ground-to-air Communication |
|
| Project
for Civil Aviation Authority. |
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| An
order has been received from the Civil Aviation |
|
| Authority
for supply, installation and commissioning of |
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| Control
Tower Equipment for New Passenger Terminal |
|
| Complex,
Lahore International Airport. The project |
|
| combines
major systems like Weather Monitoring and |
|
| Reporting,
VHF Communication and Crisis |
|
| Management. |
|
|
| Rail
Transportation |
|
| The
completed project of Track Circuiting at 94 stations |
|
| is
under one year Supervision and Maintenance. |
|
| Rehabilitation
of Pakistan Railways has assumed top |
|
| priority
of the Government which may provide business |
|
| possibilities
in future. |
|
|
| Solar Systems |
|
| Besides
normal business with PTCL solar power was |
|
| introduced
for water pumping. A project for solar |
|
| powered
submersible pump was completed in a remote |
|
| village
of Distt. Sargodha. Solar power is a technology |
|
| of
future and we expect good business for solar power |
|
| projects
in remote areas of the country. |
|
|
| Power
Transmission & Distribution |
|
|
| Sales |
Rs. 2,313 million |
+70% |
|
|
| New Orders |
Rs. 1,097 million |
63% |
|
|
|
|
|
