20000120

1994 at Rs 129.91 million was raised to Rs 826.85 million in 1995 after capitalisation of bonus issue at 60% and right issue at 200% announced in 1994. The share capital was further raised to Rs 930.21 million in 1996 as the bonus stock issue at 12.5% was announced. The share capital base further expanded to Rs 1302.29 million in 1997 due to the right issue of 40% announced in the previous year. Since then the paid-up capital has remained unchanged.

The company has also not been able to declare dividend since 1997.

The financial health of the balance sheet is weak but should improve as the creditors have rescheduled long term debts. The liquidity position, as depicted by current ratio, further deteriorated to 0.47 from 0.70.

The difficult situation prevailed both at macroeconomics and microeconomics level. A glimpse of the situation can be seen from the chairmanÕs report.

ÒThe company commenced work on its expansion project in 1994-95 when the historical annual growth in cement demand was 7% with per capita consumption of only 71 kgs; being the lowest in the developing countries. It was, therefore expected that the growth rate of cement consumption would accelerate due to the urbanisation and revival of the economy.

The expansion project started commercial production in April Ô98 when the national capacity of cement had doubled while the demand remained depressed. Demand for cement failed to grow at the pace of increased supply due to slow down in the economy, decline in construction activity and cutting down of government expenditure.

The prices remained low in over supply market despite rise in costs. The global recession also aggravated the problem. The selling price, under capacity operations and rising costs resulted in huge losses and liquidity crunch rendering the company, unable to make debt servicing on schedule.Ó

The situation has been observed by the external auditors in the note annexed to the account.

The directors reported about the progress in the companyÕs efforts in rescheduling of loan obtained from IFC, Bank of Punjab and MCBL.

It was also reported that the company attained ISO 9002 Certification from Lloyd Register Quality Assurance UK. Ñ a world renowned company. ÒThis is a milestone achievement and the certification stands for consistent quality of over product and provides basis for export opportunity in futureÓ Ñ hoped Chairman of the company.

The directors report also brought the attention of shareholders towards the continuous pressure on cement sector due to inconsistent economic and financial policies of the government in the matter of custom duty, sales tax. They lamented that the taxation on cement industry is the highest in the world and sales tax paid on furnace oil, power and other inputs cannot be adjusted against output tax as cement is exempt from sales tax. They suggested that sales tax paid on inputs should be adjusted against the excise duty by introducing Modified Excise Duty System, as was done in India.

They also recommended that excise duty on cement should be reduced with simultaneous reduction in the ex-factory selling price of cement as the cement prices are too high. ÒThis will increase offtake and will also be a revenue neutral action as increased consumption will lead to recovering targetted duties at a lower per tonne rate.ÓÑ- directors presented their solutions to expand the demand for cement at lower selling price and at the same time to meet the recovery of targetted duties.

During the year under review the companyÕs plant capacity utilisation increased and sales also registered growth. Gross profit replaced the previous yearÕs gross loss. But the net loss was too high.

In-evitably, the shareholders equity eroded. So break-up value of the share was reduced to Rs 19.50 from Rs 24.03.

Performance Statistics (Million Rs)

June 30 1999 1998

Capital & LiabilitiesÉÉ

Paid-up Capital: 1,302.29 1,302.29

Reserves: 2,198.50 2,198.50

Accumulated (Loss): (960.85) 370.71

Equity: 2,539.94 3,130.08

L.T. Debts: 2,464.49 2,801.35

Other Non Current

Liabilities: 211.91 76.00

Current Liabilities: 1,702.40 1,216.18

AssetsÉÉ

Fixed Assets Ñ

Tangible: 6,099.79 6,349.67

L.T. Investments: 5.00 5.00

Other Non Current

Assets: 15.06 16.25

Current Assets: 798.89 852.69

Total Assets: 6,918.74 7,223.61

Sales, Profit & PayoutÉÉ

Sales: 2,133.39 925.65

Gross Profit/(Loss): 39.78 (67.31)

Operating (Loss): (111.90) (140.83)

Other Income: 36.24 39.45

Depreciation: 732.01 273.91

Financial Charges: 502.67 133.05

(Loss) Before

Taxation: 578.98 368.52

(Loss) After

Taxation: (590.13) (373.29)

Financial RatiosÉÉ

Share Price (Rs)

14/1/2000: 5.25 Ñ

Book Value Per

Share (Rs): 19.50 24.03

Price/Book Value

Ratio: 24.04 Ñ

Debt/Equity Ratio: 49:51 47:53

Current Ratio: 0.47 0.70

Asset Turn Over

Ratio: 0.31 0.13

Gross Profit Margin (%): 1.86 (7.27)

Operating Margin (%): (5.25) (15.21)

Net Profit Margin (%): (27.67) (40.32)

Loss Per Share (Rs): (4.53) (2.87)

Price/Earning Ratio: (Ñ) Ñ

R.O.E. (%): (Ñ) (Ñ)

R.O.A. (%): (Ñ) (Ñ)

R.O.C.E. (%): (Ñ) (Ñ)

Plant Capacity & Production of Clinker (Ô000 Tonnes)ÉÉ

A. GreyÉÉ

Capacity: 1,470.00 718.00

Production: 849.78 362.74

B. WhiteÉÉ

Capacity: 30.00 30.00

Production: 34.47 31.95

Company information: Chairman/Chief Executive: Tariq Sayeed Saigol. Directors: Usman Said, Mahmood Ahmad (CresBank), Henrik Starup (FLS & IFU). Company Secretary: Mohammad Sharif. Registered Office: 42-Lawrence Road, Lahore, Phone: 6278904-5, Fax: (042) 6363184. e-mail: cement@maple.lcci.org.pk. Factory: Iskanderabad, Distt. Mianwali (Punjab).