| Gharibwal Cement Ltd - 2009 |
|
BALANCE SHEET AS AT 30 JUNE 2009
====================================================================================
(Restated)
====================================================================================
Note 2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
ASSETS
NON CURRENT ASSETS
PROPERTY, PLANT AND EQUIPMENT 6 10,259,678 9,199,686
OTHER NON CURRENT ASSETS
Investments 7 - 653
Advances and deposits 8 62,354 76,666
Deferred cost 9 - 14,192
62,354 91,511
CURRENT ASSETS
Stores, spares and loose tools 10 278,334 262,388
Stock in trade 11 371,989 77,753
Trade debtors 12 52,694 -
Advances, deposits and other receivables 13 432,032 631,707
Cash and bank balances 14 67,980 156,506
1,203,029 1,128,354
TOTAL ASSETS 11,525,061 10,419,551
EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES
Authorized capital
250,000,000 (2008: 250,000,000)
ordinary shares of Rs. 10 each 2,500,000 2,500,000
Issued, subscribed and paid up capital 15 2,318,764 2,318,764
Revenue Reserves
General reserve 332,000 332,000
Accumulated loss (1,195,555) (856,049)
(863,555) (524,049)
1,455,209 1,794,715
SURPLUS ON REVALUATION OF PROPERTY,
PLANT AND EQUIPMENT 16 1,011,107 1,041,449
NON CURRENT LIABILITIES
Redeemable capital 17 399,680 399,840
Loans 18 2,769,723 5,125,716
Liabilities against assets subject to finance lease 19 52,297 139,808
3,221,700 5,665,364
Deferred liabilities 20 147,035 119,322
3,368,735 5,784,686
CURRENT LIABILITIES
Trade and other payables 21 1,309,743 684,227
Accrued interest / mark-up 22 494,644 311,185
Short term borrowings 23 744,578 192,537
Current portion of non-current liabilities 24 2,588,898 569,308
Taxes and duties 25 552,147 41,444
5,690,010 1,798,701
CONTINGENCIES AND COMMITMENTS 26 - -
TOTAL EQUITY AND LIABILITIES 11,525,061 10,419,551
====================================================================================PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30 JUNE 2009====================================================================================
(Restated)
====================================================================================
Note 2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Sales - net 27
Cost of sales 28 1,126,459 75,230
Gross profit / (loss) 123,795 (75,230)
Selling and distribution expenses 29 8,793 5,408
General and administrative expenses 30 68,157 71,778
Other operating expenses 31 45,771 400
122,721 77,586
1,074 (152,816)
Other operating income 32 10,702 13,281
Profit / (loss) from operations 11,776 (139,535)
33 370,766 154,047
Finance costs
(358,990) (293,582)
- (270,564)
Termination benefits
Loss before taxation (358,990) (564,146)
Taxation 34 10,858 (47,884)
Loss after taxation (369,848) (516,262)
Earnings per share - basic/diluted 35 (1.60) (4.34)
====================================================================================CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2009====================================================================================
(Restated)
====================================================================================
2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
CASH FLOW FROM OPERATING ACTIVITIES
Net loss before taxation (358,990) (564,146)
Adjustments for non cash charges and others
168,535 64,519
Depreciation on operating fixed assets
Profit on sale of fixed assets - (30)
Profit/Interest income for the year (10,702) (4,195)
Provision for retirement benefits 13,329 4,060
(Reversal)/provision for diminution in value of investments 653 290
Financial charges 370,766 136,170
Loss due to exchange fluctuation 60,820 17,877
Taxes and duties - 11,640
Provision for slow moving stores and spares 2,376 -
Amortization of discount on issue of shares 14,192 20,000
619,969 250,331
260,979 (313,815)
(Increase)/decrease in current assets
Stores, spares and loose tools (18,322) (86,070)
Stock in trade (294,236) -
Other receivables 199,675 (369,281)
Trade debtors (52,694) -
Increase/(decrease) in current liabilities
Taxes and duties 533,196 -
Trade and other payables 625,516 90,284
993,135 (365,067)
Cash generated by / (used) in operations 1,254,114 (678,882)
Financial charges paid (187,307) (472,446)
Taxes paid (5,638) -
Retirement benefit paid (13,329) (2,007)
Net decrease in long term loans and advances to staff 14,312 476
Net increase in long term deposits and prepayments - (5,009)
Net decrease in long term deposit from customers - (75)
Net cash inflow / (outflow) from operating activities 1,062,152 (1,157,943)
====================================================================================CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2009====================================================================================
(Restated)
====================================================================================
2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
CASH FLOW FROM INVESTING ACTIVITIES
Fixed capital expenditure-net (1,228,527) (1,280,555)
proceeds from sale of fixed assets - 321
Security deposits paid against finance lease - (48,757)
Interest received 10,702 4,461
Net cash outflow from investing activities (1,217,825) (1,324,530)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issuance of right shares 600,000
(Repayment of) / proceeds
from redeemable capital (160) 175,000
Payment of long term loans (397,223) 1,310,958
Short term finances - net 552,041 25,997
Repayment of foreign currency loan - (188,097)
Lease finance - net (87,511) (35,811)
Net cash inflow from financing activities 67,147 1,888,047
NET DECREASE IN CASH AND CASH EQUIVALENTS (88,526) (594,426)
CASH AND CASH EQUIVALENTS
at the beginning of the year 156,506 750,932
CASH AND CASH EQUIVALENTS
at the end of the year 67,980 156,506
====================================================================================STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2009========================================================================================
Particulars Share General Accumulated Total
Note Capital Reserve Loss
========================================================================================
(Rupees in thousand)
========================================================================================
Balance as at 01 July 2007-
as reported
1,718,764 332,000 (372,757) 1,678,007
Right issue of 60,000 (thousands) 600,000 - - 600,000
No. of shares at Rs. 10 each
Loss for the year ended 30 June 2008
as reported - - (315,918) (315,918)
Effect of compliance with IAS-19 2.2 (201,064) (201,064)
Loss for the year ended 30 June 2008
as restated - - (516,262) (516,262)
Surplus on revaluation of fixed assets
transferred: -
Incremental depreciation charged
during the year - - 32,970 32,970
[net off deferred tax of
Rs. 17,753 thousands]
Balance as at 30 June 2008-as restated 2,318,764 332,000 (856,049) 1,794,715
Loss for the year ended
30 June 2009 - - (369,848) (369,848)
Surplus on revaluation of
fixed assets transferred:
Incremental depreciation charged
during the year - - 30,342 30,342
[net off deferred tax of
Rs. 16,338 thousands]
Balance as at 30 June 2009 2,318,764 332,000 (1,195,555) 1,455,209
========================================================================================NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20091. LEGAL STATUS AND OPERATIONS The Company was incorporated in Pakistan on 29 December 1960 as a Public Limited Company; its shares are quoted on Karachi and Lahore Stock Exchanges. The registered office of the Company is situated at 34 Main Gulberg, Lahore. It is principally engaged in production and sale of cement. The Company commenced production from its new dry process gray cement plant of 6,700 TPD clinker capacity from 1 April 2009. During the year, the Company has incurred a loss of Rs. 369,848 (thousand). The paid-up capital and reserves (net of losses), long term debt, current liabilities and current assets of the Company amounts to Rs.1,455,209 (thousand) 3,221,700 (thousand), 5,690,010(thousand) and 1,203,029(thousand), respectively. In order to address this situation, management has entered into negotiation with various financial institutions to strengthen the working capital position of the company, and restructuring of term loans. In addition to the negotiations with the various financial institutions, the sponsoring directors, being the majority shareholder of the Company, have extended their commitment to support and assist the Company in ensuring that it remains viable in achieving its objectives in the long run, accordingly, they have deferred the payment of their loan as and when cash flow position of the Company allows it to do so. Based on the support of the sponsoring directors and the projections prepared by the Company's management, which have been approved by the Board of Directors, the Board is of the view that the Company would have adequate resources to continue its business on a sustainable basis in the foreseeable future. 2. STATEMENT OF COMPLIANCE 2.1. 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 Financial Reporting Standards (IFRSs) 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. Change in Accounting Policy The Company has changed its accounting policy for recording of assets acquired under Ijarah in accordance with the requirements of Islamic Financial Accounting Standard (IFAS) "Ijarah", during the year. Previously, the assets acquired under Ijarah were recorded in the Company's books while installments (Ujrah) were appropriated between the principal repayment and mark-up using the effective rate of return. This change in accounting policy has been applied retrospectively as prescribed by the International Accounting Standards 8 "Accounting Policies, Changes in Accounting Estimates and Errors" and the comparatives have been restated. Had this change not been made, the property, plant and equipment, long term loans, current liabilities and accumulated loss would have been higher by Rs. 118,500 (thousands), Rs. 120,000 (thousands), Rs. 14,271 (thousands) and Rs. 12,589 (thousands), respectively and earnings per share would have decreased by Rs. 0.50. 2.3. Compliance with International Accounting Standards-19-Employees Benefit During the year, provision relating to Golden Handshake Scheme in accordance with para 137 of IAS- 19 have been accounted for and prior year financial statements have been restated accordingly. The effect of the restatement on those financial statements is summarized below. There is no effect in the current financial statements. =========================================================
2009
=========================================================
Rs (000)
=========================================================
Increase in termination benefits 201,064
Increase in trade and other payable 201,064
Increase in loss 201,064
Decrease in equity 201,064
Decrease in earnings per share 0.22 per share
=========================================================2.4. Change in accounting estimatesDuring the year, the Company changed its accounting estimate for depreciating property, plant and equipment from straight line method to reducing balance method. This change in accounting estimate has been accounted for as per the requirements of the international Accounting Standard (IAS) 8 "Accounting Policies, Changes in Accounting Estimates and Errors". Had this change not been made the property, plant and equipment, surplus on revaluation of operating fixed assets and deferred tax liability would have been lower by Rs 29,231 (thousands), Rs 16,960 (thousands), and Rs. 16,167 (thousands), respectively; accumulated loss have been higher by Rs. 10,231 (thousands) and earnings per share lower by Rs. 0.04 2.5. Adoption of new accounting Standards The Company has adopted the following new and amended IFRS and IFRIC interpretations as ofOl July 2008: IFRS 7 Financial Instruments: Disclosures IFRIC 12 Service Concessions Arrangements IFRIC 13 Customer Loyalty Programs; and IFRIC 14 IAS 19- the limit on defined benefit asset, minimum funding requirement and their interactions IFRS 2 Share-based payments Adoption of these standards and their interpretations did not have any material effect on the financial statements of the Company except for the certain additional disclosures in respect of IFRS 7 included in the relevant notes to financial statements. 2.6. Standards, interpretations and amendments to published approved accounting standards those are not yet effective: The following revised standards and interpretations with respect to approved accounting standards as applicable in Pakistan would be effective from the dates mentioned below against the respective standards or interpretations: =============================================================================
Effective Date
Standard or Interpretation (Periods beginning
on or After)
=============================================================================
IAS 1 Presentation of Financial Statements (Revised) 01 January 2009
IAS 23 Borrowing Costs (Revised) 01 January 2009
IAS 27 Consolidated and Separate Financial
Statements(Revised) 01 July 2009
IAS 32 Financial Instruments (Amended) 01 January 2009
IAS 39 Financial Instruments Recognition and
01 January 2009
Measurement (Amended)
IFRS 2- Share-Based Payment (Amended) 01 January 2009
IFRS 3- Business Combinations (Revised) 01 July 2009
IFRS 8- Operating Segments 01 January 2009
IFRIC 15- Agreements for the construction of Real Estate 01 January 2009
IFRIC 16- Hedges of a Net Investment in a Foreign 01 October 2009
Operation
IFRIC 17- Distributions of Non-cash Assets to owners 01 July 2009
IFRIC 18- Transfers of Assets from Customers 01 July 2009
=============================================================================The Company expects that the adoption of the above standards and interpretations will not have any material impact on the Company's financial statements in the period of initial application other than to the extent of certain changes and! or enhancements in the presentation and disclosures in the financial statements resulting from the application of IAS1.The revised IAS 1 was issued in September 2007 and becomes effective for financial years beginning on or after 1 January 2009. The standard separates owner and non-owner changes in equity. The statement of changes in equity will include only details of transactions with owners, with non-owner changes in equity presented as a single line. In addition, the standard introduces the statement of comprehensive income. It presents all items of recognized income and expense, either in one single statement, or in two linked statements. The Company is still evaluating whether it will have one or two statements. In addition to the above, amendments to various accounting standards have also been issued by IASB as a result of its annual improvement project. Such amendments are generally effective for account periods beginning on or after 1 January 2009. The Company expects that the adoption of the above standards and interpretations will not have any material impact on the Company's financial Statements in the period of initial application. 3. BASIS OF PREPARATION These financial statements have been prepared under the historical cost convention except that certain fixed assets have been included at revalued amounts for foreign exchange. Further, certain investments have been included at their market value and staff retirement benefits for gratuity and compensated absences have been recognized at present value. 4. SIGNIFICANTACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS The preparation of financial statements in conformity with approved accounting standards, as applicable in Pakistan, requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company's accounting policies. Estimates and judgments are continually evaluated and are based on historical experience, including expectations of future events that are believed to be reasonable under the circumstances. These estimates and underlying assumptions are reviewed on an on going basis. Revision to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. The areas involving a higher degree of judgments or complexity or areas where assumptions and estimates are significant to the financial statements are as follows: 4.1. Taxation In making the estimate for income tax payable by the Company, the Company takes into account the applicable tax laws and the decision by appellate authorities on certain issues in the past. Deferred tax assets are recognized for all unused tax losses and credits to the extent that it is probable that taxable profit will be available against which such losses and credits can be utilized. Significant management judgment is required to detennine the amount of deferred tax assets that can be recognized, based upon the likely timing and level of future taxable profits together with future tax planning strategies. 4.2. Provision for doubtful receivables The Company reviews its doubtful trade debts at each reporting date to assess whether provision should be recorded in the profit and loss account. In particular, judgment by management is required in the estimation of the amount and timing of future cash flows when determining the level of provision required. Such estimates are based on assumptions about a number of factors and actual results may differ, resulting in future changes to the provisions. 4.3. Useful life and residual values of property, plant and equipment The Company reviews appropriateness of the rate of depreciation, useful life and residual value used in the calculation of depreciation. Further, where applicable, an estimate of the recoverable amount of assets is made for possible impairment on an annual basis. In making these estimates, the Company uses the technical resources available with the Company. Any change in the estimates in the future might affect the carrying amount of respective item of property, plant and equipment, with corresponding effects on the depreciation charge and impairment, if any. 4.4. Impairment of non-financial assets The Company assesses whether there are any indicators of impairment for all non financial assets at each reporting date. Non-financial assets are also tested for impairment when there are indicators that the carrying amounts may not be recoverable. 4.5. Provision for defined employee's benefits Defined benefit plans are provided for permanent employees of the Company subject to completion of a prescribed qualifying period of service. The plans are structured as separate legal entities managed by trustees except compensated absences for which liability is recognized in the Company's financial statements. These plans are evaluated with reference to uncertain events and based upon actuarial assumptions including inter alia, discount rates, expected rates, expected rates of return on plan assets, expected rates of salary increases, medical cost rates and mortality rates. The actuarial valuations are conducted by independent actuaries on annual basis. Gratuity costs primarily represent the increase in actuarial present value of the obligation for benefits earned on employee service during the year and the interest on the obligation in respect of employee service in previous years, net of the expected return on plan assets. Calculations are sensitive to changes in the underlying assumptions. 5. SIGNIFICANT ACCOUNTING POLICIES 5.1. Property, plant & equipment and depreciation Owned Operating fixed assets, except freehold land which is stated at revalued amount, are stated at cost or revalued amounts less accumulated depreciation and impairment if any. Capital work-in-progress is stated at cost. Depreciation is charged at the rates stated in note 6 applying reducing balance. The useful life and residual value of major components of fixed assets is reviewed annually to determine that expectations are not significantly different from the previous estimates. Adjustment in depreciation rate for current and future periods is made if expectations are significantly different from the previous estimates. Depreciation is charged from the month when it becomes available for use. Gain/loss on disposal of fixed assets is taken to profit and loss account. Normal repairs and maintenance are charged to profit and loss account as and when incurred. Major improvements and modifications are capitalized and assets replaced, if any, other than those kept as stand-by, are retired. Leased Assets subject to finance lease are stated at the lower of present value of minimum lease payments under the lease agreements and the fair value of the assets. The related obligations of lease are accounted for as liabilities. Financial charges are allocated to accounting periods in a manner so as to provide a constant periodic rate of financial cost on the remaining balance of principal liability for each period. Depreciation is charged at the rates stated in note 6 by applying reducing balance whereby the cost/revalued amount and capitalized exchange fluctuation of an asset are written-off over its estimated useful life. Financial charges and depreciation on leased assets are charged to income. 5.2. Investments Investments intended to be held for less than twelve months from the balance sheet date or to be sold to raise operating capital, are included in current assets, while all other investments are classified as long term. Management determines the appropriate classification of its investments at the time of the purchase and re-evaluates such designation on a regular basis. Investments at fair value through profit or loss: All investments classified as investments at fair value through profit or loss, are initially measured at cost being fair value of consideration given. At subsequent reporting date these investments are measured at fair value (quoted market price), unless fair value could not be measured reliably. The investments, for which quoted market price is not available, are measured at cost. Realized and unrealized gains and losses arising from change in fair value are included in the profit or loss for the period in which they arise. 5.3. Deferred cost All deferred costs including discount on issue of shares incurred and deferred before 05 July 2004 are amortized over a period of five years in accordance with the provisions of substituted Fourth Schedule to the Companies Ordinance 1984. 5.4. Stores and spares These are valued at lower of moving average cost and net realizable value except items-in-transit which are valued at cost accumulated to the balance sheet date. Stores, spares and loose tool are regularly reviewed by the management to assess their Net Realizable Value (NRV). Provision is made for slow moving items and obsolete store items. 5.5. Stock-in-trade Basis of valuation are as follows: =====================================================================
Particulars Mode of valuation
=====================================================================
Raw materials Lower of annual average cost and net
realizable value
Work-in-process Lower of NRV or average cost comprising
quarrying cost, transportation, government
levies, direct cost of raw material, labour and
other manufacturing overheads.
Finished goods - Lower of cost and net realizable value.
Packing materials - At lower of simple moving average cost and
net realizable value
=====================================================================Cost in relation to work-in-process and finished goods represent the annual average manufacturing cost which consists of prime cost and appropriate manufacturing overheads.Stock-in-trade is regularly reviewed by the management and any obsolete items are brought down to their Net realizable value. Net realizable value signifies the selling price in the ordinary course of business less cost necessary to be incurred to affect such sale. 5.6. Trade debts Trade debts are carried at invoice amount on transaction date less any estimate of provision for doubtful receivables. Known bad debts are written off as and when identified. 5.7. Cash and cash equivalents Cash and cash equivalent consist of cash-in-hand and balances with banks. Cash and cash equivalent included in cash flow statement comprise of cash-in-hand, balances with banks and temporary bank overdrafts. 5.8. Ijarah Ujarah payments under an Ijara are recognized as an expense in the profit and loss account on a straight-line basis over the Ijarah term. 5.9. Financial Instruments Financial assets are short term investment, long term deposits, long term loans, trade debtors, loans and other receivables and cash and bank balances. These are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts. Financial liabilities are classified according to the substance of the contractual arrangements entered into. Significant financial liabilities are liabilities against assets subject to finance lease, long term loans and finances, short term loans and finances and trade payables. Mark-up bearing finances are recorded at the gross proceeds received; other liabilities are stated at their nominal value. Financial charges are accounted for on accrual basis. 5.10. Offsetting of financial assets and liabilities Financial assets and financial liabilities are set off and the net amount is reported in the financial statements when there is a legally enforceable right to set off and the company intends either to settle on a net basis, or to realize the assets and to settle the liabilities simultaneously. Equity instruments are recorded at their face value. All incremental external costs directly attributable to the equity transaction are charged directly to equity net of any related income tax benefit. 5.11. Impairment of assets The management assesses at each balance sheet date whether there is any indication that an asset is impaired. If any such indication exists, the management estimates the recoverable amount of the asset. If the recoverable amount of the asset is less than its carrying amount, the carrying amount of the cash generating unit is reduced to its recoverable amount by charging the impairment loss against profit and loss account for the year. 5.12. Taxation Current The charge for current taxation is based on taxable income at current rates of taxation after taking into account tax credits and rebates available, if any. Deferred Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of taxable income. Deferred tax is calculated by using the tax rates enacted at the balance sheet date. Deferred tax liability is recognised for all taxable temporary differences and deferred tax asset is recognised for all deductible temporary differences and carry forward of unused tax losses and unused tax credits, if any, to the extent that it is probable that future taxable profit will be available against these can be utilized. The Company recognizes deferred tax liability on surplus on revaluation of fixed assets which is adjusted against the related surplus. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and level of future taxable profits together with future tax planning strategies. 5.13. Revenue recognition Sale of goods Sales are recorded on dispatch of goods to customers. Interest Income Interest income is accounted for on accrual basis. Dividend Income Dividend income is recognized when the company's right to receive payment is established. 5.14. Employees benefits (a).Defined benefit plan The Company operates a funded gratuity scheme for all its permanent employees subject to completion of a prescribed qualifying period of service. Contribution to the fund is made annually on the basis of actuarial recommendation to cover obligation under the scheme. The cost of defined benefit plan is determined using actuarial valuation. The actuarial valuation involves making assumptions disclosed in note 20.2. Due to long term nature of these plans, such estimates are subject to significant uncertainty. Actuarial gains or losses are recognized as income or expense when the cumulative unrecognized actuarial gains or losses for each individual plan exceeds 10% of the higher of the present value of the defined benefit obligation and fair value of plan assets. These gains or losses are recognized in the profit and loss account over the expected average remaining working lives of the employees participating in the plan. (b).Defined contribution plan The Company also operates a funded contributory provident fund scheme for its employees. Equal monthly contributions are made by the Company and the employees to the fund. Contribution of the Company is charged to the profit and loss account for the year. (c).Compensated absences Provisions are made to cover the obligation for accumulated compensated absences on the basis of actuarial valuation and are charged to profit and loss account. Actuarial gains and losses are recognized immediately. 5.15. Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are charged to profit and loss account in the period of incurrence. 5.16. Trade and other payables Trade and other payables are carried at cost, which is the fair value of the consideration to be paid for goods and services. 5.17. Foreign currency translation Assets and liabilities in foreign currencies are translated into Pak Rupees at rates of exchange prevalent on the balance sheet date. All exchange differences arising from foreign currency transactions / translations are charged to profit and loss account. 5.18. Related party transactions All transactions with related parties are at arm's length prices determined in accordance with the pricing method as approved by the Board of Directors. 5.19. Provisions Provisions are recognized in the balance sheet when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provisions are reversed. 6. PROPERTY, PLANT, AND EQUIPMENT ====================================================================================
Note 2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Operating fixed assets 6.1 10,163,325 2,316,429
Capital work in progress 6.2 96,353 6,883,257
10,259,678 9,199,686
====================================================================================6.1. OPERATING FIXED ASSETS=========================================================================================================================================================
COST / REVALUATION DEPRECIATION
=========================================================================================================================================================
Additions (Disposals)/ Accumulated Charge Adjustment Accumulated Book value
Particulars during transfer as at for the on (disposal) as at as at
As at the year for the year As at Rate 01 July 2008 year transfers 30 June 2009 30 June 2009
01 July 2008 30 June 2009 %
=========================================================================================================================================================
Rupees in '000'
=========================================================================================================================================================
2009
Owned assets
Land - freehold 585,145 - - 585,145 - - - - 585,145
Buildings & foundations 462,721 1,519,396 - 1,982,117 5-10 295,684 34,750 - 330,434 1,651,683
Leasehold land 18,040 - - 18,040 5-10 12,592 545 - 13,137 4,903
Heavy Vehicles 162,381 - - 162,381 20 137,545 4,967 - 142,512 19,868
Plant and machinery - Line I 2,080,809 - - 2,080,809 5 927,014 56,210 - 983,224 1,097,585
Unit of
production
Plant and machinery - Line I - 6,486,675 - 6,486,675 method based - 49,314 - 49,314 6,437,361
on 25 years'
life
Railway sidings 9,339 - - 9,339 7 6,122 225 - 6,347 2,992
Roads 4,847 - - 4,847 5 2,837 101 - 2,938 1,910
Loose tools 1,403 - - 1,403 10 1,309 9 - 1,318 85
Furniture, fixtures and
other office equipment 41,211 1,461 - 42,672 10 28,337 1,342 - 29,679 12,993
Transport assets 31,427 2,241 - 33,668 20 26,944 1,064 - 28,008 5,660
3,397,323 8,009,773 - 11,407,096 1,438,384 148,527 - 1,586,911 9,820,184
Assets subject to
finance lease:
Plant and machinery 386,271 - - 386,271 5 40,719 17,278 - 57,997 328,274
Heavy vehicles 4,495 - - 4,495 20 2,654 368 - 3,022 1,473
Vehicles 16,044 5,659 - 21,703 20 5,947 2,362 - 8,309 13,394
406,810 5,659 - 412,469 49,320 20,008 - 69,328 343,141
3,804,133 8,015,432 - 11,819,565 - 1,487,704 168,535 - 1,656,239 10,163,325
=========================================================================================================================================================
COST / REVALUATION DEPRECIATION
=========================================================================================================================================================
Additions (Disposals)/ Accumulated Charge Adjustment Accumulated Book value
Particulars As at during transfer As at Rate as at for the on (disposal) as at as at
01 July 2008 the year for the year30 June 2009 % 01 July 2008 year transfers 30 June 2009 30 June 2009
=========================================================================================================================================================
Rupees in '000'
=========================================================================================================================================================
2008
Owned assets
Land - freehold 582,215 2,930 - 585,145 - - - - 585,145
Buildings & foundations 462,721 - - 462,721 5-10 278,559 17,125 - 295,684 167,037
Leasehold land 18,040 - - 18,040 5-10 11,990 602 - 12,592 5,448
Heavy Vehicles 162,381 - - 162,381 20 131,336 6,209 - 137,545 24,836
Plant and machinery 2,080,809 - - 2,080,809 5 866,288 60,726 - 927,014 1,153,795
Railway sidings 9,339 - - 9,339 7 5,880 242 - 6,122 3,217
Roads 4,847 - - 4,847 5 2,731 106 - 2,837 2,010
Loose tools 1,403 - - 1,403 10 1,298 11 - 1,309 94
Furniture, fixtures and
other office equipment 40,781 430 - 41,211 10 26,918 1,419 - 28,337 12,874
Transport assets 33,153 - (1,726) 31,427 20 27,528 852 (1,436) 26,944 4,483
3,395,689 3,360 (1,726) 3,397,323 1,352,528 87,292 (1,436) 1,438,384 1,958,939
Assets subject to
finance lease:
Plant and machinery 386,271 - - 386,271 5 22,532 18,187 - 40,719 345,552
Heavy vehicles 4,495 - - 4,495 20 2,194 460 - 2,654 1,841
Vehicles 10,947 5,097 - 16,044 20 3,693 2,254 - 5,947 10,097
401,713 5,097 - 406,810 28,419 20,901 - 49,320 357,490
3,797,402 8,457 (1,726) 3,804,133 - 1,380,947 108,193 (1,436) 1,487,704 2,316,429
=========================================================================================================================================================6.1.2. Vehicles subject to finance lease include vehicles of Rs. 2,780 (thousands) (2007: Rs. 2,780 (thousands) are in the name of four employees of the company.6.1.3. The revaluation of the Company's freehold land, building, railway siding, heavy vehicles and plant and machinery situated at its plant site,was carried at 30 June 2006 by an independent Valuers M/S Hamid Mukhtar & Co. (Pvt) Ltd Lahore. The revaluation exercise was carried out on the basis of depreciated replacement cost except freehold land which was revalued on the basis of reassessed replacement cost. This revaluation had produced incremental revaluation surplus of Rs. 902,690 (thousands). 6.1.4. Due to the non availability of underlying record of each revalued item of Property, Plant and Equipment of previous years in relation to their respective cost, the carrying amount could not be determined, had these been carried out under the cost model. 6.1.5. Depreciation has been allocated as under: ====================================================================================
2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Cost of sales 136,240 61,939
General and administrative expenses 2,433 2,290
Selling and distribution expenses 219 290
Capital work in progress 29,643 43,675
168,535 108,194
====================================================================================6.2. CAPITAL WORK-IN-PROGRESS=============================================================================
Opening Additions Transfer to Closing
Balance Operating Balance
fixed assets
=============================================================================
Rupees in thousands
=============================================================================
Civil Work and building 1,663 19,925 1,663 19,925
Dry Cement Plant
Civil Work 1,343,477 168,243 1,511,720 -
Plant and Machinery 4,639,640 975,153 5,614,793 -
5,983,117 1,143,396 7,126,513 0
Dual fuel electric power
generation plant
Civil Work 4,597 1,417 6,014 -
Plant and Machinery 817,452 54,430 871,882 0
822,049 55,847 877,896 0
6,806,829 1,219,168 8,006,072 19,925
Stores and spares held for 6.2.1 76,428 0 76,428
capital expenditure
6,883,257 1,219,168 8,006,072 96,353
=============================================================================6.2.1. This represents the cost of filter press machinery acquired to convert the old plant from wet to semi dry manufacturing process and includes stores valuing Rs. 6,000 (thousands) (2008: Rs. 6,000 (thousands)) presently lying under the control of custom authorities at their bonded custom warehouse.6.2.2. Borrowing cost capitalized during the year and the results of trial run operations are as follows: ====================================================================================
2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Borrowing cost capitalized 735,955 743,000
Profit from trial run operations 191,542 0
====================================================================================7. INVESTMENTS====================================================================================
Note 2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
At fair value through profit or loss
Cost of acquisition 7.1 1,161 1,161
Less: Provision for impairment 7.2 (1,161) (508)
- 653
====================================================================================7.1. These represent investments in shares / certificates of various listed and unlisted companies / modarabas made in mid 1990s. Since the investment in these, number of investee companies have either merged or have been delisted. The present management has neither the complete information nor the physical possession of these shares / certificates. In view of the above, the management has made full provision thereagainst.7.2. Provision for impairment ====================================================================================
2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Opening balance 653 219
Charge for the year 508 434
Closing balance 1,161 653
====================================================================================8. ADVANCES AND DEPOSITS LOANS TO STAFF====================================================================================
2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
considered good/secured
Employees 1,259 2,033
Less: Current portion shown under current assets (740) (788)
DEPOSITS
Security deposits
Rented premises 1,278 5,038
Trade 1,303 1,466
Finance lease 48,000 48,000
Ijarah 27,825 32,691
Less: current portion shown under current assets (16,571) (11,774)
62,354 76,666
====================================================================================8.1. These represent loans as per the terms of employment given for the purposes of house building, purchase of motor cars / motorcycles, house repair Loans and emergency loans. House building and vehicle loans are secured against charge on these assets, lien on r etirement benefits and Personal / third party guarantee sand are repayable in 96 to 240 equal monthly installments. Interest on house building loans is charged @ 3% - 5% P.a. Emergency and house repair loans are unsecured and interest free and are repayable in 15 - 125 equal monthly installments.9. DEFERRED COST ====================================================================================
2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Discount on issue of shares 100,000 100,000
Less: Balance as at July 01, 2008 85,808 65,808
Charge for the year 14,192 20,000
100,000 85,808
Balance as at June 30, 2009 - 14,192
====================================================================================10. STORES, SPARES AND LOOSE TOOLS====================================================================================
Note 2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Stores 10.1 211,145 195,109
Spares 66,768 66,448
Loose tools 421 831
278,334 262,388
====================================================================================10.1. This includes store-in-transit valuing Rs. 18,901 (thousands) (2008: Rs. Nil).11. STOCK-IN-TRADE ====================================================================================
Note 2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Raw materials 19,080 11,701
Work-in-process 28 251,877 30,967
Finished goods 28 81,208 34,652
Packing materials 19,824 433
371,989 77,753
====================================================================================12. TRADE DEBTORS � unsecured====================================================================================
2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Considered good 52,694 -
Considered doubtful 442 442
Less: Provision for doubtful debts 442 442
- -
52,694 -
====================================================================================12.1. As at 30 June 2009, the ageing analysis of unimpaired trade debts is as follows:=========================================
Past due but not impaired
1 - 90 90 - 180
Total days days
=========================================
(Rupees in '000')
=========================================
2009 52,694 48,228 4,466
2008 - - -
=========================================13. ADVANCES, DEPOSITS AND OTHER RECEIVABLES====================================================================================
Note 2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Loans and advances - unsecured, considered good
Balouchistan Glass Limited-associated undertaking 13.1 75,000 -
Advances to staff 13.2 14,581 9,333
Advances to suppliers 249,068 497,311
Current portion of loans to staff 740 788
Short terms deposits 18,725 38,730
Sales tax input claimable 13.3 56,561 78,216
Income tax refundable 8,198 -
Accrued Interest 9,159 332
Advisory fee receivable - 4,219
Others - 2,778
432,032 631,707
====================================================================================13.1. This carries markup at the rate of 1% above the rate charged to the Company by the financial institutions.13.2. This includes advances amounting to Rs 5,137 (thousand) (2008:5,565 (thousands)) given for the company business. Advances given to Chief Executive Officer and Directors were Rs Nil (2008: Rs Nil). 13.3. This includes sales tax deducted on local supplies and import of plant and machinery to be claimed under the provisions of Sales Tax Act, 1990. 14. CASH AND BANK BALANCES ====================================================================================
Note 2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Cash in hand 2,306 2,170
Cash at bank
Current accounts 14.1 35,774 128,309
Deposit account 14.2 10,006 10,050
Saving accounts
14.3 19,894 15,977
67,980 156,506
====================================================================================14.1. This includes Rs. 1,352 (thousands) (2008:Rs.1,326 (thousands)) deposited in separate account against security deposits received from customers (refer to Note 21).14.2. This includes Fixed Deposit of Rs 10,000 (thousands) (2008: Rs 10,000 (thousands)) under lien against Profit Participation Term Finance Certificate (PPTFC). (Referred to Note 18). 14.3. These include Rs. 15,000 (thousands) (2008: Rs. 15,000 thousands) under lien in connection with a letter of guarantee given by a Commercial bank on behalf of the Company (refer to note 26.10). These carry markup at the rates ranging from 4.5 - 6 % p.a (2008:4-8%p.a). 15. ISSUED, SUBSCRIBED AND PAID-UP SHARE CAPITAL =================================================================================
2009 2008 2009 2008
=================================================================================
(Numbers) (Rupees in 000)
=================================================================================
Ordinary shares of Rs. 10 each
218,445,000 218,445,000 fully paid in cash 2,184,450 2,184,450
13,431,417 13,431,417 fully paid bonus shares 134,314 134,314
231,876,417 231,876,417 2,318,764 2,318,764
=================================================================================15.1. Number of shares issued as right shares are Nil (2008; 60,000,000).15.2. Shares of the Company held by foreign associated undertakings incorporated in Island of Nevis. ====================================================================================
2009 2008
====================================================================================
(Numbers)
====================================================================================
Astoria Investment Limited 4,282,112 4,282,112
Topaz Holdings Limited 4,082,112 4,082,112
8,364,224 8,364,224
====================================================================================16. SURPLUS ON REVALUATION OF PROPERTY, PLANT AND EQUIPMENT====================================================================================
2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Opening balance of surplus on revaluation of fixed assets 1,602,229 1,652,952
Transferred to accumulated loss in respect of incremental
depreciation charged during the year (46,680) (50,723)
1,555,549 1,602,229
Less: Deferred tax liability on
Opening balance of revaluation 560,780 578,533
Incremental Depreciation charged on related assets (16,338) (17,753)
Deferred Tax Liability on surplus on revaluation 544,442 560,780
Closing balance of surplus on revaluation of fixed assets 1,011,107 1,041,449
====================================================================================16.1. This represents the surplus on revaluations of freehold land, buildings, plant & machinery including heavy vehicles and railway sidings which were carried out during June 2006 and will be actually realized on disposal of the assets or may be applied by the company in setting off and in diminution of any deficit arising from the revaluation of any other fixed asset of the company.17. REDEEMABLE CAPITAL ====================================================================================
2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Term Finance Certificate 399,840 400,000
Less: Current portion grouped under current liabilities (160) (160)
399,680 399,840
====================================================================================This represents redeemable capital in the form of Privately Placed Term Finance Certificates (PPTFC) issued on 18 January 2008 to the financial institutions aggregating to Rs. 400,000 (thousands) [80,000 certificates of Rs 5,000 each], registered with Central Depositary Company. These PPTFC are redeemable in ten semi-annual installments during the period of five years along with profit at the rate of KIBOR (6 months ask rate) plus 300 bps p.a (2008: 6 months KIBOR ask side plus 300 bps p.a.) Proceeds from these PPTFC were to be used to swap higher interest debts.This redeemable capital is secured by way of lien on fixed deposit of Rs.10,000 (thousands) (referred to Note 14.2) hypothecation ranking charge on all present and future fixed assets (excluding land & building) and current assets and ranking mortgage charge on all fixed assets aggregating to Rs.666,667 (thousands).It is also secured by a corporate guarantee of Rs.426,000 (thousands) given by a bank on behalf of the Company. The said guarantee is secured against a ranking charge on all present and future fixed assets (excluding land & building) up to Rs.533,330 (thousands). 18. LOANS ====================================================================================
Note 2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Loans from related parties 18.1 1,895,128 2,200,109
Loans from banking companies
and financial institutions 18.2 874,595 2,675,607
Others - 250,000
2,769,723 5,125,716
====================================================================================18.1. Loans from related parties � Unsecured====================================================================================
Note 2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
M Tousif Paracha 18.1.1 1,185,915 1,419,363
Abdur Rafiq Khan 18.1.1 643,308 780,746
Associated undertaking-Pak Hy- Oils Limited 18.1.2 46,000 -
Loans from Gharibwal employees provident fund 18.1.3 19,905 -
1,895,128 2,200,109
====================================================================================18.1.1. These are the loans obtained from the sponsoring directors of the Company and repayable on the basis of cash flow position of the Company. However the sponsoring directors have confirmed that they would not demand the payment before 30 June 2010. Mark up is payable @ 18% p.a.18.1.2. This represents loan obtained from Pak Hy-Oils Limited, an associated company, for settlement of lease finance obligation of the Company. The facility carries mark-up at the rate of 10% and is repayable after 30 June 2010. 18.1.3. Loans from Gharibwal cement employee's provident fund ====================================================================================
2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Loans from Gharibwal Cement Employees Provident Fund Trust 25,905 -
Less: Current portion 6,000 -
19,905 -
====================================================================================18.1.3.1. During the year the Company entered into an agreement with the trustees of the Gharibwal Cement Employees Provident Fund Trust ( the Fund), Restructuring the short term loan obtained from the Fund along with contributions and interest payable up to 30 June 2009. The facility carries interest at the Rate of 16% on the outstanding balance on quarterly basis with effect from 1 July 2009. The facility is repayable in monthly installments of Rs. 1,000 (thousands) starting from January 2010.Securities and Exchange Commission of Pakistan (SECP) during the year issued order against the Company under section 227 read with section 229 and section 476 of the Companies Ordinance 1984, requiring the Company to arrange special audit of the Fund within 30 days of the date of the order to determine the amount payable along with mark-up and liquidation damages under the agreement entered into in 2003. The amount so determined is payable to the Fund within 15 days from the receipt of such report by the auditors. 18.2. Loans from banking companies and financial institutions � Secured =======================================================================================================
Type of facility Note 2009 2008
=======================================================================================================
(Rupees in 000)
=======================================================================================================
Silk Bank Limited Demand Finance 18.2.1 6,500 26,000
(formerly Saudi Pak Commercial Bank Limited)
Saudi Pak Industrial & Agricultural Demand Finance 18.2.2 9,375 13,125
Investment Co. Limited
Orix Investment Bank (Pakistan) Limited Term Finance 18.2.3 10,553 17,368
First Credit and Investment Bank Limited Term Finance 18.2.3 1,579 4,737
Syndicate Term Finance Term Finance 18.2.4 1,545,258 1,545,258
The Bank of Punjab (the BOP) Demand Finance 18.2.5 350,000 350,000
Pak Brunei Investment Company Limited Bridge Finance 18.2.6 250,000 250,000
National Bank of Pakistan (NBP) Demand Finance II 18.2.7 250,000 -
KASB Bank Limited Demand Finance 18.2.8 132,000 132,000
Faysal Bank Limited Term Finance 18.2.9 118,932 166,508
2,674,197 2,504,996
Note payable - Foreign currency 18.2.10 687,198 644,285
Less: Current portion grouped under current liabilities
From banking companies and other financial institutions 2,486,800 473,674
874,595 2,675,607
=======================================================================================================18.2.1. The facility carries mark-up at the rate of 6 months KIBOR (ask side) plus 300 bps and is secured against first pari passu charge of Rs.334,000 (thousands) over all present and future fixed assets of the Company and is repayable on September 200918.2.2. As per the terms of the agreement the facility was payable in sixteen quarterly installments over a period of five years (including one year grace period),commencing from December 2004. The facility carries mark-up at the rate of 6 months KIBOR (ask side) plus 500 bps and is secured against first mortgaged pari passu charge of Rs.455,000 (thousands) on all fixed assets of the Company. The facility is further secured by first charge on current assets of the Company of Rs. 95,000 (thousands) . 18.2.3. These represent the balance of term facilities aggregating to Rs.40,000 (thousands) obtained during the year ended June 2005 as part of the consortium to finance import of two Gas Generators of Rs.320,000 (thousands).The remaining amount was financed through leasing companies (Rs.250,000 (Thousands) while Rs.30,000 (thousands) was contributed by the Company. These term facilities were repayable in nineteen quarterly installments over a period of five yearscommencing from 29 December 2004 and carry mark-up at the rate of 6 months KIBOR plus 600 bps. These facilities of Rs.290,000 (thousands) are secured by first pari passu mortgage charge of Rs. 426,670 (thousands)over assets of the Company. 18.2.4. This represents term finance facility obtained in September 2005 from a consortium of financial institutions led by Saudi Pak Leasing Corporation Limited to finance the new dry process gray cement plant of 6,700 TPD clinker capacity.The facility carries mark-up at the rate of 6 months KIBOR (ask side) plus 550 bps with a floor of 8.50% and is repayable in five years including two years grace period commencing from 01 April 2006. The facility is secured against joint pari passu charge over all present and future fixed assets of the Company to the extent of Rs. 2,210,000 (thousands) and personal guarantees of the directors of the Company. The entire facility has been grouped under current portion in these financial statements in line with the syndicate loan facility agreement. 18.2.5. This represents term finance obtained to meet the cost over runs of the new dry cement plant. This facility carries mark-up at the rate of 6 months KIBOR plus 250 bps and is payable in eight bi-annual installments commencing from 23 October 2008 over a period of five years including grace period of one year. The facility is secured by joint pari passu change over all present and future fixed assets of the Company up to Rs. 467,670 (thousands). 18.2.6. As per the terms of the agreement the facility is due in July 2009. The facility carries mark-up at the rate of 3 months KIBOR plus 350bps.The facility is secured by ranking charge over fixed assets of the Company with 25% margin. 18.2.7. The facility carries mark-up at the rate of 3 months KIBOR plus 350. The mark-up is payable quarterly while the principal as per the revised terms,signed on 22 June 2009, is payable on 3 February 2011. The facility is secured by ranking charge on fixed assets of Rs. 357,000 (thousands). 18.2.8. The facility carries mark-up at the rate of 3months KIBOR plus 400 bps and was payable on 31 March 2009. The facility is secured against joint pari passu charge on fixed assets with 25% margin. 18.2.9. The facility carries mark-up at the rate of 3 months KIBOR plus 350 bps and is payable in quarterly installment commencing from 20 September 2007 over a period of four years including six months grace period. The facility is secured against charge on fixed assets for Rs. 187,000 (thousands). 18.2.10. This represents payable against import of 3 dual fuel power generators maturing on 10 August 2009 for Euro 5,985 (thousands) 19. LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE These represent finance lease sent entered into with leasing companies against purchase of plant and machinery and vehicles. The rentals are payable in quarterly installments in arrears .The leases amounting to Rs.250,000 (thousands) are secured against first paripas surcharge of Rs.426,670 (thousands) over assets of the company as explained in Note 20.2.3 to the financial statements. While remaining leases are secured against security deposit of Rs. 27,825 (thousands). Financing rates approximately ranges from 14% to 28% per annum (2008: 8% to 24% per annum) along with KIBOR linked facilities which is six month KIBOR plus 6.5% per annum (2008:six month KIBOR plus 6% per annum) have been used as discounting factor The company intends to exercise its option to purchase the leased assets upon completion of the respective lease terms. ==========================================================================================================
2009 2008
==========================================================================================================
Minimum Financial Minimum Financial
lease charges for Principal lease charges for Principal
payments future payments outstanding payments future payments outstanding
==========================================================================================================
(Rupees in 000) (Rupees in 000)
==========================================================================================================
Not later than one year 120,454 24,516 95,938 140,292 44,818 95,474
Later than one year and not
later than five years 57,923 5,626 52,297 157,493 17,685 139,808
178,377 30,142 148,235 297,785 62,503 235,282
==========================================================================================================The amount of future payments of the lease and the period in which these payments will become due are as follows:====================================================================================
2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Years
2009 - 140,292
2010 109,658 122,785
2011 53,745 34,708
2012 12,215 -
2013 2,759 -
Minimum lease payments 178,377 297,785
Less: Future financial charges 30,142 62,503
148,235 235,282
Less: Current maturity of lease liabilities (95,938) (95,474)
52,297 139,808
DEPOSITS FROM CUSTOMERS
====================================================================================These represent interest free securities received from dealers. These are refundable on the termination of dealership and have been kept in the separate bank account in accordance with the requirement section 226 of the Companies Ordinance of 1984.20. DEFERRED LIABILITIES ====================================================================================
Note 2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Deferred taxation 22.1 136,319 113,952
Employees benefits 22.2 10,716 5,370
147,035 119,322
====================================================================================20.1. DEFERRED TAXATION====================================================================================
2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Deferred tax on taxable temporary differences:
Accelerated depreciation for tax purposes 1,853,683 398,086
Leased assets 55,017 66,126
1,908,700 464,212
Deferred tax on deductible temporary differences:
Lease finance liabilities (45,138) (71,048)
Provisions for retirement benefit (10,323) (8,982)
(55,461) (80,030)
1,853,239 384,182
Deferred tax on unused tax losses (1,716,920) (270,230)
Net deferred tax liability 136,319 113,952
====================================================================================20.2. Employees benefits====================================================================================
Note 2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Accumulated compensated absences 20.2.1 8,772 3,426
Frozen termination benefits 20.2.2 1,944 1,944
10,716 5,370
====================================================================================20.2.1. Movement in the liability recognized in the balance sheet====================================================================================
2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Net liability at the beginning of the year 3,426 3,777
Expense recognized in income statement 6,795 376
Payments by the company (1,449) (727)
8,772 3,426
Reconciliation of the present value of defined benefit obligation
Present value of defined benefit obligations-opening 3,426 3,777
Current service cost 715 142
Past service cost for new membership of officers at works 5,132 -
Interest cost 411 378
Benefits paid (1,449) (727)
Actuarial (gain) / loss 537 (144)
Present value of defined benefit obligations-closing 8,772 3,426
Expense recognized in profit and loss account
Current service cost 715 142
Interest cost 411 378
Actuarial (gain) / loss 537 -
Past service cost of new membership of officers at Works 5,132 -
6,795 520
==================================================================================== Principal actuarial assumptionsThe latest actuarial valuation was carried out as at 30 June 2009 under the 'Projected Unit Credit Method'. The main assumptions used for actuarial valuation are as follows: ====================================================================================
2009 2008
====================================================================================
Discount rate 12% p.a. 12% p.a.
Expected rate of future salary increase 11% p.a. 11% p.a.
life time of employees 7 days 7 days
====================================================================================20.2.2. Frozen termination benefitsThese are termination benefits which are frozen on the reappointment of three employees who had accepted golden handshake offered by the Company and shall be paid when they leave the Company. 21. TRADE AND OTHER PAYABLES ====================================================================================
Note 2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Creditors 536,805 436,385
Retention money 146,134 127,040
Accrued liabilities 408,396 56,113
Ijara payable 21.1 26,860 -
Advances from customers 74,133 10,459
Due to workers' profit participation fund 21.2 16,499 16,010
Gratuity Fund 21.3 25,130 22,238
Provident Fund - 2,734
Provision for frieght 45,085 -
Unclaimed dividend 146 146
1,279,188 671,125
Interest free deposits:
Repayable on demand 3,415 2,873
19,530 3,947
Others
22,945 6,820
Others 7,610 6,282
1,309,743 684,227
====================================================================================21.1. Ijarah financingThis represents the Ijarah finance facility taken from Askari Bank Limited amounting to Rs 120,000 (thousands) forimport of cement packing (Stationery machine), wagon loading machines, belt conveyors and associated equipments at the rate of 6 months KIBOR plus 250 bps with a Floor rate of 12.5% and cap of 22% per annum. Facility is secured against the exclusive ownership of the bank on machinery to the extent of Rs 120,000 (thousands), 40% deposit and Corporate Guarantee of the Company. The total of future ujrah payments under Ijarah, for each of the following periods: ====================================================================================
2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
(i) Not later than one year Nil 26,860
(ii) Later than one year and not later than five years Nil 53,719
====================================================================================21.2. Due to workers' profit participation fund====================================================================================
2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Opening balance 16,010 15,178
Interest on funds utilized by the company 2,209 2,960
18,219 18,138
Less: amount paid during the year 1,720 2,128
16,499 16,010
====================================================================================21.3. GratuityThe amounts recognized in the balance sheet on account of defined benefit plan i.e. gratuity are as follows: ====================================================================================
2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Movement in the liability recognized in the balance sheet
Net liability at the beginning of the year 22,238 19,834
Expense recognized in profit and loss account 6,534 3,684
Contribution to the fund by the Company (3,642) (1,280)
25,130 22,238
Reconciliation of the liability as at 30 June 2009
Present value of defined benefit obligations-as at 30 June 27,172 21,635
Fair value of plan assets (489) (493)
Un-recognized actuarial gain/(loss) (1,553) 1,094
25,130 22,236
Reconciliation of the present value of defined benefit obligation
Present value of defined benefit obligations-opening 21,635 19,694
Current service cost 3,997 1,784
Interest cost 2,596 1,969
Benefits paid (3,642) (1,280)
Loss due to settlements - -
Actuarial loss / (gain) 2,586 (532)
Present value of defined benefit obligations-closing 27,172 21,635
Expense recognized in profit and loss account 3,997 1,784
Current service cost
2,596 975,153
Interest cost
Curtailment or settlement - -
Expected return on plan assets (59) (69)
6,534 976,868
====================================================================================Salaries, wages and benefits appearing under heads of cost of sales, general and administrative & selling and distribution expenses include the following amounts on account of gratuity:====================================================================================
2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
3,267 1,842
Cost of sales
General and Administrative expenses 1,960 1,105
Selling and distribution 1,307 737
6,534 3,684
Reconciliation of fair value of plan assets
Fair value of plan assets - as at 30 June 493 579
Contribution to the fund by the company 3,642 1,280
Benefits paid (3,642) (1,280)
Loss due to settlement - -
Expected return on plan assets 59 69
Actuarial (gain)/loss (63) (155)
Fair value of plan assets - as at 30 June 2009 489 493
Plan assets comprise of:
Debt instrument 465 465
Cash & Bank 24 28
489 493
Actual return on plan assets
Expected return on plan assets
59 69
Actuarial (gain)/loss -63 (155)
(4) (86)
==================================================================================== Principal actuarial assumptionsThe latest actuarial valuation was carried out as at 30 June 2009 under the 'Projected Unit Credit Method'. The main assumptions used for actuarial valuation are as follows: ====================================================================================
2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Discount rate 12% p.a. 12% p.a.
Expected rate of future salary increase 11% p.a. 11% p.a.
Expected rate of return 12% p.a. 10% p.a.
Average expected remaining working life time of employees 13 years 13 years
====================================================================================
================================================================================
2009 2008 2007 2006 2005
================================================================================
(Rupees in 000)
================================================================================
Present value of defined
benefit obligations
as at June 30 27,172 21,635 19,694 71,567 70,528
Fair value of plan assets
as at June 30 (489) (492) (578) (67,568) (62,221)
26,683 21,143 19,116 3,999 8,307
Deficit
================================================================================22. ACCRUED INTEREST / MARK UP====================================================================================
2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Interest / mark-up / profit payable on:
Redeemable capital 51,801 22,910
Loans:
From Related parties 162,848 74,314
From banking companies and other financial institutions 245,536 171,950
Lease finances 11,246 18,097
Short term borrowings 23,213 23,914
494,644 311,185
====================================================================================23. SHORT TERM BORROWINGS====================================================================================
Note 2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Cash and running finances-secured 23.1 & 23.3 212,467 137,044
Import finances-secured 23.2 & 23.3 274,699 -
Loan from past associated undertaking -
Dandot cement company limited 23.4 250,000 -
Temporary bank overdrafts-unsecured 23.5 7,412 39,650
Others-unsecured
Provident Fund 23.6 - 15,843
744,578 192,537
====================================================================================23.1. Short term finance facilities available from various banks under markup arrangements aggregate Rs 218,000 (thousands) (2008:203,000 (Thousands)). These facilities carry markup at the rates ranging from 16.14% to 19.02% (2008: 10.26% to 14.06%) per annum, payable on quarterly basis Facilities available for opening letter of credit / guarantees aggregate Rs. 1,016,000 (thousand) (2008: 594,000 (thousand)).23.2. The company has obtained import finance facilities aggregating to Rs 653,000 (thousands) (2008: 212,000 (thousands)) from commercial banks. The rate of mark up ranges from 16% to 18.33%. 23.3. These facilities are secured by creation of charge on all present and future current and fixed assets of the Company, personal guarantees of the Sponsoring directors, lien over import documents of letter of credit. Further it is secured against hypothication and pledge of stock and coal respactively. The facilities are expiring on various dates by 30 June 2010. 23.4. This represents loan obtained from pastassociated company, Dandot Cement Company Limited (DCCL) in 2007. Thefacility initially carried mark-up at the rate of 10% p.a. however, at the request of the Company, DCCL agreed not to charge mark-up on the said loan. 23.5. This represents cheques issued in excess of the current account balance as at the balance sheet date but not presented for payments in the bank at the close of the year. 23.6. The short term finance facility obtained from Gharibwal Cement Employees Provident Fund Trust was restructured during the year along with contributions due and interest payable upto 30 June 2009 (refer to Note 18.1.3.1). 24. CURRENT PORTION OF NON CURRENT LIABILITIES ====================================================================================
Note 2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Redeemable capital 160 160
Loans:
Banking companies and other
financial institutions 18.2 2,486,800 473,674
Gharibwal Employees Provident Fund Trust 6,000 -
2,492,800 473,674
Liabilities against assets
subject to finance lease 19 95,938 95,474
2,588,898 569,308
====================================================================================25. TAXES AND DUTIES====================================================================================
2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Excise duty payable 337,066 1,961
Sales tax payable 166,407 -
Income tax deducted at source payable 21,965 28,655
Royalty on raw material 20,936 2,179
Income tax payable - 2,876
Local taxes 5,773 5,773
552,147 41,444
====================================================================================26. CONTINGENCIES AND COMMITMENTS26.1. Excise duty arrears demand of Rs. 16,276 (thousands) in respect of capacity production period 1966-67 to 1973-74 made by the Central Excise and Land Customs Department had not been accepted by the Company.The Company had calculate ditsliabilityat Rs. 1,760 (thousands) on the basis of actual production which has been accounted for in priory years. On appeals filed by the Company, the Central Board of Revenue remanded the case to the Collector of Central Excise and Land Customs, Rawalpindi which is pending adjudication. 26.2. The Company filed a writ petition in the Lahore High Court (the Court) against imposition of export tax on raw materials by District Council, Chakwal (the Council) and refund of amounts already paid on this account. The Court vide its judgment dated February18, 1997directed the Council to refrain from collecting export tax on raw materials brought by the Company from its quarries to its factory. The Court further directed the Council for efund the Company the sum of Rs.45,948 (thousands) recovered from it during the period from I 985-86 to 1996-97. The Lahore High Court Rawalpindi Bench vide its order dated 17 March 1997 on a revision application by the Council. Suspended the operation of the judgment dated 18 February 1997. The matter is still pending for adjudication with the Lahore High Court - Rawalpindi Bench. 26.3. District Council-Chakwal served notices dated 25 July1998 and 05 August 1998. where by the Company had been directed to deposit an amount of Rs. 5,400 (thousands) being 'exit tax' pertaining to the year 1996-97 and also for the deposit if such tax on the prescribed rate in future. The Supreme Court of Pakistan had issued a stay order in respect of the payment of Rs.5,400 (thousands) as demanded by the District Council. 26.4. The Company, through a writ petition, challenged the refusal of Islamabad Electric Supply Company (IESCO) in accepting the decision by the Electric Inspector and Advisory Board in favour of the Company where in it was held that with effect from May 1999, The Company be treated as permanently disconnected from IESCO and no bill he issued to the Company by IESCO after May 1999. The Lahore High Court, vide its order dated October 24, 2000. allowed the Company's petition and declared the action of IESCO, that is, issuing bills after May 1999 to he without lawful authority and of no legal effect. IESCO, however, has filed civil petition for leave to appeal along with application for suspension of operation of the aforementioned order of the Lahore High Court, but Supreme Court of Pakistan so far has not passed any stay order. The Company has filed a petition with the Lahore High Court for initiating contempt proceedings against IESCO. The Lahore High Court has directed IFSCO to submit its report and para-wise comments to the Company's petition. 26.5. The company has also filed an appeal before the Secretary Industries and Mineral Development against imposition of5% penalty on outstanding royalty in respect of mining a limestone lease. 26.6. The company has filed a petition Collector appeal Islamabad has passed an order against the demands of Central Excise Duty and Sales Tax amounting to Rs.3 13,618 (thousands) and Rs. 359,371 (thousands) respectively along with penalties of Rs 627,326 (Thousands) and 1 7,980 (thousands) respectively and additional duty to he calculated at the time of payment of principal amount. These demands have been based on hypothetical calculation of paper bags consumed during the period from July, 1995 to June, 2001. These demands were against the difference of 6,1114,456/- number of bags which were hypothetically calculated originally. Departmental Reconciliation Committee constituted by the Collector (Appeals) Customs. Sales Tax & Federal Excise Islamabad and lead by the Additional Collector has scrutinized in detail the Company's books of accounts, store receipts & issuance statements, paper bags/suppliers direct confirmation, sales tax invoices etc. and issued its report dated 20-02-2009 where in it has unanimously agreed between the department and the Company that the declared version of the Company in respect of paper bags consumed in filling of cement is correct and there is on excessive consumption as alleged originally. However, the collector appeal. customs sales tax federal excise Islamabad, has recalculated another figure of excessive calculation of 835,190/-paperbags. Although the departmental reconciliation committee has agreed the declared version of the Company. Company has filed an appeal before Sales Tax Appellate Tribunal, Islamabad. Writ petition was also tiled ill the Islamabad High Court. who granted stay for recovery of reduced demand. 26.7. The Competition Commission of Pakistan (the CCP) took suo moto action under competition ordinance, 2007 and issued Show Cause Notice on 28 October 2008 for increase in the prices of cement across the country. The similar notices were also issued to All Pakistan Cement Manufacturers Association (APCMA) and its member cement manufacturers. The company has tiled a Writ Petition in the Lahore High Court. The Lahore High Court. Vide its order dated 24 August 2009 allowed the CCP to issue the final order. The CCP accordingly passed an order on 28 August 2009 and imposed a penalty of Rs39,126 (thousands) on the company. The Lahore High Court vide its order dated 31 August 2009 restrained tile CCP from enforcing its order against tile Company for the time being. Based on the legal opinion, the management is confident that tile Company has good case and there are reasonable chances of success in tile pending Petition in tile Lahore High Court. 26.8. The Company has filled an appeal under section 33 of the Securities and Exchange Commission of Pakistan Act, 1997 against tile order of tile SECP under section 227 read with section 229 and Section 476 of the Companies Ordinance 1984 (Note 18.1.3.1). The management is confident of a favorable outcome of tile appeal and has not recorded any provision for liquidation damages under tile terms of the original agreement. 26.9. The Pakistan Standards and Quality Control Authority (PSQCA) charged a marking fee @ 15% of tile total production of cement to manufacturer for tile renewal of license and imposed liability amounting to Rs about 24,000 (thousands) but management disagrees with this amount of liability. Based on tile legal opinion, the management is confident that tile Company has good ease and there are reasonable chances of success in tile pending Petition in tile Lahore Session Court. 26.10. Corporate guarantees given by commercial banks on behalf of Company in connection with issuance of PPTFC outstanding as at June 30, 2008 aggregated to Rs. 426,000 (thousands) (2008: Rs.426,000) (thousands)).Tile Company has given counter guarantee to the aforesaid banks of an equivalent amount. 26.11. Guarantees given by a commercial bank on behalf of the Company to Sindh High Court outstanding as at 30 June 2008, aggregated to Rs 41,760 (thousands). Tile facility is secured by a security deposit of Rs 15,000 (thousands) (referto Note 14.3)and the personal guarantees of sponsoring directors. 26.12. Guarantees given by banks on behalf of the Company to Sui Northern Gas Pipelines Limited outstanding as at 30 June 2009 aggregated to Rs. 500,000 (thousands) that includes guarantee given by First Dawood Investment Bank Ltd amounting to Rs. 270,000 (thousands) and guarantee issued by Bank Islami Pakistan Limited of Rs 230,000 (thousands). (2008: Rs. 547,265 (thousands)). 26.13. The company has issued a post dated cheque amounting to Rs.25,938 (thousands) and 49,000 (thousand) from a scheduled bank in favour of collector of customs for differential amount of duties in respect of clearance of imported plant items. file cheque is issued as collateral ill the course of an interim relief allowed by tile Sindh high court to release tile plant and machinery uptill tile final outcome of tile case. 26.14. Commitments in respect of capital expenditure were outstanding on account of: ====================================================================================
2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
a) Wet process cement plant 25,000 25,000
b) New dry process ccfllent project 250,00 1147,600
275.000 172,72,600
====================================================================================27. SALES � net====================================================================================
2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Cement sales 1,499,018 -
Local sales 219,162 -
Export sales 1,718,180 -
Less: Sales tax 205,288 -
Excise duty 215,116 -
Special excise duty 10,679 -
Discount Rebate to dealers 21,254 -
Unloading / forwarding on export sales 15,589 -
467,926 -
1,250,254 -
====================================================================================28. COST OF SALES====================================================================================
Note 2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
118,774 -
Raw materials consumed 28.1 - -
Packing materials consumed 103,106 -
Provision for slow moving stores and spares 2,376 -
Stores and spares consumed 37,733 -
Salaries, wages and benefits 77,883 92
Fuel and power consumed Electricity consumed 212,365 10,660
Coal consumed 499,858 -
Diesel 21,167 -
Sui gas - Kiln 77,871 -
811,261 10,660
Rent, rates and taxes 6,570 1,248
Repair and maintenance 16,144 -
Insurance - 1,029
Vehicle running and traveling 1,248 -
Other expenses 1,878 262
Depreciation 6.1.4 136,240 61,939
1,313,213 75,230
Adjustment of work-in-process inventory
Opening 30,967 30,967
Transferred from trial run 63,914 -
Closing (251,877) (30,967)
(156,996) -
Cost of goods manufactured 1,156,217 75,230
Adjustment of finished goods inventory
Opening 34,652 34,652
Transferred from trial run 16,798 -
Closing (81,208) (34,652)
(29,758) -
1,126,459 -
75,230 -
1,126,459 75,230
====================================================================================28.1. Raw materials consumed====================================================================================
2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Opening stock as at July 01 11,701 11,701
Transferred from trial run 54,979 -
Cost of raw materials:
Outside purchases and transportation cost 64,969 -
Royalty 5,540 -
Excise duty 665 -
137,854 -
Closing stock as at June 30 (19,080) (11,701)
118,774 (11,701)
====================================================================================29. SELLING AND DISTRIBUTION EXPENSES====================================================================================
Note 2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Salaries, wages and benefits 29.1 2,420 3,388
Vehicles' running and maintenance 135 688
Postage, telegram and telephone 144 294
Electricity 272 107
Legal and professional charges 5,575 -
Advertisement & sale promotion - 12
Insurance 28 629
Depreciation 6.1.4 219 290
8,793 5,408
====================================================================================29.1. This includes dues in respect of final settlement of certain employees who left employment during the year.30. GENERAL AND ADMINISTRATIVE EXPENSES ====================================================================================
Note 2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Salaries, wages and benefits 14,677 22,422
Vehicles' running and maintenance 2,823 1,376
Traveling and conveyance 3,958 3,012
Legal and professional charges 7,976 7,465
Auditors' remuneration 30.1 1,100 575
Postage, telegram and telephone 2,062 1,648
Printing and stationery 855 543
Insurance 1,453 200
Rent, rates and taxes 6,762 6,922
Fee and subscription 341 1,702
Entertainment 1,306 879
Utilities 1,083 796
Advertisement 583 108
Repair and maintenance 6,061 1,233
Discount on issue of shares amortized 9 14,192 20,000
Depreciation 6.1.5 980 2,290
Miscellaneous 1,945 607
68,157 71,778
====================================================================================30.1. Auditors' remuneration====================================================================================
Ernst and
Young Ford
Rhodes Sidat Viqar A. Khan
Hyder
====================================================================================
Ford Rhodes Sidat Hyder & Co
Audit fee 500 250
Half year review fee 250 150
Certification and others 250 125
Out-of-pocket expenses 100 50
1,100 575
====================================================================================31. OTHER OPERATING EXPENSES====================================================================================
Note 2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Donations 31.1 - 110
Provision for diminution in value of investments 653 290
Loss on import of equipment 33.2 45,085 -
Zakat 33 -
45,771 400
====================================================================================31.1. No directors or their spouse have any interes in any donee to whom donations were made.31.2. This represents cost, net of insurance claim, and freight charges of equipment destroyed during shipment. 32. OTHER OPERATING INCOME ====================================================================================
Note 2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Income from financial assets
Profit/mark-up on:
Bank deposits 1,188 806
Employee's loans - 46
1,188 852
Income from loans to related parties
Temporary advances to associated company 9,187 3,343
9,187 3,343
Income from assets other than financial assets
Profit on disposal of fixed assets - 30
Scrap sales - 2,408
Rental income 32.1 327 6,293
Others - 354
327 9,087
10,702 13,281
====================================================================================32.1. This represents rent on colony quarters given to ex-employees of the company who had been terminated during the last year and rent of shops.33. FINANCE COSTS ====================================================================================
2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Interest/mark-up on:
Redeemable capital 18,439 47,329
Long term loans
From banking companies and other financial institutions 108,390 10,472
From related parties 96,093 -
Short term finances 27,925 39,159
438 1,584
Workers' (profit) participation fund
2,209 2,960
Lease finance charges 23,160 28,461
Ijara rentals 26,860 -
Exchange loss 60,820 17,877
Commission on bank guarantees 2,152 2,781
Bank charges and others 4,280 3,424
370,766 154,047
====================================================================================34. TAXATION====================================================================================
Note 2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Current 34.1
For the year 5,638 -
Prior year (17,147) -
Deffered 22,367 (47,884)
10,858 (47,884)
====================================================================================In the view of tax losses and withdrawl of section 113 of Income Tax Ordinance, 2001 vide the Finance Act, 2008, no provision forb current income tax has been made other than Income covered under Final Tax Regime. Accordingly, tax expense reconciliation with the accounting profit is not reported. Income tax assessment s of the company have been completed upto the income year ended 30 June 2008.35. EARNING PER SHARE ====================================================================================
2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Basic loss per share
Loss for the year attributable
to ordinary shareholders-Rupees in thousand (2008: Restated) (369,848) (516,262)
Weighted average number of ordinary shares - Number 231,876,417 224,798,316
Earning per share - Rupees (2008: Restated) (2) (2.30)
Diluted earning per share
====================================================================================There is no dilution effect on the basic earning per share of the Company as the Company has not issued any dilutive potential ordinary shares.36. FINANCIAL RISK MANAGEMENT 36.1. Capital risk Management: The primary objective of the Company's capital management is to safe guard the company's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders. No changes were made in the objectives, policies or processes during the year ended 30 June 2009. The Company manages its capital structure and makes adjustment to it in the light of changes in economic conditions. The Company monitors capital using a debt equity ratio, which is net debt divided by total capital plus net debt. Equity comprises of share capital, revenue reserves and surplus on revaluation of fixed assets. The gearing ratios as at June 30, 2009 and 2008 were as follows. ====================================================================================
2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Director's loan-unsecured 1,829,223 2,200,109
4,567,232 5,153,718
Others-net
Total Debt-net 6,396,455 4,816,006
Share Capital revenue reserves and
surplus on revaluation of fixed assets 2,466,316 2,836,164
Total Equity plus total debt-net 8,862,771 7,652,170
Debt to equity ratio 72% 63%
====================================================================================The Company finances its operations through equity, borrowings and management of working capital with a view to maintaining an appropriate mix between various sources of finance to minimize risk. The sponsoring directors, being the majority shareholder of the Company, has extended their commitment to support and assist the company in ensuring that it remains viable in achieving its objectives in the long run, accordingly, they have deferred the payment of their loan as and when cash flow position of the company allows it to do so. In order to improve liquidity and profitability of the Company, the management is planning to take certain appropriate steps such as increase sales through export of cement to African countries.36.2. Market Risk: Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise three types of risk: interest rate risk, currency risk, and other price risk, such as equity risk. Financial instruments affected by market risk include loans, borrowing sand deposit. The Company is exposed to interest rate risk, liquidity risk and credit risk. The sensitivity analyses in the following sections relate to the position as at June 30,2009 and 2008. 36.3. Yield/Mark-up rate Risk: Yield/mark-up rate risk is the risk that the value of the financial instrument will fluctuate due to changes in the market yield/mark-up rates. Sensitivity to yield/mark - up rate risk Arises from mismatches of financial assets and liabilities that mature or reprice in a given period. Significant interest rate risk exposure are primarily managed by a mix of borrowings at fixed and variable interest rates. The effective yield/mark-up rate on the financial assets and liabilities are disclosed in their respective notes to the financial statements. 36.4. The company does not account for any fixed rate financial assets and liabilities through profit and loss. Therefore a change in interest rates at the reporting date would not affect profit and loss account. The following table demonstrates the sensitivity to a reasonably possible change of 100 basis points in interest rates at the reporting date, with all the variables held constant, of the Company's profit/(loss) before tax (through impact on floating rate borrowings). ====================================================================================
100 bps
Increase Decrease
====================================================================================
(Rupees in 000)
====================================================================================
Effect on loss-30 June 2009 53,187 (53,187)
Effect on loss-30 June 2008 12,120 (12,120)
====================================================================================The sensitivity analysis prepared is not necessarily indicative of the effects on loss for the year and assets / liabilities of the company.36.5. Foreign Exchange risk management: Foreign exchange risk arises mainly on sales that are denominated in a currency other than the functional currency primarily U.S Dollars (USD). Payables exposed to foreign currency are not covered through any forward foreign exchange contracts or through hedging. Sensitivity analysis of liabilities exposed to foreign exchange risk are as follows: ===============================================================
2009 2008
===============================================================
Euro Euro
000 000
===============================================================
Foreign exchange denominated monetory
Liability 5,985 5,985
Increase/Decreas Effect on loss Effect on
e in Euro to Pak before tax Equity
Rupee
===============================================================
2009
+5% 34,360 22,334
-5% (34,360) (22,334)
2008
+5% 32,214 20,939
-5% (32,214) (20,939)
===============================================================36.6. Liquidity risk:The Company had started commercial production at its new production facility in April 2009. The Company had acquired long-term finances and entered into lease arrangements for the financing of this new production facility. Due to this situation the working capital of the Company is negative as at the balance sheet date. The revenues generated from the enhanced capacity have started to flow. The Company's Management closely monitors the Company's liquidity and cash flow position and foresees that the said negative working capital position will become favorable during the next year due to increased revenues from the expanded production capacity including increase in export sales. 36.7. Credit risk and concentration of credit risk: Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. Concentration of credit risk arises when a number of counter parties are engaged in similar business activities or have similar economic features that would cause their liability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentration of credit risk indicates the relative sensitivity of the Company's performance to developments affecting a particular industry. The Company is mainly exposed to credit risk on trade debts and advances to suppliers amounting to Rs 301,762 (thousands. Company seeks to minimize the credit risk exposure through having exposure only to customers and creditor considered credit worthy. 36.8. Equity Price risk: Equity price risk is the risk arising from uncertainties about future values of investments securities. As at balance sheet date, the Company is not exposed to equity price risk as the Company has made the full provision in the investment portfolio 36.9. Fair value of financial instruments: Fair value is the amount for which an asset could be exchanges, or a liability settled between knowledgeable willing parties in an arm's length transaction. The carrying value of all financial assets and liabilities reflected in the financial statement approximate their fair values except for the assets where impairment has been charged as disclosed in the respective notes. 37. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES =============================================================================
Chief Executive Directors Executives
=============================================================================
Particulars 2009 2008 2009 2008 2009 2008
=============================================================================
Rupees '000'
=============================================================================
Managerial Remuneration - - - 750 21,017 5,793
Perquisites and benefits
House rent - - - 333 3,513 1,671
Personal staff salary - - - - - 254
Entertainment - - - 55 909 78
Utilities and others - - - 42 12,034 1,816
- - - 430 16,456 3,819
Contribution to:
Retirement benefits - - - 18 619 135
- - - 1,198 38,092 9,747
Number of persons 1 1 1 2 41 10
=============================================================================37.1. Chief Executive, directors and executives are entitled to free use of the company's transport and residential telephones.38. TRANSACTIONS WITH RELATED PARTIES The related parties comprise associated company/undertakings, directors of the Company, key management staff and staff retirement funds. Details of transaction with related parties during the year other than those which have been disclosed elsewhere in these financial statements are stated below: ====================================================================================
2009 2008
====================================================================================
Associated Companies: (Rupees in 000)
====================================================================================
Balochistan Glass Limited (BGL)
Sale of stores (including sales tax) 91 -
Purchase of stores (including sales tax) 8 1,027
Interest received - 3,343
Interest charged 8,559 -
Expenses incurred 44,997 -
Expenses paid on behalf of BGL 15,189 35
Loans / advances given to BGL 99,215 10,000
Repayment of loans / advances given to BGL 54,013 23,938
Pak Hy Oils Limited 46,000 -
Directors 184,857 1,588,527
Loan paid during the year 210,317 1,516,378
Markup paid during the year 289,116 156,966
Staff Retirement benefits 93,970 69,500
====================================================================================All transactions were carried out on commercial terms and conditions and were valued at arm's length price using Comparable Uncontrollable Price method. Remuneration and benefits to key management personnel under the terms of their employment are given in note 37.39. NUMBER OF EMPLOYEES ====================================================================================
2009 2008
====================================================================================
(Rupees in 000)
====================================================================================
Number of permanent employees at balance sheet date 373 334
====================================================================================40. CAPACITY AND PRODUCTION � TONNS=================================================================
Old plant
=================================================================
Clinker Cement
=================================================================
2009 2008 2009 2008
=================================================================
Plant capacity (Tons) 540,000 540,000 568,420 568,420
Actual production (Tons) 31,815 40,015 40,015 40,015
=================================================================
New Plant
=================================================================
Clinker Cement
=================================================================
2009 2008 2009 2008
=================================================================
Plant capacity (Tons) 2,010,000 - 4,320,000 -
Actual production (Tons) 782,074 - 692,091 -
=================================================================During the year, 444,595 tons of clinker was produced during the trial run.During the financial year under consideration, the wet process plant remained closed due to high operating cost as compared to low price of cement in the market. So it was not feasible to operate expensive wet process cement plant due to which all three kilns remained non operative during the whole year. 41. SUBSEQUENT EVENTS Subsequent to the year end, the Company has negotiated restructuring of long term loans amounting to Rs. 604,000 (thousands) under which repayment dates of these loans have been extended from 30 July 2009 to 04 February 2011. Had these loans been negotiated before the year end the current liability as at the year end would have been lower by Rs 604,000 (thousands) 42. DATE OF AUTHORIZATION These financial statements have been authorized for issue by the Board of Directors of the Company in its meeting held on November 07, 2009. 43. CORRESPONDING FIGURES Correspondence figures have been rearranged and reclassified, wherever necessary, for the purpose of comparison. Major restatements are disclosed in their respective notes. 44. GENERAL Figures have been rounded off to the nearest of thousand rupees, unless otherwise stated. |