| Dadabhoy Cement Industries Limited |
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| Annual
Report 1999 |
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| COMPANY
INFORMATION |
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| BOARD
OF DIRECTORS |
|
| MR.
MOHAMMAD HUSSAIN DADABHOY |
|
Chairman |
|
| MRS.
RAZIA HUSSA1N DADABHOY |
|
| MRS.
HUMAIRA DADABHOY |
|
| MR.
MOHAMMAD AMIN DADABHOY |
|
Chief Executive |
|
| MS.
YASMEEN DADABHOY |
|
| MR.
FAZAL KARIM DADABHOY |
|
| MR.
NASEEMUDDIN |
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| COMPANY
SECRETARY & |
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| GENERAL
MANAGER FINANCE |
|
| MR.
NAYYAR KARIM |
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|
| AUDITORS |
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| FORD,
RHODES, ROBSON, MORROW |
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| CHARTERED
ACCOUNTANTS |
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| LEGAL
ADVISOR: |
|
| AZIZA.
MUNSHI |
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| BANKERS: |
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| ALLIED
BANK OF PAKISTAN LIMITED |
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| UNITED
BANK LIMITED |
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| NATIONAL
DEVELOPMENT FINANCE CORPORATION |
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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 & SHARE DEPTT.: |
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| 5TH
FLOOR, MAQBOOL COMMERCIAL COMPLEX |
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| JCHS
BLOCK 7 & 8 |
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| SHAHRAH-E-FAISAL,
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 THE 19TH ANNUAL GENERAL MEETING |
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| OF
SHAREHOLDERS |
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| NOTICE
is hereby given that the 19th Annual General Meeting of shareholders of
Dadabhoy Cement |
|
| Industries
Limited will be held on Wednesday the 29th day of December, 1999 at 2.00 p.m.
at |
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| Defence
Sunset Club, Defence Housing Authority, Karachi. to transact the following
business: |
|
|
| 1.
To confirm the minutes of the 18th Annual General Meeting of the company held
on 29th |
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| December
1998. |
|
|
| 2.
To receive, consider and adopt the Audited Accounts of the Company for the
year ended |
|
| 30th
June, 1999 together with the Directors' and Auditors' Reports thereon. |
|
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| 3.
To appoint auditors for the ensuing year and fix their remuneration. |
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| 4.
To transact any other: business as may be placed before the meeting with the
permission |
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| of the Chair. |
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|
By Order of the Board |
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| Karachi: |
|
(NAYYAR KARIM) |
|
| Dated:
4th December, 1999 |
|
Company Secretary |
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|
| NOTES: |
|
|
| 1.
The Share Transfer Books of the Company will remain closed for transaction
from 22nd |
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| December,
1999 to 29th December, 1999 (Both days inclusive). |
|
|
| 2.
Any member of the company entitled to attend and vote may appoint another
member as |
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| his/her
'Proxy to attend and vote on his/her behalf. |
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| 3.
Proxies must be received at the registered office of the company not less
than 48 hours |
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| before
the meeting. |
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| DIRECTORS'
REPORT |
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| It
is great pleasure that I welcome you to the 19th Annual General Meeting of
the company and |
|
| present
to you the report on the performance of the company for the year ended 30th
June |
|
| 1999
alongwith the Auditors Report. |
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|
| OPERATING
RESULTS |
|
|
| During
the year under review the Cement Industry continue to experience the biggest
slump in |
|
| market.
During the year under review government increase price of Furnace Oil added
with high |
|
| increase
in input price coupled with the stagnation of demand has resulted in piling
up of stock |
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| of
cement and over supply. The impact of input prices could not be passed on to
the end users. |
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| The
sale has been decreased by 32%, which directly reduced our net sale from Rs.
1,000.367 |
|
| million
to Rs. 703.145 million. However, the company managed to earn a' profit of Rs.
1.695 |
|
| million
(after taxation) against the sum of Rs. 13.993 million last year. |
|
|
| FUTURE
PROSPECTS |
|
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| In
the next couple of years the sluggish marketing scenario is likely to prevail
unless there are |
|
| some
rapid changes in the socio-economic conditions. Export of cement from
Pakistan has great |
|
| potential
but the international prices being very low. It is very difficult to compete
with current |
|
| cost.
The cement industry also requires government support in further reducing the
excise duty, |
|
| reduction
in the cost of inputs and by encouraging export of cement through incentives
in the |
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| form
of favourable duty drawbacks making our prices comparable in the
international market. At |
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| Management
level, some drastic measures are in. hand to lower the cost of production and
we |
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| expect
a significant break through in mitigating the crisis. We expect a major
relief through these |
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| measures
and together with betterment of market and changes taken by the government. |
|
|
| PRODUCTION
AND SALES |
|
|
| The
production of cement for the year was 374.376 tons as compared to 547.054
tons for the |
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| previous
year. The decrease in product is due to slump in the market. |
|
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| ISO
9002. CERTIFICATE |
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| Your
company reached another landmark with the ISO 9002 Certificate that shows the
quality |
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| of
our product and landmark for the Management and Staff. The first surveillance
audit was held |
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| by
external auditors and to comply was
meeting all the requirements of the system. The certificate |
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| will
strengthen the company in promoting sales of our product within and outside
the country. |
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| MILLENNIUM
COMPLIANCE |
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| The
Millennium compliance has been achieved to the extent of 100% and the
Directors are confident |
|
| that
the company's external operation will not be disrupted due to the issue. |
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| CASE
WITH NDFC |
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| During
the year under review, the company has filed judicial Applications in the
High Court of |
|
| Sindh
against the NDFC, claiming that the amount it originally borrowed as long
term loans therefrom |
|
| has
been repaid in full and that the outstanding balances in the books of the
company represented |
|
| penal
interest, interest on interest and mark-up on mark-up the imposition of which
is prohibited |
|
| by
law and is against the Circulars of the State Bank of Pakistan. The High
Court of Sindh has |
|
| passed
a brief order as a result of the above-referred Judicial Applications stating
that no coercive |
|
| action
is to be taken by the lender against the company. The amount shown as Long
Term Loan |
|
| in
the accounts are comprises of mark-up on mark-up and penalties and no amount
is payable to |
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| NDFC
in this respect. |
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| AUDITORS |
|
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| The
Auditors M/s. Ford, Rhodes, Robson, Morrow, Chartered Accountants retire at
the conclusion |
|
| of
the meeting although eligible they did not offer themselves for
re-appointment. |
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| CUSTOMERS |
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| We
believe in forming long term, mutually beneficial relationship with our
customers, what is based |
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| on
solid basic principal and appreciate our customer in putting trust in the
present situation. |
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| PATTERN
OF SHAREHOLDING |
|
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| The
pattern of shareholding of the company as on 30-6-1999 is enclosed with
Annual Accounts. |
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| ACKNOWLEDGMENT |
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|
|
| I,
acknowledge with deep appreciation the loyalty and dedication with which
officers and staff of |
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| the
company have kept the pace of achieving the objectives of the company. |
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|
FOR & ON BEHALF OF
THE BOARD |
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| Karachi: |
|
(MOHAMMAD AMIN DADABHOY) |
|
| Dated:
December 4, 1999. |
|
Chief Executive |
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|
|
| AUDITOR'S
REPORT TO THE MEMBERS |
|
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| We
have audited the annexed balance sheet of DADABHOY CEMENT INDUSTRIES LIMITED |
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| as
at June 30, 1999 and the related profit and loss account and statement of
changes in financial |
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| position,
together with the notes forming part thereof, for the year then ended and we
state that |
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| we
have obtained all the information and explanations which to the best of our
knowledge and |
|
| belief
were necessary for the purposes of our audit and, after due verification
thereof, we report |
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| that: |
|
|
| (a)
in our opinion, proper books of accounts have been kept by the company as
required by |
|
| the
Companies Ordinance, 1984', |
|
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| (b)
in our opinion: |
|
|
| the
balance sheet and profit and 10ss account, together with the notes thereon,
have |
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| been
drawn up in conformity with the Companies Ordinance, 1984 and are in
agreement |
|
| with
the books of accounts and are further in accordance with accounting policies |
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| 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; |
|
|
| (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 and the statement of changes
in financial |
|
| position,
together with the notes forming part thereof, 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, 1999 and of the
profit and |
|
| the
changes in financial position for the year then ended., |
|
|
| (d)
in our opinion, no Zakat was deductible at source under the Zakat and Ushr
Ordinance, |
|
| 1980; and |
|
|
| (e)
without qualifying our opinion, we draw attention to the following matters: |
|
|
| (i)
as disclosed in notes 16(b) and 16(c) to the accounts, the company has flied
various |
|
| Judicial
Applications during the current year in the High Court of Sindh against the |
|
| lender
of interest and mark-up based long term loans, aggregating to Rs. 598.913 |
|
| (1998:
Rs. 708.112) million, for the reasons given in the above referred notes.
These |
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| Applications
are currently pending with the High Court. of
Sindh and, accordingly, a |
|
| final
decision in this regard has not been rendered to date by the above referred
court. |
|
|
| (ii)
the ultimate outcome of contingencies shown in note 23 to the accounts,
aggregating |
|
| to
Rs. 427.130 (1998: Rs. 317.364) million, cannot presently be determined and, |
|
| hence,
no provision that may result therefrom has been made in the accounts for the |
|
| current year. |
|
|
| (iii) interest and mark-up on long term loans,
aggregating to Rs. 67.480 million, as discussed |
|
| in
notes 16(b) and 16(c) to the accounts have been recorded in the accounts of
the |
|
| current
year as reduction of outstanding balances of long term loans at the end of |
|
| the
year for the reasons stated in the above referred notes. |
|
|
| Karachi: |
|
Ford, Rhodes, Robson,
Morrow |
|
| Dated:
'7th December, 1999 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1999 |
|
|
|
|
June 30, |
June 30, |
|
|
|
1999 |
1998 |
|
|
Note |
(Rs '000s) |
|
| ASSETS |
|
| NON-CURRENT
ASSETS |
|
| Tangible
fixed assets |
|
| Operating
fixed assets at cost less |
|
| accumulated
depreciation |
|
3 |
1,510,231 |
1,541,193 |
|
| Capital
work-in-progress |
|
4 |
16,079 |
32,688 |
|
| Spares
held for capital expenditure purposes |
|
|
23,990 |
12,989 |
|
|
|
---------- |
---------- |
|
|
|
1,550,300 |
1,586,870 |
|
|
|
|
| Long-term
investments |
|
5 |
71,326 |
77,326 |
|
| Long-term
loans and deposits |
|
6 |
2,136 |
10,266 |
|
|
| CURRENT
ASSETS |
|
| Stores
spares and loose tools |
|
7 |
116,148 |
127,779 |
|
| Stock-in-trade |
|
8 |
23,486 |
31,566 |
|
| Trade debts |
|
9 |
94,769 |
108,200 |
|
| Loans,
advances, deposits, prepayments |
|
|
|
| and
other receivables |
|
10 |
51,952 |
59,369 |
|
| Cash
and bank balances |
|
11 |
8,809 |
8,940 |
|
|
---------- |
---------- |
|
|
295,164 |
335,854 |
|
|
---------- |
---------- |
|
| TOTAL
ASSETS |
|
1,918,926 |
2,010,316 |
|
|
|
========== |
========== |
|
| EQUITY
AND LIABILITIES |
|
| SHARE
CAPITAL AND RESERVES |
|
|
|
| Share Capital |
|
| Authorised |
|
| 60,000,000
(1998: 60,000,000) |
|
| Ordinary
shares of Rs. 10/- each |
|
600,000 |
600,000 |
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up |
|
12 |
398,688 |
398,688 |
|
| Reserves |
|
13 |
7,469 |
5,772 |
|
|
|
|
---------- |
---------- |
|
|
406,157 |
404,460 |
|
| SURPLUS
ON REVALUATION |
|
| OF
FIXED ASSETS |
|
14 |
487,688 |
487,688 |
|
|
| NON-CURRENT
LIABILITIES |
|
| Redeemable
capital |
|
15 |
22,986 |
26,653 |
|
| Long
term loans |
|
16 |
578,401 |
703,231 |
|
| Long
term deposits |
|
17 |
35,098 |
28,847 |
|
| Obligations
under finance leases |
|
18 |
-- |
28,848 |
|
|
| CURRENT
LIABILITIES |
|
| Current
maturities of redeemable capital, |
|
| long
term loans and obligations under |
|
| finance leases |
|
19 |
130,457 |
100,712 |
|
| Short
term running finances |
|
20 |
10,590 |
13,196 |
|
| Short term loan |
|
21 |
6,438 |
35,671 |
|
| Creditors,
accrued and other liabilities |
|
22 |
231,129 |
171,499 |
|
| Provision
for taxation - net |
|
3,407 |
2,385 |
|
| Unclaimed
dividend |
|
6,575 |
7,126 |
|
|
---------- |
---------- |
|
|
388,596 |
330,589 |
|
| CONTINGENCIES AND COMMITMENTS |
|
23 |
|
|
---------- |
---------- |
|
| TOTAL
EQUITY AND LIABILITIES |
|
1,918,926 |
2,010,316 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
| MOHAMMAD
AMIN DADABHOY |
|
FAZAL KARIM DADABHOY |
|
| Chief
Executive |
|
Director |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
Year ended |
Year ended |
|
|
|
June 30, |
June 30, |
|
|
Note |
1999 |
1998 |
|
|
|
(Rs. '000s) |
|
|
| NET SALES |
|
24 |
703,145 |
1,000,367 |
|
|
|
| COST
OF SALES |
|
25 |
621,307 |
862,482 |
|
|
|
----------- |
----------- |
|
| GROSS
PROFIT |
|
|
81,838 |
137,885 |
|
|
| Other
operating income |
|
26 |
6,069 |
14,636 |
|
|
----------- |
----------- |
|
|
|
87,907 |
152,521 |
|
|
| Administrative
expenses |
|
27 |
48,119 |
45,170 |
|
| Selling
and distribution expenses |
|
28 |
14,978 |
10,490 |
|
|
----------- |
----------- |
|
|
63,097 |
55,660 |
|
|
----------- |
----------- |
|
| OPERATING
PROFIT |
|
24,810 |
96,861 |
|
|
| Financial
charges |
|
29 |
19,316 |
76,866 |
|
|
| Workers'
Profit Participation Fund |
|
281 |
1,000 |
|
|
----------- |
----------- |
|
|
19,597 |
77,866 |
|
| PROFIT
BEFORE TAXATION |
|
5,213 |
18,995 |
|
| TAXATION
- Current |
|
30 |
3,516 |
5 ,002 |
|
|
|
|
----------- |
----------- |
|
| NET
PROFIT FOR THE YEAR |
|
1,697 |
13,993 |
|
|
| ACCUMULATED
LOSSES BROUGHT FORWARD |
|
(117,452) |
(131,445) |
|
|
| ACCUMULATED
LOSSES CARRIED FORWARD |
|
----------- |
----------- |
|
| TO
RESERVES |
|
(115,755) |
(117,452) |
|
|
========== |
========== |
|
| BASIC
EARNINGS PER SHARE |
|
31 |
0.04 |
0.35 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
| MOHAMMAD
AMIN DADABHOY |
|
FAZAL KARIM DADABHOY |
|
| Chief
Executive |
|
Director |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION (CASH FLOW STATEMENT) |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
Year ended |
Year ended |
|
|
|
June 30, |
June 30, |
|
|
Note |
1999 |
1998 |
|
|
|
(Rs '000s) |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| Profit
before taxation |
|
5,213 |
18,995 |
|
| Adjustment
for: |
|
|
|
| Depreciation |
|
34,334 |
44,747 |
|
| Financial
charges |
|
19,316 |
11,330 |
|
| Gain
on sale of fixed assets |
|
(378) |
(491) |
|
| Provision
against debts considered doubtful |
|
6,249 |
3,173 |
|
| Working
capital changes |
|
32 |
91,432 |
(51,019) |
|
|
---------- |
---------- |
|
|
156,166 |
92,271 |
|
|
|
|
| Financial
charges paid during the year |
|
(46,041) |
122,823) |
|
| Taxes paid |
|
(2,494) |
(3,507) |
|
|
---------- |
---------- |
|
| NET
CASH FROM OPERATING ACTIVITIES (A) |
|
107,631 |
(34,059) |
|
|
|
========== |
========== |
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
| Capital
expenditure |
|
11,347 |
(16,191) |
|
| Spares
held for capital expenditure |
|
(11,001) |
(1,318) |
|
| Sale
proceeds of fixed assets |
|
2,265 |
1,229 |
|
| Loans,
deposits and prepayments |
|
8,130 |
(444) |
|
| Investments |
|
6,000 |
3,865 |
|
|
---------- |
---------- |
|
| NET
CASH FLOWS FROM INVESTING ACTIVITIES (B) |
|
16,744 |
(12,859) |
|
|
========== |
========== |
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
| Net
effect due to repayments of long term loans |
|
| and
obligation under Finance leases |
|
(127,600) |
190,694 |
|
| Payment
of dividend |
|
(551) |
(4,091) |
|
| Deposits
from dealers |
|
6,251 |
279 |
|
|
---------- |
---------- |
|
| NET
CASH FLOWS FROM FINANCING ACTIVITIES (c) |
|
(l 21,900) |
186,882 |
|
|
========== |
========== |
|
| NET
INCREASE IN CASH AND CASH |
|
|
|
| EQUIVALENTS
(A+B+C) |
|
2,475 |
8,892 |
|
|
|
|
| CASH
AND CASH EQUIVALENTS |
|
|
|
| AT
THE BEGINNING OF THE YEAR |
|
(4,256) |
(144,220) |
|
|
---------- |
---------- |
|
| CASH
AND CASH EQUIVALENTS AT THE |
|
| END
OF THE YEAR |
|
33 |
(1,781) |
(4,256) |
|
|
========== |
========== |
|
|
|
|
| MOHAMMAD
AMIN DADABHOY |
|
FAZAL KARIM DADABHOY |
|
| Chief
Executive |
|
Director |
|
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
| 1.
THE COMPANY AND ITS OPERATIONS |
|
|
| Dadabhoy
Cement Industries Limited is one of the leading manufacturers of cement in
Pakistan. It |
|
| was
incorporated on August 9, 1979 as a public limited company and is currently
listed on all the Stock |
|
| Exchanges
in Pakistan |
|
|
| The
company is currently engaged in the manufacturing of ordinary portland, slag
and sulphate |
|
| resistant
cement. |
|
|
| 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
|
|
| 2.1
Accounting Convention |
|
| Fixed
accounts have been prepared under the historical cost convention except for
freehold |
|
| land,
building on freehold land and plant and machinery which are stated at
revalued amounts. |
|
|
| Fixed assets |
|
|
| (a) Owned |
|
|
| Fixed
assets are stated at cost or revalued amounts less accumulated depreciation
except |
|
| for
freehold land and capital work-in-progress which are stated at cost.
Depreciation on |
|
| plant
and machinery and quarry equipment including exchange differences has been |
|
| charged
on the basis of production of units method. Depreciation on other depreciable |
|
| assets
is charged on straight line method at the rates stated in note 3 |
|
|
| Full
year's depreciation is charged in the year of addition while no depreciati6n
is charged |
|
| in
the year of disposal. |
|
|
| Maintenance
and normal 'repairs are charged to income as and when incurred. |
|
|
| Major
renewals and improvements are capitalized and the assets so replaced, if any,
are |
|
| retired.
Gains and losses on disposal of assets, if' any, are included in income
currently. |
|
|
| (b) Leased |
|
|
|
| Assets
held under finance leases are stated at cost less accumulated depreciation.
The |
|
| outstanding
obligations under leases less financial charges allocated to future periods
are |
|
| shown
as a liability. The financial charges are calculated at the interest rates
implicit in |
|
| leases
and are charged to the profit and loss account. |
|
|
| Depreciation
is charged at the same rates as charged on company's owned assets. |
|
|
| 2.3
Capital work-in-progress |
|
|
| Capital
work-in-progress is stated at cost. It consists of expenditure incurred and
advances made |
|
| in
respect of fixed assets in the course of their construction and installation. |
|
|
| 2.4
Stores, spares and loose tools |
|
|
| These
are principally valued at moving average cost. Items in transit and in bonded
warehouse |
