| Cherat Cement Co Ltd - 2004 |
====================================================================================================
Note 2004 2003
(Rupees '000)
====================================================================================================
ASSETS
NON-CURRENT ASSETS
Fixed assets - Tangible
Operating assets - at book value 3.1 1,119,332 1,211,360
Assets subject to finance lease 3.2 54,548 64,685
Capital work-in-progress 4 77,827 -
1,251,707 1,276,045
Long-term investments 5 9,894 10,478
Long-term loans 6 6,595 5,017
Long-term security deposits 3,061 3,679
Long-term security deposits 1,271,257 1,295,219
CURRENT ASSETS
Assets held for disposal 7 489 1,400
Stores, spares and loose tools 8 421,347 264,991
Stock-in-trade 9 79,931 48,937
Loans, advances, prepayments and other receivables 10 22,638 17,218
Short-term investments 11 - 89,716
Taxation - net - 49,848
Cash and bank balances 12 386,410 128,661
910,815 600,771
TOTAL ASSETS 2,182,072 1,895,990
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES
Authorised capital
80,000,000 (2003: 80,000,000) ordinary
shares of Rs. 10/- each 800,000 800,000
Issued, subscribed and paid-up capital 13 531,924 531,924
Reserves 13.2 687,725 474,798
1,219,649 1,006,722
NON-CURRENT LIABILITIES
Long-term loans - secured 14 187,500 262,500
Liabilities against assets subject to finance leas 15 6,813 33,965
Long-term deposits -unsecured 16 15,170 15,366
Deferred taxation 17 170,327 170,754
379,810 482,585
CURRENT LIABILITIES
Current maturity of long-term liabilities 18 100,719 58,137
Short-term finance 19 - 73,127
Creditors, accrued and other liabilities 20 200,815 200,460
Provision for taxation - net 59,593 -
Unclaimed dividend 8,717 8,468
Proposed dividend 212,769 66,491
582,613 406,683
CONTINGENCIES AND COMMITMENTS 21
TOTAL EQUITY AND LIABILITIES
1,895,990 2,182,072
===================================================================================================
=================================================================================================== PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2004 ==================================================================================================== Note 2004 2003 (Rupees '000) ==================================================================================================== SALES-net 22 2,084,955 1,507,662 Cost of goods sold 23 1,369,785 1,357,517 GROSS PROFIT 715,170 150,145 Administrative expenses 24 (57,380) 957,143) Selling and distribution expenses 25 (36,967) (34,002) (94,347) (91,145) 620,823 59,000 OPERATING PROFIT Other income 26 12,714 33,332 633,537 92,332 Financial charges 27 (019,075) 929,617) Cost of voluntary golden handshake - (13,488) Other charges 28 (1,894) (22,675) Workers' Profit Participation Fund 20.3 (30,628) (1,328) Workers' Welfare Fund 20 (8,272) - (59,869) (67,108) PROFIT BEFORE TAXATION 573,668 25,224 TAXATION - current (147,405) (10,480) - prior (994) 99,000) - deferred 427 4,000 29.2 (147,972) (15,480) PROFIT AFTER TAXATION 425,696 9,744 UNAPPROPRIATED PROFIT BROUGHT FORWARD 3,898 30,645 Transfer from general reserve - 30,000 PROFIT AVAILABLE FOR APPROPRIATION 429,594 70,389 APPROPRIATION: Proposed dividend � Rs. 4/- per share (2003: @ Rs. 1.25 per share) (212,769) (66,491) Proposed issue of bonus shares @ 25% (1 share for every 4 shares held) (2003 Nil) (132,981) - 9345,750) (66,491) UNAPPROPRIATED PROFIT CARRIED FORWARD 83,844 3,898 EARNINGS PER SHARE - Basic & diluted 30 Rs. 8.00 Re. 0.18 ==================================================================================================== ==================================================================================================== CASH FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 2004 ==================================================================================================== Note 2004 2003 (Rupees '000) ==================================================================================================== CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation 573,668 25,224 Adjustments: Depredation 3.1.3 & 3.2.2 139,371 152,412 Return on investments (4,981) (7,350) Gain on sale of fixed assets 3.1.4 & 26 (317) (17,148) Financial charges 27 19,075 29,617 Exchange loss 28 239 2,281 Dividend income 26 (2,160) (1,920) 151,227 157,892 724,895 183,116 Operating profit before working capital changes (Increase)/Decrease in operating assets Assets held for disposal 911 (1,400) Stores and spares (156,356) 30,724 Stock-in-trade (30,994) 29,061 Loans, advances, prepayments and other receivables 5,984 5,646 (192,423) 64,031 532,472 247,147 Increase /(Decrease) in current liabilities Short-term finance (73,127) (170,401) Creditors, accrued and other liabilities 7,144 33,304 (65,983) (137,097) 466,489 110,050 Cash generated from operations Income tax paid - net (38,958) 836 Interest paid (25,864) (22,250) Net cash generated from operating activities 401,667 88,636 CASH FLOWS FROM INVESTING ACTMTIES Additions to fixed assets 3.1.1 (37,841) (366,052) Sale proceeds of fixed assets 3.1.4 952 21,301 Capital work-in-progress (77,827) 73,252 Long term advances (1,578) (366) Sale proceeds of investments 95,606 66,256 Dividend received 26 2,160 1,920 Long-term security deposits 618 5,339 Net cash used in investing activities (17,910) (198,350) CASH FLOWS FROM FINANCING ACTMTIES Long-term loans 14 (37,500) 300,000 Lease rentals paid against finance lease 15.1 (22,070) (26,108) Long-term deposits (196) 111 Dividend paid 66,242 119,125 Net cash (used in) / from financing activities (126,008) 154,878 Net cash flows during the year 257,749 45,164 Cash and cash equivalents at the beginning of the year 128,661 83,497 Cash and cash equivalents at the end of the year 386,410 128,661 ==================================================================================================== ======================================================================================================================
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED JUNE 30, 2004
======================================================================================================================
CAPITAL RESERVES REVENUE RESERVES
Issued, Reserve for
subscribed Capital issue of General Unappro- Sub
and paid-up reserve bonus reserve priated Total Total
capital shares profit
(Rupees '000)
======================================================================================================================
Balance at July 01, 2002 585,824 (3,000) - 450,000 30,645 477,64 1,063,469
Shares issued on amalgamation 50,600 - - - - - 50,600
Shares of CEL exchanged on
amalgamation against shares
of CCCL (50,600) - - - - - (50,600)
Net profit for the year 2002 -2003 - - - 9,744 9,744 9,744
Adjustment relating
to amalgamation (53,900) 53,900 - - - 53,900 -
Cash dividend - - - - (66,491) (66,491) (66,491)
Transfer from general reserve - - - (30,000) 30,000 - -
Balance at June 30, 2003 531,924 50,900 - 420,000 3,898 474,798 1,006,722
Net profit for the year 2003- 2004 - - - - 425,696 435,696 425,696
Cash dividend - - - - (212,769) (212,769) (212,769)
Bonus shares - - 132,981 - (132,981) - -
Balance at June 30, 2004 531,924 50,900 132,981 420,000 83,8.44 687,725 1,219,649
======================================================================================================================NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 20041. CORPORATE INFORMATION The company was incorporated in Pakistan as a public company limited by shares in the year 1981. Its main business activity is manufacturing, selling and marketing of cement. The company started commercial production in May 1985 and is listed on Karachi, Lahore and Islamabad Stock Exchanges. The registered office of the company is situated at Modem Motors House, Beaumont Road, Karachi. 2. SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies adopted in preparing the financial statements are as follows: 2.1. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan and the requirements of Companies Ordinance, 1984. Approved accounting standards comprise of such International Accounting Standards as notified under the provisions of the Companies Ordinance, 1984. Wherever, the requirements of the Companies Ordinance, 1984 or directives issued by the Securities and Exchange Commission of Pakistan differ with the requirements of these standards, the requirements of Companies Ordinance, 1984 or the requirements of the said directives take precedence. 2.2. ACCOUNTING CONVENTION These financial statements have been prepared on the basis of historical cost convention. 2.3. FIXED ASSETS AND DEPRECIATION 2.3.1. OWNED ASSETS Operating fixed assets except land and capital work-in-progress are stated at cost less accumulated depreciation and any impairment in value. Land and capital work-in-progress are stated at cost. Depredation is charged to income applying the reducing balance method except for computers, which are depreciated by using the straight-line method. Full years depredation is charged on additions during the year while no depredation is charged on assets disposed off. Maintenance and 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 or losses on disposal of assets, if any, are recognized as and when incurred. The carrying values of fixed assets are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. If such indication exists and where the carrying value exceeds the estimated recoverable amount, the assets are written down to the recoverable amount. 2.3.2. ASSETS SUBJECT TO FINANCE LEASE Assets subject to finance lease are initially stated at the lower of present value of minimum lease payments under the lease agreement and the fair value of the assets. The related obligations of the lease are accounted for as liabilities. Assets acquired under finance lease are depreciated on the same basis as per owned assets. 2.4. INVESTMENTS 2.4.1. IN ASSOCIATES Investments in associates are stated at cost less provision for impairment, if any, in the value of such investments. 2.4.2. HELD-TO-MATURITY INVESTMENTS These represent investments with fixed maturity in respect of which the company has the positive intent and ability to hold till maturity. These investments are initially recognised at cost and are subsequently carried at amortised cost. 2.5. ASSETS HELD FOR DISPOSAL These are stated at estimated net realisable value. 2.6. STORES, SPARES AND LOOSE TOOLS These are valued at lower of average cost and estimated net realisable value except items-in-transit which are stated at invoice value plus other charges paid thereon to the balance sheet date. Provision / write off, if required is made in the accounts for slow moving, obsolete and unusable items. 2.7. STOCK-IN-TRADE Stock-in-trade is valued at the lower of cost and estimated net realizable value. Cost signifies in relation to: Raw and packing material - Purchase cost on average basis Finished goods and work-in-process - Cost of direct material, labour and proportion of manufacturing overheads. Net realisable value signifies the estimated selling price in the ordinary course of business less cost of completion and cost necessary to be incurred in order to make the sale. 2.8. FINANCIAL INSTRUMENTS All financial assets and liabilities are recognised at the time when the company becomes party to the contractual provisions of the instrument and are derecognised in case of assets, when the contractual rights under the instrument are realised, expire or surrendered and in case of liability, when the obligation is discharged, cancelled or expired. Any gain / loss on the recognition and derecognition of the financial assets and liabilities is included in the profit and loss for the period in which it arises. 2.9. FOREIGN CURRENCY TRANSLATIONS Transactions in foreign currencies are translated to Pak Rupee at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to Pak Rupee at the foreign exchange rate ruling at that date. 2.10. BORROWING COSTS Borrowing costs that are directly attributable to the acquisition and construction of assets and incurred during the period the activities necessary to prepare the asset for its intended use are in progress, are capitalised as a part of the cost of related asset. All other borrowing costs are recognised as an expense in the period in which they are incurred. 2.11. CASH AND CASH EQUIVALENTS For the purpose of cash flow statement, cash and cash equivalents comprise current and PLS accounts with the commercial banks. 2.12. REVENUE RECOGNITION 2.12.1. SALES Revenue front sales is recognized upon passage of title to the customers that generally coincides with physical delivery. 2.12.2. INTEREST AND DIVIDEND Return on held to maturity investments are recognized on accrual basis using effective yield method. Dividend income is recognized when the right to receive such income is established. 2.13. REFUND AND CLAIMS These are recognized on receipt basis. 2.14. STAFF RETIREMENT BENEFITS 2.14.1. GRATUITY SCHEME The company operates an approved and funded gratuity scheme for all eligible employees who have completed the minimum qualifying period of service. The scheme is administered by the trustees nominated under the trust deed. The contributions to the scheme are made in accordance with actuarial valuation using Projected Unit Credit method. Actuarial gains and losses are recognised as income or expense when the cumulative unrecognised actuarial gains or losses exceed 10 percent of the higher of defined benefit obligation and the fair value of plan assets as of the end of previous reporting period. These gains or losses are recognised over the expected remaining working lives of the employees participating in the scheme 2.14.2. PROVIDENT FUND The company operates an approved defined contributory provident fund scheme for all permanent employees who have completed the minimum qualifying period of service. Equal contributions are made by the company and the employees to the fund at the rate of 8.33 percent of basic salary. 2.15. PROVISIONS Provisions are recognized when the company has a present legal or constructive obligation as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the obligation can be made. 2.16. TAXATION 2.16.1. CURRENT The charge for current taxation is based on taxable income at the current rate of taxation after taking into account applicable tax credit, rebates and exemption available if any or minimum taxation at the rate of one -half percent of the turnover whichever is higher. However, for income covered under final tax regime, taxation is based on applicable tax rates under such regime. 2.16.2. DEFERRED Deferred income tax is provided using the liability method for all temporary differences at the balance sheet date between tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. In this regard, the effects on deferred taxation of the portion of income subject to final tax regime is also considered in accordance with the requirement of Technical Release - 27 of Institute of Chartered Accountants of Pakistan. Deferred income tax asset is recognized for all deductible temporary differences and carry forward of unused tax losses, if any, to the extent that it is probable that taxable profit will be available against which such temporary differences and tax losses can be utilized. Deferred income tax assets and liabilities are measured at the tax rate that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date. 2.17. RELATED PARTY TRANSACTIONS The company enters into transactions with related parties on arm's length basis using admissible valuation methods. 3. FIXED ASSETS - TANGIBLE 3.1. OPERATING ASSETS - AT BOOK VALUE 3.1.1. The following is a statement of operating assets. ==================================================================================================================================================
Additions/ Accumulated Adjustment for Accumulated Book Rate
cost at (Deletions) / cost at depreciation depreciation Depreciation depredation value %
Description July 01, Transfer June 30, at July 01, on (Disposal) /for the year at June 30, at June 30, per
2003 2004 2003 Transfers 2004 2004 annum
(Rupees in 000)
==================================================================================================================================================
Freehold land 1,605 - 1,605 - - - 1,605 -
Leasehold land 6,255 - 6,255 - - - - 6,255 -
Building on freehold land 309,888 835 310,723 207,650 - 10,010 217,660 93,063 5-10
Plant and machinery (3.1.2,329,174 21,267 2,350,078 1,282,207
(363) (69) 109,294 1,391,432 956,646 10
Power and other installati 42,264 270 42,534 34,103 - 959 35,062 7,472 10
Motor vehicles 7,161 6,692 18,681 4,629 - 2,200 9,678 8,803 20
(1,104) (846)
*6,932 *3,895
Quarry, factory and
laboratory equipments 135,798 4,555 140,353 106,345 - 6,076 111,421 28,932 15
Furniture, fixtures and 29,953 1,972 31,669 18,786 (173) 1,433 20,046 11,623 10-20
office equipment (256)
computers 32,621 3,250 35,871 29,639 - 3,299 32,938 2,933 33.33
2004 2,894,119 37,841 2,937,769 1,683,359 (1,088) 132,271 1,818,437 1,119,332
(1,723) *3,895
*6,932
2003 2,535,892 366,052 2,894,719 1,560,404 (33,512) 143,735 1,683,359 1,211,360
(37,665) *12,732
*30,440
==================================================================================================================================================3.1.2. These include an amount of Rs. Nil (2003: Rs. 18.112 million) representing the borrowing cost capitalised during the year.3.1.3. The depreciation for the year has been allocated as follows. ====================================================================================================
Note 2004 2003
(Rupees' 000)
====================================================================================================
Manufacturing overheads 23 128,792 138,094
Administrative expenses 24 2,253 4,037
Selling and distribution expenses 25 1,226 1,604
132,271 143,735
====================================================================================================3.1.4. DISPOSAL OF FIXED ASSETS===============================================================================================================================
Sr. Book Sale Gain/ Mode of
NoDescription Cost Value Proceeds (Loss) Disposal Sold to
(Rupees '000)
===============================================================================================================================
Plant and Machinery
1 Crusher syndicator with conveyor 198 160 101 (59) Tender M/s Nasir Mineral
Traders, Nihalpura
2 Crusher syndicator with conveyor 165 134 105 (29) Tender M/s Al-Pak Traders,
Gujranwala
363 294 206 (88)
Motor vehicles
3.Honda CD7O motor cycle 68 35 65 30 Insurance M/s. EFU General
Claim Insurance, Karachi
4 Honda Civic 679 91 307 216 Negotiation Mrs. Najma Naeem Raut
Karachi
5.Suzuki Margalla 52 24 228 204 Negotiation Mr. Aftab A. Siddiqui,
Karachi (Employee)
6.Suzuki Mehran 305 108 132 24 Negotiation Syed Tahir Abbas,
Lahore (Employee)
1,104 258 732 474
Furniture, fixtures and Office equipments
7. Air conditioners 137 46 10 (36) Negotiation Aircon De-luxe, Karachi
and Mr. lshtiaq Ahmed
Khan, Karachi (Employee)
8. Fax machines 112 36 3 (33) Negotiation Mr. Humayun A. Zuberi,
Karachi (Employee) and
Mr. Altaf Hussain, Karachi
(Employee)
9. Miscellaneous furniture items 7 1 1 - Negotiation Various
256 83 14 (69)
1,723 635 952 317
===============================================================================================================================3.2. ASSETS SUBJECT TO FINANCE LEASE3.2.1. The following is a statement of assets subject to finance lease. ==================================================================================================================================
Adjustment
Accumulated for Accumulated Rate
Coat at Additions/ Cost at Depreciation Depreciation Depreciation Depreciation Book value %
Description July01, (Deletions) June 30, at July 01, on for the at June 30, at June 30, per
2003 *(Transfers) 2004 2003 * Transfer year 2004 2004 annum
(Rupees in '000)
==================================================================================================================================
Plant and machiner 50,000 - 50,000 10,000 - 3,333 13.333 36,667 10
Quarry
Equipment 15,590 - 15,590 4,326 - 1,690 6,016 9,574 15
Vehicles 23,005 *(6,932) 16,073 9,584 *(3,896) 2,077 7,766 8,307 20
2004 88,595 *(6,932) 81,663 23,910 *(3,895) 7,100 27,115 54,548
2003 113,844 5,191 88,595 27,965 *(12,732) 8,677 23,910 64,685
*(30,440)
==================================================================================================================================3.2.2. The depreciation for the year has been allocated as follows.=========================================================================================
2004 2003
Note (Rupees 000)
=========================================================================================
Manufacturing overheads 23 5,983 7,143
Administrative expenses 24 774 1,105
Selling and distribution expenses 25 343 429
7,100 8,677
=========================================================================================4. CAPITAL WORK-IN-PROGRESSRepresents advances to suppliers of Rs. 76.589 million against plant and machinery in connection with the project for enhancement of production capacity and balance for certain vehicles. 5. LONG-TERM INVESTMENTS 5.1. IN ASSOCIATED COMPANY - QUOTED =========================================================================================
2004 2003
(Rupees 000)
=========================================================================================
Cherat Papersack Limited 240,000 (2003: 240,000) fully paid ordinary shares
of Rs. 10/- each;
market value Rs. 21.120 million (2003: Rs. 22.320 million) 2,800 2,800
=========================================================================================5.2. HELD TO MATURITY INVESTMENTS=========================================================================================
2004 2003
(Rupees 000)
=========================================================================================
Foreign Exchange Bearer Certificates - 64,657
US Dollar Bonds 5.2.1 7,094 32,737
7,094 97,394
Less: Current maturity
- Foreign Exchange Bearer Certificates - 64,657
- US Dollar Bonds - 25,059
- 89,716
9,894 10,478
=========================================================================================5.2.1. Represents US Dollar Bonds having redemption value of Rs. 7.094 million (2003: Rs. 32.737 million). The above investment carries mark-up at a rate of 1 percent above the LIBOR and will mature by May 2008. These are pledged with a commercial bank against credit facilities.6. LONG-TERM LOANS - CONSIDERED GOOD =========================================================================================
2004 2003
Note (Rupees 000)
=========================================================================================
Due from:
Executives 6.1 5,839 4,310
Employees 6.1 2,956 2,381
8,795 6,691
Less: Current porti (2,200) (1,674)
6,595 5,017
=========================================================================================6.1. Represents car and other loans provided as per the company's employee loan policy. These loans carry mark-up upto 7 percent per annum (2003: upto 7 percent per annum) and are repayable within 3 to 6 years.The maximum aggregate amount due from executives at the end of any month during the year was Rs. 5.839 million (2003: Rs. 6.691 million). These advances are secured against the provident fund balance of respective employees. 6.2. All the above loans are outstanding for period less than three years. 7. ASSETS HELD FOR DISPOSAL =========================================================================================
2004 2003
(Rupees 000)
=========================================================================================
Carrying value as at July 01 1,400 20,467
Less: Written down during the year - 19,067
Disposals during the year 911 -
911 -
489 1,400
=========================================================================================7.1. Represents quarry equipment related stores and spares held for disposal in consequence of the outsourcing of limestone extraction process by the company.8. STORES, SPARES AND LOOSE TOOLS =========================================================================================
2004 2003
(Rupees 000)
=========================================================================================
Stores 214,014 71,170
Spares 201,323 191,344
Loose tools 378 502
415,715 263,016
Add: Spares in transit 5,632 1,975
421,347 264,991
=========================================================================================9. STOCK-IN-TRADE=========================================================================================
2004 2003
Note (Rupees 000)
=========================================================================================
Raw and packing material 23 16,573 26,436
Work-in-process 23 38,388 14,905
Finished goods 23 24,970 7,596
79,931 48,937
=========================================================================================10. LOANS, ADVANCES, PREPAYMENTS AND OTHER RECEIVABLES=========================================================================================
2004 2003
Note (Rupees 000)
=========================================================================================
Current portion of loans due from:
Executives 1,435 1,075
Employees 765 596
6 2,200 1,674
Advances - unsecured, considered good
Suppliers
Associated companies 10.1 - 1,075
Others 7,014 4,403
9,214 7,152
Prepayments
Excise duty 9,958 5,340
Rent 1,491 1,574
Others 931 1,582
12,380 8,496
Other receivables
Accrued return on investments
Octroi 453 1,017
Others 17 17
1,044 1,570
22,638 17,218
=========================================================================================10.1. Represents balance due from the following.=========================================================================================
2004 2003
(Rupees 000)
=========================================================================================
Zensoft (Private) Limited - 1,071
Greaves Cotton Air-conditioning (Private) Limited - 4
- 1,075
=========================================================================================10.2. The maximum aggregate amount due from associated companies at the end of any month during the year was Rs. Nil (2003: Rs. 1.075 million).11. SHORT-TERM INVESTMENTS - HELD TO MATURITY =========================================================================================
2004 2003
Note (Rupees 000)
=========================================================================================
Foreign Exchange Bearer Certificates 5.2 - 64,657
US Dollar Bonds 5.2 - 25,059
- 89,716
=========================================================================================12. CASH AND BANK BALANCES=========================================================================================
2004 2003
(Rupees 000)
=========================================================================================
With banks in:
Current accounts 95,236 125,879
PLS accounts 291,008 2,742
386,244 128,621
Cash in hand 168 40
386,410 128,661
=========================================================================================12.1. Effective mark-up rate in respect of PLS accounts ranges from 1 percent to 3 percent per annum (2003: 1.5 percent to 2 percent per annum).13. SSUED, SUBSCRIBED AND PAID-UP CAPITAL Fully paid ordinary shares of Rs. 10/- each ====================================================================================
Number of shares 2004 2003
2004 2003 (Rupees '000)
====================================================================================
19,842,000 19,842,000 Issued for cash 198,420 198,420
28,290,352 28,290,352 Issued as bonus shares 282,904 282,904
48,132,352 48,132,352 481,324 481,324
Shares issued for consideration
5,060,000 5,060,000 other than cash on amalgamation 50,600 50,600
53,192,352 53,192,352 531,924 531,924
====================================================================================13.1. The following is the details of shares held by the associated companies:=========================================================================================
2004 2003
(Number of shares)
=========================================================================================
Name of associated companies
Faruque (Private) Limited 7,171,036 6,571,036
Mirpurkhas Sugar Mills Limited 2,508,280 2,508,280
Greaves Pakistan (Private) Limited 978,985 978,965
Cherat Papersack Limited 123,125 123,125
10,781,406 10,181,406
=========================================================================================13.2. RESERVESThe detailed reconciliation of capital and revenue reserves is disclosed in the statement of changes in equity. 14. LONG-TERM LOANS - SECURED FROM BANKS =========================================================================================
2004 2003
Note (Rupees 000)
=========================================================================================
Term Finance I 175,000 200,000
Term Finance II 87,500 100,000
262,500 300,000
Current maturity 18 (75,000) (37,500)
187,500 262,500
=========================================================================================14.1. Represents loans from commercial banks carrying mark-up at the rates specified below and are secured by first pari passu charge on all plant and machinery of the company and demand promissory notes of the value of Rs. 472.62 million. The above loans are repayable in eight bi-annual installments commencing from February 2004.14.2. During the year 2004, the floating mark-up rates applicable in respect of the above loans were as follows: ========================================================================================================
Term Finance
I II
========================================================================================================
July 01, 2003 to March 14, 2004 Treasury bill rate plus 3 percent Treasury bill rate plus 3 percent
March 15, 2004 to June 14, 2004 KIBOR plus 1 percent Treasury bill rate plus 3 percent
June 15, 2004 to June 30, 2004 KIBOR plus 1 percent KIBOR plus 1 percent
========================================================================================================15. LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE15.1. This represents finance leases entered into with leasing companies for plant and machinery, equipments and vehicles. The total lease rentals due under the various tease agreements aggregate to Rs. 35.444 million (2003: Rs. 62.607 million) and are payable in equal quarterly installments. Taxes, repairs, replacement and insurance costs are to be home by the lessee. In case of termination of agreement, the lessee has to pay the entire rent for unexpired period. Financing rates of approximately 9 percent to 11 percent per annum have been used as discounting factor. Purchase options can be exercised by the lessee, paying 5 percent of the leased amount. The movement in the finance lease liability is as follows: ============================================================================================
2004 2003
Minimum Lease Present Minimum Lease Present
Payments Value Payments value
(Rupees in '000)
============================================================================================
Within one year 28,226 25,719 27,163 20,637
After one year but not more than five ye 7,218 6,813 35,444 33,965
Total minimum lease payments 35,444 32,532 62,607 54,602
Less: Amount representing finance charge (2,912) - (8,005) -
Present value of minimum lease payments 32,532 32,532 54,602 54,602
Less: Current portion (25,719) (25,719) (20,637) (20,637)
6,813 6,813 33,965 33,965
============================================================================================16. LONG-TERM DEPOSITS - UNSECURED=========================================================================================
Note 2004 2003
(Rupees '000)
=========================================================================================
Dealers 16.1 13,208 13,492
Suppliers and contractors16.2 1,982 1,874
15,170 15,366
=========================================================================================16.1. This represents interest-free security deposits from dealers which are repayable / adjustable on cancellation or withdrawal of dealership.16.2. This represents interest-free security deposits from suppliers and contractors which are repayable / adjustable after the satisfactory execution of the agreements. 17. DEFERRED TAXATION =========================================================================================
2004 2003
(Rupees 000)
=========================================================================================
Represents the tax effect of temporary differences relating to:
Accelerated tax depreciation allowance 165,506 190,047
Leased assets 6,550 3,439
Provisions (1,729) (7,674)
Tax loss (unassessed) - (15,058)
170,327 170,754
=========================================================================================18. CURRENT MATURITY OF LONG-TERM LIABILITIES=========================================================================================
2004 2003
Note (Rupees 000)
=========================================================================================
Long-term loans 14 75,000 37,500
Liabilities against assets
subject to finance leas 15.1 25,719 20,637
100,719 58,137
=========================================================================================19. SHORT-TERM FINANCE - SECURED=========================================================================================
2004 2003
(Rupees '000)
=========================================================================================
Running finance under mark-up arrangements 19.1 73,127
=========================================================================================19.1. The company has aggregate running finance facilities of Rs. 320 million (2003: Rs. 320 million) from commercial banks at KIBOR plus 1 percent per annum. These arrangements are generally for a period of twelve months and are renewable.The facilities are secured by way of charge over fixed assets, hypothecation of stock, stores and spares, book debts and demand promissory note and pledge of investments. 20. CREDITORS, ACCRUED AND OTHER LIABILITIES 20.1. =========================================================================================
2004 2003
Note (Rupees 000)
=========================================================================================
10,698 63,703
Accrued liabilities
- Accrued interest / mark-up
- Foreign currency loan 12,883 12,887
- Long-term loans - secured 4,065 9,518
- Short-term finance - secured 78 955
- Finance lease 454 913
- Other accrued liabilities
- Salaries payable 1,489 2,180
- Bonus payable 5,575 5,494
-Staff benefits payable 15,711 17,119
-Accrued expenses 12,464 8,882
52,719 57,948
Other liabilities
-Advances from customers 42,763 22,582
-Staff Provident Fund 55 58
-Retention money 433 4,259
-Payable to staff gratuity fund 20.2 7,716 16,356
-Insurance payable 16,922 12,520
-Workers' Profit Participation Fund 20.3 30,628 1,328
-Workers' Welfare Fund 8,272 -
-Sales tax payable 17,424 9,102
-PSI marking fee 5,813 4,615
-Royalty and excise duty 5,338 4,615
-Others 2,034 2,695
137,398 78,809
200,815 200,460
=========================================================================================20.1. These include amount of Rs. Nil (2003: Rs. 0.56 million) due to an associated company.20.2. STAFF GRATUITY FUND =========================================================================================
2004 2003
(Rupees 000)
=========================================================================================
Present value of the obligation 65,469 58,068
Fair value of plan assets (76,555) (39,529)
Unrecognized actuarial gain /loss) 18,802 (2,183)
Liability recognized in the accounts 7,716 16,356
Expenses recognized
Current Service Cost 3,661 3,491
Interest Cost 3,484 5,051
Expected return on plan assets (4,285) (3,657)
Expenses recognized in the income statement 2,860 4,885
Reconciliation at June 30, 2004
Opening net liability 16,356 16,871
Expenses as above 2,860 4,885
Contribution paid (11,500) (5,400)
Closing net liability 7,716 16,356
Actual return on plan assets
Expected return on plan assets 4,285 3,657
Actuarial gain / (loss) on plan assets 18,802 (2,183)
Actual Return on plan assets 23,087 1,474
=========================================================================================- Discount rate: 9 percent per annum- Expected rate of increase in salaries: 9 percent per annum - Expected rate of return on investment: 9 percent per annum 20.3. WORKERS' PROFIT PARTICIPATION FUND =========================================================================================
2004 2003
(Rupees 000)
=========================================================================================
Balance as at July 01 1,328 8,966
Interest thereon 38 116
1,366 9,082
Less: Payments during the year 1,366 9,082
- -
Contribution for the year 30,628 1,328
30,628 1,328
=========================================================================================21. CONTINGENCIES AND COMMITMENTS21.1. CONTINGENCIES =========================================================================================
2004 2003
(Rupees 000)
=========================================================================================
8,019 8,019
=========================================================================================21.1.2. TAX CONTINGENCIES=========================================================================================
2004 2003
Note (Rupees 000)
=========================================================================================
29 4,320 4,320
=========================================================================================21.2. COMMITMENTS21.2.1. =========================================================================================
2004 2003
(Rupees 000)
=========================================================================================
Contracts for capital expenditure in relation to 319,630 -
project for enhancement of production capacity
=========================================================================================21.2.2. Guarantee issued by a commercial bank on behalf of the company.=========================================================================================
2004 2003
(Rupees 000)
=========================================================================================
8,500 8,500
=========================================================================================21.2.3. LETTERS OF CREDIT ISSUED BY COMMERCIAL BANKS=========================================================================================
2004 2003
(Rupees 000)
=========================================================================================
145,244 20,450
=========================================================================================22. SALES - NET=========================================================================================
2004 2003
(Rupees 000)
=========================================================================================
Local sales net of trade discounts and volume rebate 2,466,754 2,076,187
Less: Sales tax 22.1 364,679 323,865
Excise duty 451,186 541,718
815,865 865,583
1,650,889 1,210,604
Export sales net of trade discounts 434,066 297,058
2,084,955 1,507,662
=========================================================================================22.1. Includes an amount of Rs. 7.465 million paid under CBR's notification SRO 247(1)/2004 dated May 05, 2004.23. COST OF GOODS SOLD =========================================================================================
2004 2003
Note (Rupees 000)
=========================================================================================
Raw and packing material consumed
Opening stock 26,436 25,083
Purchases 257,900 221,585
284,336 246,668
Closing stock 9 (16,573) (25,436)
267,763 220,232
Duty drawback on exports (10,793) (4,284)
256,970 215,948
Manufacturing overheads
Salaries, wages and benefits 23.1 121,858 117,097
Stores and spares consumed 83,035 6.4,622
Fuel and power 718,048 705,835
Rent, rates and taxes 32,906 27,688
Insurance 29,491 27,270
Vehicle running expenses 8,958 8,987
Travelling and conveyance 1,619 1,793
Printing and stationery 535 922
Legal and professional charges 7,511 444
Laboratory expenses 2,290 1,753
Depredation 3.1.3 & 3.2.2 134,775 145,237
Repairs and maintenance 8,657 6,832
Communication expenses 1,049 1,004
Miscellaneous manufacturing overheads 2,025 1,081
Stores written-off 915 590
1,410,642 1,327,103
Work-in-process
Opening 14,905 19,421
Closing 9 (38,388) (14,905)
Cost of goods manufactured 1,387,159 1,331,619
Finished goods
Opening 7,596 33,494
Closing 9 (24,970) (7,596)
1,369,785 1,357,517
=========================================================================================23.1. Salaries, wages and benefits include Rs. 5.093 million (2003: Rs. 6.508 million) in respect of staff retirement benefits.24. ADMINISTRATIVE EXPENSES =========================================================================================
2004 2003
Note (Rupees 000)
=========================================================================================
Salaries, wages and benefits 24.1 33,310 30,315
Travelling and conveyance 3,011 2,771
Vehicles running expenses 2,160 2,208
Communications 1,542 1,750
Printing and stationery 1,529 1,814
Rent, rates and taxes 1,278 1,232
Utilities 1,356 1,830
Repairs and maintenance 2,284 1,567
Legal and professional charges 2,272 1,862
Insurance 587 563
Auditors' remuneration 24.2 1,612 1,283
Subscription 2,117 2,830
Advertisement 284 762
Staff training expenses 100 44
Entertainment 546 612
Depredation 3.1.3 & 3.2.2 3,027 5,142
Miscellaneous 365 558
57,380 57,143
=========================================================================================24.1. Salaries, wages and benefits include Rs. 1.542 million (2003: Rs. 1.830 million) in respect of staff retirement benefits.24.2. AUDITORS' REMUNERATION =========================================================================================
2004 2003
(Rupees 000)
=========================================================================================
Audit fee 300 250
Tax, corporate and other services 1,270 939
Out of pocket expenses 42 94
1,612 1,283
=========================================================================================25. SELLING AND DISTRIBUTION EXPENSES=========================================================================================
2004 2003
Note (Rupees 000)
=========================================================================================
Salaries, wages and benefits 25.1 20,843 18,822
Travelling and conveyance 585 764
Staff training expenses 132 131
Vehicle running expenses 1,178 1,146
Communications 2,089 2,115
Printing and stationery 474 500
Rent, rates and taxes 1,070 946
Utilities 1,834 1,698
Repairs and maintenance 599 319
Insurance 284 266
Advertisement 1,007 726
Entertainment 39 39
Depreciation 3.1.3 & 3.2.2 1,569 2,033
Export expenses 3,649 1,887
License and subscription 493 1,431
Miscellaneous 1,122 1,179
36,967 34,002
=========================================================================================25.1. Salaries, wages and benefits include Rs. 1.174 million (2003: Rs. 1.242 million) in respect of staff retirement benefits.26. OTHER INCOME =========================================================================================
2004 2003
Note (Rupees 000)
=========================================================================================
Return on Foreign Exchange Bearer Certificates 4,643 6,045
Return on US Dollar Bonds 338 1,305
Profit on PLS accounts with banks 2,091 363
Gain on disposal of fixed assets 3.1.4 317 17,148
Dividend income from associated company 2,160 1,920
Scrap sales 1,400 2,782
Miscellaneous income 1,765 3,769
12,714 33,332
=========================================================================================27. FINANCIAL CHARGES=========================================================================================
2004 2003
(Rupees 000)
=========================================================================================
Mark-up on long-term loan 12,577 5,850
Financial charges on lease arrangements 4,696 10503
Mark-up on short-term running finance and bank charges 1,802 13,264
19,075 29,617
=========================================================================================28. OTHER CHARGES=========================================================================================
2004 2003
Note (Rupees 000)
=========================================================================================
Donations 28.1 1,574 1,211
Interest on WPPF 20.3 38 116
Assets held for disposal written down at net realisable value - 19,067
Loss on sale of assets held for disposal 43 -
Exchange loss - net 239 2,281
239 22,675
========================================================================================28.1. Recipients of donation do not include any donee in whom any Director or his spouse had any interest.29. TAXATION The assessments of the company for and up to the tax year 2003 have been completed. However, the department has filed an appeal before the Income Tax Appellate Tribunal (ITAT), for assessment year 2002-2003, in respect of certain disallowances that resulted in an additional tax demand of Rs. 4.320 million. The management considers that the outcome of the appeal would be favourable and hence no provision has been made in the financial statements. 29.1. Relationship between accounting profit and tax expense Profit before tax: 573,668 Less: Profit subject to final tax regime: 118,431 Profit subject to normal taxation: 455,237 29.2. TAX EXPENSE FOR THE YEAR Tax charge on profit subject to normal taxation at the rate of 35 percent: 159,333 Tax effects of expenses inadmissible for tax purposes: 1,447 Tax effects of income subject to lower rate of tax: (648) Tax effects on finalization of assessments relating to prior years: (6,064) Effects on deferred taxation of final tax regime on exports: (11,674) Tax liability under final tax regime: 5,426 Others: 152 Tax expense for the year: 147,972 Average effective tax rate on accounting profit is 26 percent. 29.3. Corresponding figures in respect of relationship between accounting profit and tax expense are not reported for the reason that the tax liability for the preceding year was determined under final tax regime and minimum taxation which was based on turnover. 30. EARNINGS PER SHARE - BASIC AND DILUTED =========================================================================================
2004 2003
=========================================================================================
Net profit for the year after tax 425,696 9,744
Weighted average number of ordinary shares in issue
during the year 53,192,352 53,192,352
Earnings per share Rs. 8.00 Re. 0.18
=========================================================================================31. FINANCIAL INSTRUMENTSYield / Mark-up rate risk The company's exposure to interest rate risk and the effective rates on its financial assets and liabilities as of June 30, 2004 are summarized as follows: =================================================================================================================================================
2004 2003
INTEREST BEARING NON- INTEREST BEARING NON-
Less than One to INTEREST Total Less than One to INTEREST Total
One year Five years Total BEARING one year Five years Total BEARING
(Rupees in '000) (Rupees in '000)
=================================================================================================================================================
Financial assets:
Long-term investments - 7,094 7,094 2,800 9,894 89,716 7,678 97,394 2,800 100,194
Long-term security deposi - - - 3,061 3,061 - - - 3,679 3,679
Loans and advances 2,200 8,795 8,795 3,041 16,836 1,674 5,017 6,691 7,031 13,722
Cash and bank balances 291,008 - 291,008 95,402 386,410 2,742 - 125,919 128,661
293,208 13,689 306,897 109,304 416,201 94,132 12,695 106,827 139,429 246,256
Financial Liabilities:
Long-term loans 75,000 187,500 262,500 - 262,500 37,500 262,500 300,000 - 300,000
Liabilities against assets
subject to finance lease 25,719 6,813 32,532 - 32,532 20,637 33,965 54,602 - 54,602
Long-term deposits - - - 15,170 15,170 - - - 15,366 15,366
Short-term finance - - 73,127 - 73,127 . 73,127
Creditors, accrued and
other liabilities - - - 125,624 125,624 - - - 164,551 164,551
Unclaimed dividend - - - 8,717 8,717 - - - 8,468 8,468
100,719 194,313 295,032 149,611 444,543 131,264 296,465 427,729 188,385 616,114
=================================================================================================================================================Effective interest rates for the monetary financial assets and liabilities are mentioned in the respective notes to the financial statements.CONCENTRATION OF CREDIT RISK Credit risk represents the accounting loss that would be recognised at the reporting date if counter parties failed to perform as contracted. The company does not have exposure to credit risk, as the company receives advance against sales. LIQUIDITY RISK The company applies prudent risk management policies by maintaining sufficient cash and bank balances and by keeping committed credit lines. At the balance sheet date the company has unavailed credit facility of Rs. 320 million (2003: Rs. 246.873 million). FOREIGN EXCHANGE RISK MANAGEMENT Foreign currency risk arises mainly where investments, receivables, loans and payables are denominated in foreign currencies. As at the balance sheet date, the carrying value of assets exposed to exchange risk is Rs. 7.094 million (2003: Rs. 32.737 million). FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying value of all financial assets and liabilities reflected in the financial statements approximate their fair values. 32. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES ==============================================================================================
2004 2003
==============================================================================================
Chief Chief
Executive Directors Executives Executive Directors Executives
(Rupees '000)
==============================================================================================
Managerial remuneration 2,812 5,626 58,429 2,352 4,877 49,991
Housing allowance 437 1,452 18,198 397 1,344 17,207
Retirement benefits 360 624 6,864 320 550 6,359
Utilities 399 523 3,512 357 473 3,321
Leave fare - 312 3,502 - 275 3,299
4,008 8,537 90,505 3,426 7,519 80,177
Number 1 2 166 1 2 159
==============================================================================================The chief executive, a director and an executive have been provided with furnished accommodation. Further, the chief executive, directors and some executives are also provided with the use of company maintained cars, telephone facility, utilities and some other facilities, which are reimbursed at actual to the extent of their entitlements.The aggregate amount charged in the financial statements for the year for fee to 4 directors amounted to Rs. 0.034 million (2003: 5 directors - Rs. 0.062 million). 33. CAPACITY - CLINKER =========================================================================================
2004 2003
(Rupees 000)
=========================================================================================
Installed capacity 750,000 750,000
Actual production 774,000 656,416
=========================================================================================34. TRANSACTIONS WITH RELATED PARTIESRelated parties comprise related group companies, local associated companies, directors and executives. The Company in the normal course of business carries out transactions with various related parties. Amounts due from and to related parties, amounts due from executives and remuneration of directors and executives are disclosed in the relevant notes. Other material transactions with related parties are given below: =========================================================================================
2004 2003
Note (Rupees 000)
=========================================================================================
Purchase of explosives 12,576 6,923
Purchase of packing material 188,206 187,767
Dividend received 26 2,160 1,920
Dividend paid 12,727 24,249
Other services 34.1 2,308 1,703
Royalty 11,706 9,397
Contribution to staff provident and gratuity fund 16,449 10,095
Insurance premium 20,324 19,195
=========================================================================================34.1. Transactions between the company and its associated undertakings are carried out on an arm's length basis and the related price is determined in accordance with the admissible valuation method. Additionally, certain actual administrative expenses are being shared amongst associated undertakings.35. NUMBER OF EMPLOYEES The number of employees at the balance sheet date is 720 (2003: 690). 36. DATE OF AUTHORISATION These financial statements were authorised for issue on September 15, 2004 by the Board of Directors of the company. 37. GENERAL - Figures presented in these financial statements have been rounded off to the nearest thousand rupees. - Certain prior years figures have been re-arranged, wherever necessary consequent upon changes in current year's presentation. However, there were no material reclassifications. |