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KSB Pumps Company Limited
Annual Report 1999
Contents
MISSION STATEMENT & VALUES
COMPANY INFORMATION
DEALERS NETWORK
NOTICE OF MEETING
DIRECTORS' REPORT
MANAGEMENT REPORT
AUDITORS'' REPORT
BALANCE SHEET
PROFIT AND LOSS ACCOUNT
CASH FLOW STATEMENT
NOTES TO THE ACCOUNTS
PATTERN OF SHAREHOLDING
KSB Pump's Company Limited
REGISTERED OFFICE			WORKS
16/2, Sir Aga Khan Road			Hazara Road, Hassanabdal
Lahore-54000			Ph: (05772) 520236-520238-520239-2396
Ph: (042) 6304173- 6304174- 6370969-6370970			Fax: (05772) 520237
Fax: (042) 6368878- 6366192
Cover: A meandering river reflects a golden sunset as 1999 comes to an end. KSB bids farewell to the past
millennium and looks towards an era of peace and prosperity.
Mission Statement & Values
Mission Statement
We manufacture and market a selected range of standard and engineered pumps
and castings of world class quality. Our efforts are directed to have delighted
customers in the water, sewage, oil, energy, industry and building services
sectors.
In line with the Group strategy, we are committed to develop into a center of
excellence in water application pumps and be a strong regional player. We want
to market valves, complete system solutions and foundry products including
patterns for captive, automotive and other industries. We will develop a world
class human resource with highly motivated and empowered employees.
The measure of our success is being a clear market leader; achieving quantum
growth and providing attractive returns to stakeholders.
Our Values are
We believe in self-esteem of our customers,
suppliers and employees
We work as a team where every member owns
the process with an entrepreneurial spirit
We work with professional honesty and integrity
We trust our employees and appreciate their
contributions
We strive for continuous improvement to achieve
excellence in all spheres of our activities
We are an equal opportunity employer and
follow merit in human resources development
We fulfill our obligation towards society and environment.
Company Information
DIRECTORS		Dr. Agus Susanto		Chairman
		Arif Ijaz		Managing Director
		Peter Wurzbacher
		Manzurul Haq
		Nasim Beg
		Aezaz Hussain (effective 01.12.1999)
		R. D, Ahmad
		Adrian Meraj (Nominee NIT)
COMPANY SECRETARY
S. Zamanat Abbas
MANAGEMENT
Arif Ijaz		Chief Executive
A. Ghaffar Khan		Sales & Marketing
S. Zamanat Abbas		Finance & Administration
Pervez Iqbal Mughal		Production
Bashir Saleem		Projects
AUDITORS
A. F. Ferguson & Co.
BANKERS
ANZ Grindlays Bank
Bank of America NT & SA
Hongkong & Shanghai Banking Corporation Limited
Deutsche Bank AG
Muslim Commercial Bank Limited
Habib Bank Limited
United Bank Limited
LEGAL ADVISORS
Orr Digham & Co.
Zafar Law Associates
Dealers Network
LAHORE
UPPAL MACHINERY STORES
98-Railway Road, Lahore. Ph: 7657974 Fax: 7662541
ALI AGENCIES
37-Umer Market. Mcleod/Railway Road, Lahore. Ph: 7650758 - 7665758
KARACHI
ANWAR CORPORATION
Nicol/Frere Road Crossing, P.O. Box No. 4755, Karachi. Ph: 2428411-14
ENGINEERING SALES & SERVICES
Syedna Tahir Saifuddin Road, Off M.A. Jinnah Road, Karachi. Ph: 7731866 - 7731710
RAWALPlNDI
HAS SAN ENGINEERING
A/'754 Taj Mahal Market, Jinnah Road, Rawalpindi. Ph: 555386 Fax: 535386
KHYBER ELECTRIC CO. (PVT) LTD.
43-R/S,Bank Road, Rawalpindi. Ph: 567783-4
MULTAN
SULTAN SONS (PVT) LTD,
Sultan Mansions, Railway Road, Multan. Ph: 548574 - 542501
QUETTA
MARSHALL TRADING CO.
Shahrah-e-Adalat, Quetta. ph: 842867- 836913 Fax: 836912
PESHAWAR
AL-HASEEB CORPORATION
26 Gulistan Market, Railway Road, Faisalabad. Ph: 619454 Fax: 624404
PESHAWAR
GEO PUMPS & ELECTRICAL SERVICES
Sikandar Plaza, Shuba Bazar, Peshawar. Ph: 253119
Notice of Meeting
Notice is hereby given that the 42nd annual general meeting of the members of KSB Pumps Company
Limited, will be held at Hotel Avari, Shahrah-e-Quaid-e-Azam, Lahore, on Wednesday, the 29th December, 1999 at
4.00 p.m. to transact the following business:
1. To confirm the minutes of the extra-ordinary general meeting held on March 26, 1999.
2. To consider and adopt the audited accounts of the Company for the year ended June 30, 1999 and
report of the auditors and Directors thereon.
3. To approve the payment of dividend of 15% for the year ended June 30, 1999 as recommended by the
Directors.
4. To appoint auditors and fix their remuneration.
Messrs A. F. Ferguson & Co., Chartered Accountants, the retiring auditors, being eligible, offer
themselves for re-appointment as auditors of the Company.
NOTES:
1. A member entitled to attend and vote at this meeting is entitled to appoint
another member as proxy. Proxies in order to be effective must be received at
the Registered Office of the Company not later than 48 hours before the time
appointed for the meeting. If a member appoints more than one proxy and
more than one instruments of proxy are deposited by a member with the
Company, all such instruments of proxy shall be rendered invalid. Every proxy
shall have the right to attend, speak and vote in place of the member appointing
him/her at the meeting.
2. The Share Transfer Books of the Company will remain closed from
December 21, 1999 to December 29, 1999 (both days inclusive). Transfers
received in order at the Registered Office of the Company by the close of
business on December 20, 1999 will be in time to be passed for payment of
dividend to the transferees.
3. Members are required to notify the change of address, if any, immediately.
					BY ORDER OF THE BOARD
Lahore,					S. ZAMANAT ABBAS
December 06, 1999					Company Secretary
Directors' Report
The Directors are pleased to present the annual report together with the audited accounts of the Company for the year
ended June 30, 1999.
STATE OF COMPANY'S AFFAIRS
The Management Report on page 9 comments on the business of the Company during the year and has the approval of the directors.
RESULTS FOR THE YEAR					Rupees
Profit for the year before providing for taxation					43,125,607
Provision for taxation					(21,527,000)
					------------------
Profit after taxation					21,598,607
Unappropriated profit brought forward					431,643
					------------------
Available for appropriation					22,030,250
Appropriated as under:
- Transfer to general reserve					4,000,000
- Proposed dividend @ Rs 1.50 per share (15 %)					18,000,000
					------------------
					22,000,000
					------------------
Unappropriated profit carried forward					30,250
					==========
MATERIAL CHANGES SINCE THE BALANCE SHEET DATE
There have been no material changes since June 30, 1999 and the Company has not entered into any commitments which would affect
the financial position of the Company at that date,
BOARD OF DIRECTORS
On expiry of the term of office of the serving Directors, the following were elected as Directors of the Company for a period of three
years in an extraordinary general meeting on March 26, 1999:
1. Dr. Agus Susanto
2. Mr. Arif Ijaz
3. Mr. Peter Wurzbacher
4. Mr. Manzurul Haq
5. Mr. R. D. Ahmad
6. Mr. A. Razak Dawood
7. Mr. Nasim Beg
In addition to the above seven elected Directors, Mr. Adnan Meraj was nominated as Director Nominee of NIT under Section 183 of
the Companies Ordinance, 1984.
Owing to the appointment of Mr. A. Razak Dawood as Minister for Commerce, Industry and Production, the Board received with regret
the resignation of Mr. Razak. In the Circumstances, the Board wishes to place on record its warm appreciation for the valuable
contribution made by Mr. Razak during his tenure as Director.
BUSINESS OF THE COMPANY
The Company's business is that of manufacture and sale of pumps and valves. In addition, castings are manufactured
for sale to third parties.
Y2K COMPLIANCE
The Company has undertaken all measures to ensure that its IT system is fully Y2K compliant.
HR INITIATIVES
The management has put in strategic efforts aligning the sales, structures, skills, systems, staff with the shared vision that we prepared
in 1998. This alignment has brought in new synergies, team work and empowerment enhancing the productivity of the Company.
PATTERN OF SHAREHOLDING
The information about the pattern of shareholding appears as an appendix to the accounts on page 30
HOLDING COMPANY
The holding company is Canadian Kay Pump Limited incorporated in Toronto, Canada, Their particulars appear in note 3 to the
accounts.
Auditors
The present auditors, M/s. A. F. Ferguson & Co., being eligible, have offered themselves for re-appointment.
	Arif Ijaz				Dr. Agus Susanto
	Chief Executive				Chairman
Lahore,
November 11, 1999
Management Report
For the period under review, the business climate in the country remained
depressed and grim. The stagnant Industrial Sector, and the threat of
sovereign default, meant that resources to the Industrial & Development sectors
were severely curtailed, presenting the Company with multiple risks.
Fortunately, in anticipation, your company implemented a series of
strategic and structural measures that not only enabled it to absorb these shocks
easily, but also resulted in a substantial increase in Orders Received and
Turnover, with a corresponding increase in profits. This was achieved by
targeting the Project and Service sectors through a newly created
Customer Services Department which saw a 30% increase in the Project and
Service business. The strategic focus of the Company therefore shifted
towards a Turnkey system solution concept. Per employee productivity also
registered a significant increase, The Human Resource Initiatives created better
teamwork and higher motivational levels, especially in Sales where Exports
increased substantially. Better forecasting and cash management also helped us to
bring down financial charges. The drive for World Class competencies also led us
to be one of the first companies to adopt the new IAS - 19 accounting standard.
Due to the new standard, a lot of expense which could be amortized
earlier had to be expensed. Notable is the costs of downsizing and liability of
accumulated leaves of absences. This is perhaps the reason why profit as
percentage of sales has not shown an upward trend, although the quantum of
profit is much higher. On the operations side, a better focus has resulted in the
cost of sales being constant in spite of higher input costs, receivables and
inventories as a percentage of sales has shown improvements. Besides, your
Company has also insured that it is Y2K compliant and the number of permanent
employees stood at 404.
In short, all the emphasis on team building, cross functional synergy and
empowerment bore fruit.
The recent political development in Pakistan is a major development. Up to now, the
signals emanating are positive and the stock markets have seen an upturn after
a long time. One of our board members, Mr. A. Razak Dawood, has been chosen
as the Minister for Production and Commerce. With his long standing
reputation of a conscientious and upright businessman, we are confident that he
will be part of a dedicated team that is very serious in reviving a dying economy.
KSB Pakistan achieved it's highest ever turnover during this period of economic
malaise. This is more than a vote of confidence in its dedicated team. With
this as commitment, I have no doubt that this Company will continue to shine in
the face of all odds.
Lahore,					Arif Ijaz
November 11, 1999					Managing Director
Auditors' Report to the Members
We have audited the annexed balance sheet of KSB Pumps Company Limited as
at June 30, 1999 and the related profit and loss account and cash flow
statement, together with the notes forming part thereof for the year ended
June 30, 1999 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 purpose 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, except for
the changes referred to in note 2.2 to the accounts with which
we concur;
(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 cash flow statement, 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 cash flows for the year then ended;
(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 the Ordinance:
Lahore,					A.F. Ferguson & Co.
November 12,1999					Chartered Accountants
Balance Sheet as at June 30 1999
					1999	1998
				Note	Rupees	Rupees
						Restated
CAPITAL AND RESERVES
SHARE CAPITAL
Authorised
15,000,000 ordinary shares of Rs 10 each					150,000,000	150,000,000
					------------------	------------------
Issued, subscribed and paid up				3	120,000,000	120,000,000
RESERVES				4	101,499,866	97,499,866
UNAPPROPRIATED PROFIT					30,250	431,643
					------------------	------------------
					221,530,116	217,931,509
					--	20,833,334
LONG TERM RUNNING FINANCE - SECURED
LONG TERM AND DEFERRED LIABILITIES
Deferred taxation					--	486,000
Provision for employees' benefits				5	14,573,040	11,341,101
Rent received in advance					--	1,182,116
					------------------	------------------
					14,573,040	13,009,217
CURRENT LIABILITIES
Current portion of long-term running finance-secured					--	16,666,666
Short term running finances-secured				6	70,688,353	52,197,908
Creditors, accrued and other liabilities				7	162,095,219	189,309,472
Proposed dividend					18,000,000	12,000,000
					------------------	------------------
					250,783,572	270,174,046
CONTINGENCIES AND COMMITMENTS				8
					------------------	------------------
					486,886,728	521,948,106
					==========	==========
FIXED CAPITAL EXPENDITURE
Operating fixed assets- tangible				9	77,552,226	71,308,039
Capital work in progress				10	497,606	1,652,894
					------------------	------------------
					78,049,832	72,960,933
LONG TERM LOANS AND DEPOSITS				11	1,039,312	871,723
CURRENT ASSETS
Stores, spares and loose tools				12	35,895,064	28,531,270
Stock in trade				13	109,647,893	116,700,446
Trade debts				14	163,799,317	157,223,734
Loans, advances, deposits, prepayments and other receivables				15	68,331,334	59,050,975
Cash and bank balances					30,123,976	86,609,025
					------------------	------------------
					407,797,584	448,115,450
					------------------	------------------
					486,886,728	521,948,106
					==========	==========
The annexed notes form an integral part of these accounts.
	Arif Ijaz				Dr. Agus Susanto
	Chief Executive				Chairman
Profit and Loss Account for the year ended June 30 1999
					1999	1998
				Note	Rupees	Rupees
						Restated
Sales				17	597,343,981	410,110,014
Cost of sales				18	432,779,482	297,140,609
					------------------	------------------
Gross profit					164,564,499	112,969,405
Administration, selling and general expenses				19	125,541,192	100,214,324
					------------------	------------------
Operating profit					39,023,307	12,755,081
Other income				20	21,627,019	21,071,175
					------------------	------------------
					60,650,326	33,826,256
Financial charges				21	13,944,419	17,289,979
Other charges				22	3,580,300	2,324,500
					------------------	------------------
					17,524,719	19,614,479
					------------------	--------