| Kohat Cement Company Limited |
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| Annual
Report 1999 |
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| Contents |
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| Company Profile |
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| Notice
of Meeting |
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| Directors'
Report |
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| Auditor's Report |
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| Balance Sheet |
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| Profit
and Loss Account |
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| Statement
of Changes in Financial Position |
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| Notes
to the Accounts |
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| Pattern
of Shareholding |
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| Company
Profile |
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| Board
of Directors |
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| Mr.
Atta Mohammad Sheikh |
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| Mr.
Aizaz Mansoor Sheikh |
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| Mr.
Nadeem Atta Sheikh |
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| Mr.
Nadeem Qadir |
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| Mian
Mohammad Riaz |
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| Mrs.
Khalida Asghar |
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| Mrs.
Khawar Sultana |
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| Company
Secretary |
Mr. Fazal Karim Khattak |
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| Auditors |
|
Viqar A. Khan |
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Chartered Accountants |
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| Legal Advisor |
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Syed Shuja-ud-Din Wasti |
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| Bankers |
|
Allied Bank of Pakistan
Limited |
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|
Askari Commercial Bank
Limited |
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Citibank N.A. |
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Habib Bank Limited |
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Muslim Commercial Bank
Limited |
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National Bank of Pakistan |
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Prime Commercial Bank
Limited |
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The Bank of Khyber |
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Union Bank Limited |
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ABN -Amro Bank |
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| Head Office. |
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House No. 1,43 FCC, |
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Gulberg-IV, Lahore. |
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Tel: (042) 575-4357-8,
575-2699 |
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Fax: (042) 575-4084 |
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E. Mail: kccl@wol.net.pk. |
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| Registered
Office and Works. |
Rawalpindi Road, Kohat. |
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Tel: (0922) 560-401-04 |
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Fax: (0922)560-405 |
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Telex: 52431 KCCL PK. |
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| Share Deptt. |
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AZM Computer Services
(Pvt.) Limited |
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|
24-Ferozepur Road, |
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|
Mozang Chungi, Lahore. |
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Tel: (042) 755-2269 |
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Fax: (042)757-6129 |
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| NOTICE
OF THE ANNUAL GENERAL MEETING |
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| NOTICE
is hereby given that the 20th Annual General Meeting of the Shareholders of
Kohat Cement Company |
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| Limited,
will be held at its Registered Office, Rawalpindi Road, Kohat on Monday the
20th December, 1999 |
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| at
11.00 A.M. to transact the following business. |
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| ORDINARY
BUSINESS |
|
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| 1.
To confirm the minutes of the Last Annual General Meeting held on December
30, 1998. |
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|
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| 2.
To receive, consider and adopt the Audited Accounts of the Company for the
year ended June 30, 1999 |
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| and
Reports of Directors and Auditors thereon. |
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| 3.
To approve Interim Cash Dividend for the year already paid @ 20% (Rupees 2
per share). This would |
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| be
the full and final dividend for the years ended June 30, 1999. |
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| 4.
To appoint Auditors for the year 1999-2000 and to fix their remuneration. The
present Auditors Viqar |
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| A.
Khan, Chartered Accountants, being eligible offer themselves for
re-appointment. |
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| 5.
To transact any other business with the permission of the Chair. |
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|
By Order of the Board |
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|
FAZAL KARIM KHATTAK |
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| Kohat:
November 28, 1999 |
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Company Secretary |
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| NOTE: |
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| 1.
A member entitled to attend, speak and vote at this meeting may appoint
another member as proxy to |
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| attend,
speak and vote on his/her behalf. Proxies in order to be effective must be
received at Registered |
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| Office
of the Company not later than 48 hours before the meeting. |
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| 2.
Members should quote their folio number in all correspondence with the
Company and at the time of |
|
| attending
the Annual General Meeting. |
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| DIRECTORS'
REPORT TO THE SHAREHOLDERS |
|
|
| Annual
Report and the Audited Accounts for the financial year ended June 30, 1999
are presented on behalf |
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| of
the Board of Directors. |
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| OPERATING
RESULTS |
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| The
net sales revenue for the year under review amounted to Rs. 732.825 million
as against Rs. 747.966 |
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| million
in preceding year. Inspite of lower capacity utilization and lower sales
revenue, your Company has |
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| earned
a pre-tax profit of Rs. 58.281 million against a loss of Rs. 1.025 million
for the previous year. The Board |
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| has
declared interim cash dividend @ 20% (Rupees 2 per share). Appropriation of
available profit is as under: |
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|
Rupees in
Thousand |
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1999 |
1998 |
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| Profit/(Loss)
before taxation |
|
|
58,281 |
(1,025) |
|
| Taxation |
|
|
|
|
| Current |
|
|
3,664 |
3,740 |
|
| Prior |
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|
-- |
(2,122) |
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| Deferred |
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|
32,000 |
-- |
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------------------ |
------------------ |
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|
35,664 |
(1,618) |
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------------------ |
------------------ |
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| Profit/(Loss)
after taxation |
|
|
22,617 |
(2,643) |
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|
------------------ |
------------------ |
|
| Unappropriated
profit brought forward. |
|
|
17,179 |
19,821 |
|
| Transferred
from General Reserve |
|
|
7,000 |
-- |
|
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|
------------------ |
------------------ |
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|
24,179 |
19,821 |
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------------------ |
------------------ |
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| Profit
available for appropriation |
|
|
46,796 |
17,179 |
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| APPROPRIATION: |
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|
| Interim
Cash Dividend @ 20% |
|
|
43,867 |
-- |
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------------------ |
------------------ |
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| Carried
Forward to Balance Sheet |
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|
2,929 |
17,179 |
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------------------ |
------------------ |
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| PRODUCTION
AND SALES |
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| Comparative
figures for production of Clinker and Cement are as under: |
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1998-99 |
1997-98 |
Increase/ |
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|
(Decrease) |
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|
(Tonnes) |
(Tonnes) |
(Tonnes) |
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| Clinker
Production |
|
329,070 |
348,608 |
(19,538) |
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| Cement
Production |
|
339,045 |
366,500 |
(27,455) |
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| Capacity
utilization has only been 60% due to depressed market conditions, and overall
excess cement production |
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| capacity
in the Country. |
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|
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| The
Company sold 338,835 metric tonnes of cement as against 366,342 metric tonnes
in the preceding year. |
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| Although
the production and sales were lower than last year but profits of the Company
have increased |
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| substantially.
Intelligent marketing and more efficient operations are the main contributing
factors for this turn |
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| around. |
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| MARKET
REVIEW |
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| Overall
weak economic conditions prevailing in the Country adversely affected all
areas of the National Economy. |
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| Market
for cement was therefore slack, and the installed production capacity in the
Country was under utilized. |
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| Constant
increase in input prices, particularly recent levy of General Sales Tax on
electricity and furnace oil has |
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| increased
the cost of production by Rs. 250 per tonne. An additional constant cost push
factor is across the board |
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| wage
increase every two years by way of peace agreement, thrust upon the Company
without any relation to Labour |
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| efficiency
due to exorbitant demands of C.B.A Labour Union. Any attempt by the Company
to pass on these |
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| increases
to the consumers will jeopardize the sales volume. |
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| FUTURE
PROSPECTS |
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| The
present fixed excise duty of Rs. 1400 per tonne on cement is highest in the
world, while in India excise duty |
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| is
Rs. 350 per tonne. High incidence of taxes on electricity and furnace oil
makes production of cement in Pakistan |
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| one
of the most expensive in the world. Each bag of cement attracts Rs. 120 in
direct and indirect taxes. |
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| Unless
the Government reduces this high incidence of taxation, the Cement industry
will continue to slide downwards. |
|
| However,
reduction in financial and depreciation costs of your Company over future
years will contribute towards |
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| better
profitability. |
|
|
| DEBT
OBLIGATION |
|
| Inspite
of very tight liquidity position, the Company continues to meet its financial
obligations. There has |
|
| been
a net debt reduction of approximately Rs. 124 million during the year under
review. The debt outstanding |
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| as
of June 30, 1999 is Rs. 396 million which is one of the lowest in the cement
sector. |
|
|
| YEAR
2000 COMPLIANCE OF COMPUTER SYSTEM |
|
|
| The
Corporate Law Authority, (now Securities and Exchange Commission) in exercise
of powers under |
|
| section
246 of the Companies Ordinance, 1984 vide its circular no. 3/1998 dated
October 05, 1998 has directed |
|
| all
listed companies to disclose in their future annual and half yearly accounts the status of the
"year 2000 |
|
| compliance". |
|
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| We
are pleased to inform that necessary modification, upgradation and
replacement of certain hardware and |
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| software
have been made to the computer system and process control system to overcome
the "year 2000 |
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| problems". |
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| PATTERN
OF SHAREHOLDINGS |
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| The
pattern of Shareholding of the Company as at June 30, 1999 is annexed with
the Annual Report. |
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| COMPANY
AUDITORS |
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| Viqar
A. Khan, Chartered Accountants, the retiring Auditors, being eligible, offer
themselves for re- |
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| appointment
for the next year. |
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| MANAGEMENT
EMPLOYEES RELATIONS |
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| The
Board would like to record its appreciation for the valuable contribution
made by all its employees. The |
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| management
is quite confident these cordial relations and cooperation will continue in
the years to come. |
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|
|
AIZAZ MANSOOR SHEIKH |
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| Lahore:
November 20, 1999 |
|
Chief Executive |
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| YEAR
WISE STATISTICAL SUMMARY |
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|
(Rs. in Million) |
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|
1999 |
1998 |
1997 |
1996 |
1995 |
1994 |
|
| ASSETS
EMPLOYED |
|
| Fixed Assets |
|
715 |
789 |
862 |
805 |
346 |
357 |
|
| Investment
and Long Term |
|
| Advances
and Deposits |
24 |
37 |
39 |
40 |
27 |
4 |
|
| Current Assets |
|
223 |
219 |
209 |
273 |
604 |
316 |
|
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|
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
|
| Total
Assets Employed |
961 |
1045 |
1111 |
1119 |
977 |
677 |
|
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|
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
|
| FINANCED BY |
|
|
| Shareholders
Equity |
384 |
406 |
408 |
449 |
453 |
414 |
|
| Long Term Liabilities |
140 |
160 |
326 |
303 |
306 |
58 |
|
| Deferred
Liabilities |
44 |
12 |
11 |
11 |
11 |
11 |
|
| Current
Liabilities |
393 |
469 |
365 |
356 |
207 |
194 |
|
|
|
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
|
| Total
Funds Invested |
961 |
1045 |
1111 |
1119 |
977 |
677 |
|
|
|
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
|
|
|
|
| TURNOVER
AND PROFIT |
|
| Turnover (Net) |
|
733 |
748 |
501 |
953 |
342 |
838 |
|
| Operating Profit |
|
115 |
57 |
45 |
116 |
71 |
255 |
|
| Profit/(Loss)
Before Taxation |
58 |
(1) |
(38) |
47 |
67 |
238 |
|
| Profit/(Loss)
After Taxation |
23 |
(3) |
(41) |
46 |
39 |
150 |
|
| Cash Dividend |
|
44 |
-- |
-- |
50 |
-- |
141 |
|
| Transfer
to Reserves |
-- |
-- |
-- |
-- |
-- |
77 |
|
| Profit
c/f |
|
3 |
17 |
20 |
61 |
65 |
25 |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of KOHAT CEMENT
COMPANY LIMITED as at June 30, |
|
| 1999
and the related profit and loss account and the statement of changes in
financial position, 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 |
|
| and,
after due verification thereof, we report that: |
|
|
| a)
in our opinion, proper books of account have been kept by the Company as
required by the Companies |
|
| Ordinance, 1984; |
|
|
|
|
|
| b)
in our opinion: |
|
|
|
|
| i)
the balance sheet and profit and loss account together with the notes
thereon, have been |
|
| drawn
up in conformity with the Companies Ordinance, 1984 and are in agreement with
the |
|
| books
of account and are further in accordance with accounting policies
consistently applied; |
|
| the
expenditure incurred during the year was for the purposes 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 and 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; and |
|
|
|
|
|
|
| d)
in our opinion, Zakat deductible at source under the Zakat and Ushr
Ordinance, 1980 was deducted |
|
| by
the Company and deposited in the Central Zakat Fund established under section
7 of that |
|
| Ordinance. |
|
|
|
|
| Lahore:
November 19, 1999 |
|
CHARTERED ACCOUNTANTS |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1999 |
|
|
|
|
|
|
1999 |
1998 |
|
|
Note |
Rupees |
Rupees |
|
|
|
|
| Share
Capital and Reserves |
|
|
|
| Authorised
share capital |
|
|
|
| 50,000,000
(1998: 50,000,000) ordinary |
|
|
| shares
of Rs. 10 each |
|
500,000,000 |
500,000,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid up share capital |
|
|
| 21,933,334
(1998: 21,933,334) ordinary |
|
|
| shares
of Rs. 10each |
|
3 |
219,333,340 |
219,333,340 |
|
|
|
|
|
| Reserves |
|
4 |
162,120,028 |
169,120,028 |
|
| Accumulated
profit |
|
|
2,928,902 |
17,178,756 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
384,382,270 |
405,632,124 |
|
|
|
|
|
| Redeemable
Capital |
|
5 |
16,954,098 |
-- |
|
| Liabilities
Against Assets Subject to Finance Lease |
6 |
118,220,157 |
154,842,859 |
|
| Deferred
Liabilities |
|
7 |
44,124,993 |
11,663,462 |
|
| Long
Term Security Deposits |
|
8 |
4,420,000 |
4,710,000 |
|
|
|
|
|
|
|
| Current
Liabilities |
|
|
|
|
| Short
term finances |
|
9 |
9,875,029,371 |
121,550,768 |
|
| Current
portion of long term liabilities |
|
10 |
154,188,070 |
210,261,864 |
|
| Creditors,
accruals and other payables |
|
11 |
81,340,902 |
105,114,377 |
|
| Provision
for taxation |
|
|
14,546,815 |
31,382,689 |
|
| Dividend
payable |
|
|
44,097,041 |
239,473 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
392,923,121 |
468,549,171 |
|
| Contingencies
and Commitments |
|
12 |
-- |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
961,024,639 |
1,045,397,616 |
|
|
|
|
========== |
========== |
|
|
| Fixed
Capital Expenditure |
|
|
|
| Operating
fixed assets- tangible |
|
13 |
714,765,683 |
789,047,171 |
|
| Capital
work-in-progress |
|
14 |
-- |
173,082 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
714,765,683 |
789,220,253 |
|
|
|
|
|
|
| Long
Term Loans to Employees |
|
15 |
1,428,611 |
2,465,682 |
|
|
|
|
| Long
Term Deposits |
|
16 |
22,325,311 |
34,345,523 |
|
|
|
|
| Current Assets |
|
|
|
| Stores,
spares and loose tools |
|
17 |
56,342,730 |
57,445,439 |
|
| Stock in trade |
|
18 |
50,964,743 |
41,135,325 |
|
| Trade debtors |
|
19 |
43,461,019 |
71,515,023 |
|
| Advances,
deposits, prepayments, |
|
|
|
| investments
and other receivables |
|
20 |
38,324,163 |
23,276,560 |
|
| Cash
and bank balances |
|
21 |
33,412,379 |
25,993,811 |
|
|
|
|
------------------ |
------------------ |
|
|
|
222,505,034 |
219,366,158 |
|
|
|
------------------ |
------------------ |
|
|
|
961,024,639 |
1,045,397,616 |
|
|
|
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
1999 |
1998 |
|
|
Note |
Rupees |
Rupees |
|
|
|
|
| Sales |
|
22 |
732,825,249 |
747,966,749 |
|
| Cost
of goods sold |
|
23 |
590,884,795 |
665,197,448 |
|
|
|
|
------------------ |
------------------ |
|
| Gross profit |
|
|
141,940,454 |
82,769,301 |
|
|
|
|
|
| Selling,
administrative and general expenses |
|
24 |
26,465,728 |
25,449,759 |
|
|
|
|
------------------ |
------------------ |
|
| Operating profit |
|
|
115,474,726 |
57,319,542 |
|
|
|
|
|
| Other income |
|
25 |
3,305,734 |
13,741,794 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
118,780,460 |
71,061,336 |
|
|
|
|
|
|
| Financial
charges |
|
26 |
55,810,692 |
72,086,740 |
|
| Other charges |
|
27 |
4,688,828 |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
60,499,520 |
72,086,740 |
|
|
|
|
| Profit/(Loss)
before taxation |
|
|
58,280,940 |
(1,025,404) |
|
| Taxation |
|
28 |
(35,664,126) |
(1,617,634) |
|
|
|
|
------------------ |
------------------ |
|
| Profit/(Loss)
after taxation |
|
|
22,616,814 |
(2,643,038) |
|
| Unappropriated
profit brought forward |
|
|
17,178,756 |
19,821,794 |
|
| Transferred
from general reserve |
|
7,000,000 |
-- |
|
|
|
|
------------------ |
------------------ |
|
| Profit
available for appropriation |
|
|
46,795,570 |
17,178,756 |
|
|
|
|
|
|
| Appropriation |
|
|
|
|
| Interim
dividend @ 20% (1998: NIL) |
|
|
43,866,668 |
-- |
|
|
|
|
------------------ |
------------------ |
|
| Unappropriated
profit carried forward |
|
|
2,928,902 |
17,178,756 |
|
|
|
|
========== |
========== |
|
| Earning
per share |
|
|
1.03 |
(0.12) |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
CHIEF EXECUTIVE |
|
|
DIRECTOR |
|
|
|
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
1999 |
1998 |
|
|
Note |
Rupees |
Rupees |
|
|
|
|
| Cash
flows from operating activities |
|
|
| Cash
generated from operations |
|
|
A |
218,435,329 |
104,682,717 |
|
| Financial
charges paid |
|
|
(78,644,077) |
(61,887,182) |
|
| Income
tax paid/deducted at source |
|
(24,503,320) |
(11,256,243) |
|
|
|
|
|
|
------------------ |
------------------ |
|
| Net
cash inflow/(outflow) from operating activities |
|
|
115,287,932 |
31,539,292 |
|
|
|
|
|
|
|
|
| Cash
flows from investing activities |
|
|
| Fixed
capital expenditure |
|
|
(8,874,820) |
(18,497,244) |
|
| Net
(increase)/decrease in long term loans and deposits |
|
(1,359,202) |
2,572,082 |
|
| Sale
proceeds of fixed assets |
|
|
516,760 |
1,988,876 |
|
| Profit/mark-up
on bank deposits and investments |
|
689,871 |
1,464,399 |
|
| Long
term security deposits |
|
|
(290,000) |
(2,255,000) |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash inflow/(outflow) from investing activities |
|
(9,317,391) |
(14,726,887) |
|
|
|
|
|
|
|
| Cash
flows from financing activities |
|
|
| Repayment
of shod term borrowings |
|
|
(46,269,005) |
-- |
|
| Increase
in redeemable capital |
|
|
|
31,000,000 |
-- |
|
| Repayment
of redeemable capital |
|
|
|
(48,049,792) |
(11,725,000) |
|
| Repayment
of finance lease liabilities |
|
|
(58,692,606) |
(16,018,116) |
|
| Dividend paid |
|
|
|
|
(9,100) |
(14,560) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(122,020,503) |
(27,757,676) |
|
|
|
|
------------------ |
------------------ |
|
| Net
increase/(decrease) in cash and cash equivalents |
|
(16,049,962) |
(10,945,271) |
|
| Cash
and cash equivalents at the beginning of the year |
|
(30,844,054) |
(19,898,783) |
