Lucky Cement Limited Annual Report – Financial Statements Analysis

Cement Industry of Pakistan

                         Cement Industry of Pakistan

 

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Lucky Cement Limited

Annual Report 1999
CONTENTS
Company Information
Notice of Meeting
Directors’ Report
Au

 

lance Sheet
Profit & Loss Account
Statement of Changes in Financial Position (Cash Flow)
Notes to the Accounts
Statement and Report under Section 237 of the Companies Ordinance, 1984
Lucky Powertech Limited
Consolidated Accounts
Pattern of Shareholding
COMPANY INFORMATION
BOARD OF DIRECTORS
Abdul Razzak Tabba  (Chairman/Chief Executive)
Muhammad Yunus Tabba
Samir Ahmed
Haji Abdul Razzak
Martyn S. Wells
Muhammad Sohail Tabba
Muhammad Ali Tabba
Imran Yunus Tabba
EXECUTIVE DIRECTOR
Abdur Razzaq Thaplawala
COMPANY SECRETARY &SR. MANAGER FINANCE
Muhammad Abid Ganatra
ACA. ACMA, ACIS
AUDITORS
M. Yousuf Adil Saleem & Co.,
  Chartered Accountants
BANKERS
Metropolitan Bank Limited
Muslim Commercial Bank Limited
Soneri Bank Limited
REGISTERED OFFICE/FACTORY
Pezu, District Lakki Marwat
N . W. F. P.
HEAD OFFICE
6-A Muhammad Ali Housing Society,
A. Aziz Hashim Tabba Street,
Karachi -75350.
UAN (021) 111-786-555
SALES OFFICES
26-B, Aibak BlockAptma House,
New Garden Town, Lahore.Jamrud Road, Peshawar.
UAN (042) 111-786-555UAN (091) 111-786-555
Gold Crest Plaza, 20 AzmatSaddar Bazar, Bannu Road,
Wasti Road, Near ChowkNear Main Flying Coach Adda,
Dera Adda, MultanD.I. Khan.
Tel · (061 ) 540021,510021UAN (0961) 111-786-555
3rd Floor, Kulsum Plaza,
42 Blue Area, Islamabad.
UAN (051 ) 111-786-555
SHARES DEPARTMENT
404, 4th Floor, Trade Tower
Abdullah Haroon Road, Karachi.
Tel. No. 5685930-5687839
NOTICE OF 6TH ANNUAL GENERAL MEETING
Notice is hereby given that the 6th Annual General Meeting of the members of Lucky Cement
Limited will be held on Wednesday, the 29th December, 1999 at 12:00 noon at the registered
office of the Company situated at factory premises Pezu, District Lakki Marwat, N.W.F.P. to
transact the following business:
1. To confirm the minutes of 5th Annual General Meeting held on 30th December, 1998.
2. To receive, consider and adopt the audited accounts for the year ended June 30, 1999
  together with the Directors’ and Auditors’ report thereon.
3. To appoint Auditors and fix their remuneration for the year 1999-2000. The present Auditors,
  Messrs M. Yousuf Adil Saleem & Co., Chartered Accountants, retire and being eligible,
  offer themselves for reappointment.
4. To transact any other business with the permission of the Chair.
By order of the Board
Muhammad Abid Ganatra
Karachi: December 7, 1999Company Secretary
Notes:
1. The share transfer books of the Company will be closed from 21st December, 1999 to 29th
December, 1999 (both days inclusive) for the purpose of 6th Annual General Meeting.
2. A member entitled to attend and vote may appoint another member as his/her proxy to
  attend and vote instead of him/her. Proxies must be received at the Registered Office of
  the Company not less than 48 hours before the time of holding the meeting.
3. The members are requested to notify change in their address, if any, to the Company’s
  shares department at 404, 4th Floor, Trade Tower, Abdullah Haroon Road, Karachi.
DIRECTORS’ REPORT
We have pleasure to present this Sixth Annual Report of the company alongwith the annual accounts
for the year ended 30th June, 1999 and auditors report thereon.
Demand Situation
The demand of the cement in the country showed a marginal improvement during the year under
review. The despatches of cement by the industry increased by about half a million tons during the
year as compared to year ended on 30th June, 1998. As explained in our report for the year 1997-98,
the consumption of cement per head of population in Pakistan is one of the lowest in the world. Let
us hope that present stagnation in our economy will not last longer and economic development in the
country will accelerate soon.
Prices and Excise Duty
The prices of cement during the year were fairly stable. The Federal Government converted the
excise duty leviable at 40% of retail price to a specific duty per ton in April, 1999. Prior to
April, 1999, the incidence of excise duty worked out between Rs. 1,600/= to Rs. 1,800/= per ton
depending upon the prevailing retail price. Under the changed basis, the excise duty is now payable
at a fiat rate of Rs. 1,400/= per ton irrespective of the retail price. As a consequence of the revision
in the incidence of duty the ex-factory prices of cement were reduced by about Rs. 200.00 per ton
under pressure from the authorities.
Increase in Costs
The price of Furnace Oil was increased from Rs. 5,520/= to Rs.6,090/= per ton in May, 1999. In the
current year, the price was further increased to Rs. 6,980.00 per ton with effect from 16th August,
1999 due to levy of sales tax. A recent announcement of the Government has said that the electricity
supplies will also be liable to 15% sales tax with effect from 16th August, 1999. The levy of sales tax
on furnace oil and electricity will have very little effect on those industries whose end products are
liable to .sales tax because of tax credit on inputs available to them. The cement is not chargeable to
sales tax and therefore the cement industry will not be able get any credit for sales tax paid by it on
the furnace oil & electricity. This will increase the cost of production by about Rs. 150/= per ton of
cement. Unless the cement manufacturers are allowed to increase their prices by corresponding
amount, the industry’s financial performance will be adversely affected. On our part, your company
is trying to reduce the cost of inputs by taking measures to reduce the consumption of fuel oil and
electricity on the one hand and increasing the production efficiency on the other hand.
It may not be out of place to remind the shareholders that your company had decided to set-up it’s
cement plant in a remote area of the NWFP on the basis of Government’s promise to exempt
cement produced by it from sales tax upto June, 2001. This promise was backed by appropriate
notification and the Protection of Economic Reforms Act 1992. Unfortunately, under pressure of
some competitors, the Government did not honour its promise and extended the exemption from
sales tax to the entire industry and increased excise duty simultaneously. This was obviously meant
to circumvent the law and nullify the benefit of sales tax available to your company. This was also a
violation of section ‘6’ of Protection of Economic Reforms Act, 1992 which reads:
    “The fiscal incentives for investment provided by the government through statutory orders listed
in the schedule OR OTHERWISE NOTIFIED shall continue in force for the term specified thereon
and SHALL NOT BE ALTERED TO THE DISADVANTAGE OF THE INVESTORS”
No wonder that this and other ill-advised measures by the Government have shaken the confidence
of investing public both in Pakistan & abroad.
Operating Performance
The company produced 682,032 tons of clinker or 51.66% of its rated capacity based on 330 days
operation. In the preceding year, the clinker production was 526,184 tons or 39.86%. If the rated
capacity is calculated on the basis of 300 working days per year which is the industry standard in
Pakistan, our production in 1998-99 works out to 56.84% of the rated capacity. The following are
the figures of cement production & despatches during the year under review:
Cement Production 691,445 Tons
Cement Despatches 709,106 Tons
As you will see from the attached profit & loss accounts, the company earned a gross profit of
Rs. 262.6 million on a net sales of Rs. 1,474.9 million yielding a Gross Profit percentage of 17.8%
against 6.56% earned in the preceding year. Because of the location of the company’s plant in a
.remote area, the company’s product had to bear higher transportation cost. However, inspire of
higher transportation costs, you will be pleased to know that after charging the administration, selling
,and financial expenses, the year closed with a net profit of Rs. 55.4 million against a net loss of
Rs. 119.2 million in the preceding year. The carry forward loss of Rs. 145.7 million has now been
reduced to Rs. 90.33 million only. It is hoped that this loss will be wiped off during the current year
if there is no major changes in cost of inputs or prices of cement.
Balance Sheet
The company’s balance sheet is still quite robust. It’s long term loans and liabilities for financial
leases amounted to Rs. 484.74 million as on 30th June, 1999 against the equity of Rs. 3,349.67
million giving a debt equity ratio of 14.5:85.5. The break-up value of the company’s Rs. 10.00 equity
share improved from Rs. 13.45 per share on 30th June, 1998 to Rs. 13.67 per share on 30th June,
1999. The company continued to discharge its repayment obligations of long term loans in time.
Year 2000 problems in Computer System
As reported in our previous report, we have taken adequate measures to protect the company
against Y2K problems.
Auditors
The auditors, M. Yousuf Adil Saleem & Co, Chartered Accountants, retire and being eligible offer
themselves for reappointment.
Pattern of Shareholding
The pattern of shareholding as on 30th June, 1999 is annexed to this report.
Subsidiary
The audited accounts of the Lucky Powertech Limited, the company’s wholly owned subsidiary, for
the year ended 30th June, 1999 are annexed to this report.
Acknowledgment
The directors acknowledge the appreciation for the participation of Mr. Razi-ur-Rahman Khan in
the board of directors meeting during the period of his directorship. Mr. Khan has resigned from the
directorship and his place Mr. Samir Ahmed has been appointed for remaining period.
Your directors acknowledge with appreciation, the efforts of company’s managers, technicians and
workers and the support extended by the company’s bankers, leasing companies, dealers and stockists.
By order of the Board
ABDUL RAZZAK TABBA
Karachi: December 7, 1999Chairman & Chief Executive
AUDITORS’ REPORT TO THE MEMBERS
We have audited the annexed balance sheet of Lucky Cement Limited as at June 30, 1999 and
related profit and loss account and the statement of changes in financial position (cash flow statement)
together with the notes forming part thereof. for the year then ended and we state that we have
obtained all the information and explanations which to the best of our knowledge and belief were
necessary for the purposes of our audit and, after due verification thereof, we report that:
a. in our opinion, proper books of account have been kept by the Company as required by the
  Companies Ordinance, 1’984;
b. in our opinion:
i. the balance sheet and profit and loss account together with the notes thereon have been
  drawn up in conformity with the Companies Ordinance, 1984, and are in agreement with
  the books of account and are further in accordance with accounting policies consistently
  applied;
ii. the expenditure incurred during the year was for the purpose of the Company’s business;
and
iii. the business conducted, investments made and the expenditure incurred during the year
were in accordance with the objects of the Company;
c. in our opinion and to the best of our information and according to the explanations given to us,
  the balance sheet and profit and loss account and the statement of changes in financial position
  (cash flow statement) together with the notes forming part thereof, give the information required
  by the Companies Ordinance, 1984 in the manner so required and respectively give a true and
  fair view of the state of the Company’s affairs as at June 30, 1999 and of the profit and the
  changes in financial position for the year then ended; and
d. in our opinion, no zakat was deductible at source under the Zakat and Ushr Ordinance, 1980.
M. YOUSUF ADIL SALEEM & CO.,
Karachi: December 7, 1999Chartered Accountants
Annual Report 1999
BALANCE SHEET AS AT JUNE 30, 1999
Note19991998
Amount in “000”
SHARE CAPITAL AND RESERVE
Authorized capital
300,000,000 Ordinary shares
of Rs. 10/= each3,000,0003,000,000
======================
Issued, subscribed and paid-up capital
245,000,000 Ordinary shares of Rs. 10/= each
fully paid in cash2,450,0002,450,000
Capital reserve
Share premium990,000990,000
Accumulated loss(90,330)(145,761)
——————–——————–
3,349,6703,294,239
LONG TERM LOANS3408,718517,901
LIABILITIES AGAINST ASSETS SUBJECT
TO FINANCE LEASE476,022106,709
DEFERRED LIABILITIES575,994124,589
LONG TERM DEPOSITS616,13919,234
CURRENT LIABILITIES
Short term finance7175,143221,156
Short term loan – unsecured and interest free
Associated Undertaking45,000
Current portion of long term liabilities813 4,105114,529
Creditors, accrued and other liabilities9238,037178,603
Provision for taxation7,00 07,000
——————–——————–
599,285521,288
CONTINGENCIES AND COMMITMENTS10
——————–——————–
4,525,8284,583,960
======================
FIXED ASSETS – TANGIBLE
Operating assets113,779,2853,886,494
Capital work-in-progress125,5 9117,805
——————–——————–
3,784,8763,904,299
LONG TERM INVESTMENT13200,000200,000
LONG TERM DEPOSITS AND
DEFERRED COSTS1442,83553,663
CURRENT ASSETS
Stores and spares15171,221114,451
S toc k- in- trade1665,73 563,125
Trade debtors – secured5,681
Advances, deposits, prepayments and
other receivables17231,030233,283
Cash and bank balances1824,45015,139
——————–——————–
498,117425,998
——————–——————–
4,525,8284,583,960
======================
The annexed notes from 1 to 33 form an integral part of these accounts.
Muhammad Yunus TabbaAbdul Razzak Tabba
DirectorChief Executive
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED JUNE 30, 1999
Note19991998
Amount in “000”
Sales – net191,474,9641,010,006
Cost of sales201,212,348943,705
——————–——————–
Gross profit262,61666,301
Operating expenses
Administrative2137,76746,779
Selling and distribution2214,33210,551
——————–——————–
52,09957,330
——————–——————–
Operating profit210,5178,971
Other income23626629
——————–——————–
211,1439,600
——————–——————–
Financial charges24152,795123,781
Workers’ profit participation fund2,9170
——————–——————–
155,712123,781
——————–——————–
Profit/(loss) before taxation55,431-114,181
Provision for taxation0(5,000)
——————–——————–
Net profit / (loss) after taxation55,431-109,181
Accumulated loss brought forward-145,761(26,580)
——————–——————–
Accumulated loss carried forward-90,330-135,761
======================
Earning per share29Rs.0.22Rs..23
The annexed notes from 1 to 33 form an integral part of these accounts
Muhammad Yunus TabbaAbdul Razzak Tabba
DirectorChief Executive
STATEMENT OF CHANGES IN FINANCIAL POSITION
(CASH FLOW STATEMENT) FOR THE YEAR ENDED JUNE 30, 1999
19991998
Amount in “000”
A. CASH FROM OPERATING ACTIVITIES
Profit / (loss) before taxation55,431(114,181)
Adjustments for:
Depreciation157,453135,523
Amortization of deferred cost11,83811,636
Gain / (loss) on disposal of fixed assets24(232)
Provision for gratuity1,9652,304
Payment for gratuity(345)
Financial charges152,795123,781
——————–——————–
Profit before working capital changes379,161158,831
Working capital changes
Increase / (Decrease) in current assets
Stores and spares(56,770)17,364
Stock in trade(2610)(28,847)
Trade debtors(5,681)37
Advances, deposits, prepayments
and other receivables2,253(78,563)
Increase / (Decrease) in current liabilities
Creditors, accrued and other liabilities8,65645,111
——————–——————–
Cash generated from operation325,009113,933
Financial charges paid(122,9 84)(160,535)
——————–——————–
Net cash from / (used in) operating activities202,025(46,605)
——————–——————–
B. CASH FROM INVESTING ACTIVITIES
Fixed capital expenditure(38,093)(173,387)
Sales proceed of fixed assets3 835,885
Long term deposits(1,750)
Deferred costs(1,010)(122)
——————–——————–
Net cash used in investing activities(39,065)(139,374)
——————–——————–
C. CASH FROM FINANCING ACTIVITIES
Long term loan paid(64,060)(12,500)
Lease finance obtained35,000
Lease finance paid(15,744)(446)
Deferred liabilities(24,738)53,578
Long term deposits(3,095)(5,533)
——————–——————–
Net cash from investing activities(107,636)70,099
——————–——————–
Net decrease in cash and cash equivalents (A+B+C)55,324(115,880)
Cash and cash equivalent at the beginning of the year(206,017)(90,137)
——————–——————–
Cash and cash equivalent at the end of the year150,693(206,017)
======================
Cash and cash equivalent
Cash and bank balances24,45015,139
Short term finance(175,143)(221,156)
——————–——————–
150,693206,017
======================
Muhammad Yunus TabbaAbdul Razzak Tabba
DirectorChief Executive
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED JUNE 30,1999
1. THE COMPANY AND ITS OPERATION
Lucky Cement Limited was incorporated in Pakistan on September 18, 1993 under the Companies
Ordinance, 1984. The shares of the Company are quoted on the Stock Exchanges of Pakistan.
The principal activity of the Company is manufacture and sale of Cement. The project is located
at District Lakki Marwar in North West Frontier Province.
2. SIGNIFICANT ACCOUNTING POLICIES
2.1 Accounting convention
  These accounts have been prepared under the ‘historical cost convention’.
2.2 Staff retirement benefit
The Company operates an unfunded gratuity scheme for all its employees. Annual provisions
are made in the accounts to cover this liability.
2.3 Taxation
Current
Provision for current taxation is based on current rates of tax after taking into account tax
rebates and credits available, if any.
Deferred
The Company accounts for deferred tax on all material timing differences using the liability
method. However, deferred tax is not provided if it can be established with reasonable
certainty that these timing differences will not reverse in the foreseeable future.
2.4 Fixed assets and depreciation
Operating assets
These are stated at cost less accumulated depreciation except free hold land which is
stated at cost.
Depreciation is charged to income applying the straight line method on building and quarry
equipment and on written down value on all other assets at the rates mentioned in the
relevant note. On plant and machinery depreciation is charged on units of production
method based on higher of estimated life and production. Full year’s depreciation is charged
on additions while no depreciation is charge on assets deleted during the year. However,
capitalization of project cost is depreciated proportionately for the period of use. Upto the
year. 1997-98 depreciation on Vehicle, Furniture and Fixture, Office equipment and other
assets was recorded on straight line method. Due to this change, depreciation for the year
has been reduced by Rs. 3.5 million.
Maintenance and normal repairs are charged to income as and when incurred. Major
renewals and improvements are capitalized.
Gains and losses on disposal of assets, if any, are included in income currently.
Assets subject to finance lease
Assets subject to finance lease are stated at the lower of present value of minimum lease
payments under the lease agreements and fair value of the assets. The related obligations
of the lease are accounted for as liabilities. Assets acquired under the finance leases are
depreciated at the rates specified in relevant note.
2.5 Capital work in progress
All cost/expenditure directly related to specific assets incurred during project implementation
period are carried under this head. These are transferred to specific assets as and when
assets are available for use.
2.6 Deferred Costs
Deferred cost is amortized over a maximum period of five years beginning from the year
of deferment.
2.7 Investments
Long term investments are stated at cost. Provision is made for permanent diminution in
value.
2.8 Stores and spares
These are valued at moving average cost. Items in transit are stated at cost accumulated
upto the balance sheet date.
2.9 Stock in trade
These are valued at lower of cost or net realizable value. Cost signifies in relation to raw
and packing material at average cost. In case of work in process and finished goods at
average cost comprising prime cost and appropriate manufacturing overheads.
2.10 Foreign Currency Transactions
Assets and liabilities in foreign currencies are translated into Pak Rupees at the rates of
exchange prevailing at the balance sheet date, except those covered under the forward
exchange contracts which are translated at cover rate. Exchange gains and losses on
translation are included in income currently.
2.11 Revenue Recognition
Sales are recorded on despatch of goods to customers.
Note19991998
Amount in “000”
3. LONG TERM LOANS
Secured
Banking Company3.1464,500520,500
Investment Bank3.229,44037,500
Unsecured
Sponsors3.345,000
——————–——————–
493,940603,000
Less: Payable within one year shown
under current liabilities(85,222)(85,099)
——————–——————–
408,718517,901
======================
3.1 This loan is secured against first charge by way of equitable mortgage on the fixed assets,
floating charge on books debts and hypothecation on plant / machinery and equipments
other than of Line ~A’ and quarry equipments. The sanctioned amount of loan is
Rs. 524.236 million and is repayable in monthly instalments. The mark-up rate is 45 paisas
per Rs. 1,000/- per day.
3.2 This loan is secured against second charge upto Rs. 68 million on the plant and equipment
  other than of Line ‘A’. This loan is repayable in monthly installments and will be paid in full
  by October 2000. The rate of mark up is 21%per annum.
3.3 This loan has been transferred to short term loan.
4. LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE
Opening balance13 6,13 9101,585
Transferred / obtained during the year4,51035,000
——————–——————–
140,649136,585
Paid during the year(15,744)(446)
——————–——————–
124,905136,139
Payable within one year shown under
Current liabilities(48,883)(29,430)
——————–——————–
76,022106,709
======================
4.1 Liabilities against assets subject to finance lease represent liabilities for finances obtained
  under sale and lease back arrangements from a commercial bank and leasing companies.
  Effective from June 1999 the discounting rate of bank is reduced to 15% from previous
  rate of 21%. The approximate discounting rate of leasing companies is 20.5%.
4.2 The amount of future lease payments to which the Company is committed as at June 30,
1999 are as under:
Year ending June 30Amount in “000”
200066,742
200164,964
200213,055
200311,467
——————–
156,228
Less: Finance charges allocated
to future periods31,323
——————–
124,905
===========
19991998
Amount in “000”
5. DEFERRED LIABILITIES
Staff gratuity8,3386,718
Retention money
Contractor – local5.149,552
Plant and machinery – foreign suppliers5.211,47712,140
Encashment of performance
guarantee (US$ 1,313,250)5.256,17956,179
——————–——————–
75,994124,589
======================
5.1 This represented retention money of local contractors and balance amount is transferred
  to current liabilities.
5.2 These represent net retention money and proceed of encashment of performance
guarantee. The encashment amount of performance guarantee is valued at the conversion
rate prevailing at the date of encashment. These amounts are likely to be settled against
the claims made by the company (refer note # 10.2).
6. LONG TERM DEPOSITS – Unsecured
Cement Stockists6.14,1096,704
Transporters6.211,90012,400
Others130130
——————–——————–
16,13919,234
======================
6.1 These represent interest free security deposits received from Stockists and are repayable
  on cancellation or withdrawal of stockistship and adjustable with unpaid amount of sales.
6.2 These represent interest free security deposits received from transporters and are repay able
  on cancellation or withdrawal of contracts.
7. SHORT TERM FINANCES – Secured175,143221,156
======================
7.1 These represent running finance facilities from commercial banks. The amount sanctioned
  is Rs. 230 million. These facilities are subject to average mark-up @ 15% p.a. and are
  secured by way of charge on stores and spares and assets ranking pari passu with the
  charge created to secure long term loans.
8. CURRENT PORTION OF LONG TERM
LIABILITIES
Long term loans85,22285,099
Liability against assets subject to finance lease48,88329,430
——————–——————–
134,105114,529
======================
9. CREDITORS, ACCRUED AND OTHER
LIABILITIES
Creditors114,48499,290
Accrued expenses11,83314,342
Markup on secured long term loans & short term finances71,23345,932
Advances from customers7,58812,943
Retention money29,3265,333
Workers’ profit participation fund2,917
Withholding taxes3 8 0674
Others27689
——————–——————–
238,037178,603
======================
10. CONTINGENCIES AND COMMITMENTS
Contingencies
10.1 Under SRO 484(1 )/92 dated May 14, 1992 the plant and machinery not being manufactured
  locally was exempt from custom duty and sales tax, if imported before June 30, 1995. The
  Company obtained certificates from the Ministry of Industries and Central Board of
  Revenue (CBR) that the machinery being imported was not manufactured locally. In
  April 1995 the Central Board of Revenue advised the Custom authorities that the local
  industry was capable of manufacturing some of the equipment being imported by the
  Company, and that exemption from custom duty and sales tax on such equipments be
  denied. The Company has filed a writ petition against CBR’s instructions before the
  Peshawar High Court. The High Court was pleased to grant an ad interim injunction
  which was later on confirmed. The amount of levy is not ascertained at this stage. The
  case is pending with Peshawar High Court for final decision.
10.2 The company has field suits against the supplier of main plant and machinery in the Sindh
  High Court, Karachi on account of uneconomical operation, short supply of equipment and
  parts and supply of sub-standard/defective parts etc. The suits are pending with the High
  Court and the total amount of these claims are not determinable in monetary terms at this
  stage.
10.3 In January, 1995, the Chinese Supplier of the plant sent a shipment of certain equipment
  by air which were found to be short supplied at the time of erection. Since the equipment
  were part and parcel of the main plant, the supply was made free of charge. The custom
  authorities however, assessed the equipment to duties and taxes of Rs. 20,830,226/- which
  was paid in full. The Company disputed this levy and filed an appeal before the Customs,
  Excise and Sales Tax Appellate Tribunal. The Tribunal has set aside the impugned
  assessment, waived the fine and penalty of Rs. 3,650,000/- and Rs. 1,000,000/- respectively
  and directed the custom authorities to re-determine the value of the goods and assess the
  same at concessional rate of duty @ 25% of tariff rate as per SRO No.978(1)/95 dated
  October 4, 1995.
10.4 The Income Tax department has filed an appeal before the Income Tax Appellate Tribunal
  against an order passed by the Commission (Appeals) in favour of the Company with
  respect to levy of tax amounting to Rs. 85 million on certain pre operational earnings for
  the assessment years 1994-95, 1995-96 and 1996-97. No liability has been accounted for
  in these accounts in lieu of the relief granted by the Commissioner (Appeals).
19991998
Amount in “000”
Commitments in respect of
Letters of credit21,27912,600
11. OPERATING ASSETS
Cost atAddition /Cost atAccumulatedDepreciationRateAccumulatedBook value
July 01(disposal)June 30depreciation/adjustment%depreciationat June 30
Particulars19981999at July 01for the yearp.a.at June 301999
19981999
Land- free hold5,309565,3655,365
Building on free hold Land849,48213,946863,42845,51243,172588,684774,744
Plant and machinery2,848,93832,7692,881,707101,61296,057UPM197,6692,684,038
Quarry equipment183,4171,306184,72313,7559,606523,361161,362
Vehicles18,08839318,48111,5211,3922012,9135,568
Furniture and fixtures5,077145,0911,641345101,9863,105
Office equipment18,92771819,5205,9321,365107,23512,285
(125)(62)
Other assets9,378l, 10410,4822,422806103,2287,254
—————-—————-—————-—————-—————-—————-—————-—————-
3,938,61650,3063,988,797182,395152,743335,0763,653,721
(125)(62)
Leased
Plant and machinery135,000135,0005,7784,500UPM10,278124,722
Vehicles1,7541,75470221020912842
—————-—————-—————-—————-—————-—————-—————-—————-
136,754136,7546,4804,71011,190125,564
—————-—————-—————-—————-—————-—————-—————-—————-
4,075,37050,3064,125,551188,875157,453346,2663,779,285
1999 (Rupees in “000”)(125)(62)
========================================================================
3,728,482383,0014,075,37053,941135,523188,8763,886,494
1998 (Rupees in “000”)(36,113)(588)
========================================================================
UPM = Unit of production method
11.1 A portion of land has been leased for twenty years to Lucky Powertech Limited, a wholly owned subsidiary company, for power
plant.
19991998
Amount in “000”
11.2 Depreciation charge for the year
has been allocated as follows:
Cost of sales154,141128,213
Administration expenses3,1597,127
Selling expenses153183
—————-—————-
157,453135,523
==================
11.3 Disposal’ of assets
ParticularsCostBookSaleMode ofParticulars
ValueProceedsDisposalof Buyers
Office equipment1256338Trade inKhan Office Products, Karachi.
===========================
1999 (Rupees ‘000’)1256338
===========================
1998 (Rupees ‘000’)36,11235,65235,885
===========================
19991998
Amount in “000”
12. CAPITAL WORK-IN-PROGRESS – at cost
Building and civil works5,31014,659
Plant and machinery – Local1,990
Quarry development1,018
Electrification2 81100
Mechanical errection and installation38
—————-—————-
5,59117,805
==================
13. LONG TERM INVESTMENT
Wholly owned subsidiary
Lucky Powertech Limited – Unquoted
20,000,.000 fully paid Ordinary
shares of Rs. 10/- each13.1200,000200,000
==================
13.1 No provision for diminution in value of investment has been considered necessary as the
  market value of this project at current rates is much higher than the book value and in the
  opinion of the Management such diminution is temporary in nature.
Latest financial statements of subsidiary and statement under section 237 of Companies
Ordinance, 1984, are enclosed
14. LONG TERM DEPOSITS AND
DEFERRED COSTS
Long term lease deposits12,92412,924
Deferred Costs
Preliminary expenses2,5072,507
Expenses on issue of shares41,04641,046
Quarry development costs13,14512,135
Other deferred costs2,4932,493
—————-—————-
59,19158,181
Less · Amortization of deferred costs(29,280)(17,442)
—————-—————-
29,91140,739
—————-—————-
42,83553,663
==================
15. STORES AND SPARES
Stores28,05923,800
Spares128,75787,417
Spares in transit14,4053,234
—————-—————-
171,221114,451
==================
16. STOCK-IN-TRADE
Raw and. packing material8,3587,659
Work-in-process49,86719,774
Finished goods7,51035,692
—————-—————-
65,73563,125
==================
17. ADVANCES, DEPOSITS, PREPAYMENTS
  AND OTHER RECEIVABLES
Loans and advances
Employees1,4471,650
Advance to wholly owned subsidiary
for power supply123,021129,889
Advance income tax48,73540,759
Excise duty2,694865
Advance to suppliers and others20,80429,437
—————-—————-
196,701202,600
Deposits and prepayments
Deposits3,8403,858
Prepayments492331
—————-—————-
4,3324,189
Other receivables – Considered goods
Octroi refundable4,4704,094
Insurance claim330
Freight3,743102
Custom duty20,83 020,830
Others9541,138
—————-—————-
29,99726,494
—————-—————-
231,030233,283
==================
18. CASH AND BANK BALANCES
Bank balances
Current accounts24,14514,325
PLS accounts262768
—————-—————-
24,40715,093
Cash in hand4 346
—————-—————-
24,45015,139
==================
19. SALES – net
Sales2,542,9731,791,561
Less · Excise duty1,063,138776,123
Loading and other charges4,8715,432
—————-—————-
1,068,009781,555
—————-—————-
1,474,9 641,010,006
==================
20. COST OF SALES
Raw material23,74520,211
Packing material167,948122,853
Fuel and power703,720553,933
Stores and spares42,64631,100
Salaries and wages60,72057,577
Repairs and maintenance3,2787,921
Depreciation154,741128,213
Insurance39,69127,954
Amortization of quarry development2,6292,427
Other manufacturing expenses15,74115,568
—————-—————-
1,214,259967,757
—————-—————-
Work-in-process
Opening19,77 422,903
Closing(49,867)(19,774)
—————-—————-
(30,093)3,969
—————-—————-
Cost of goods manufactured1,184,166971,726
Finished goods
Opening35,6927,671
Closing(7,510)(35,692)
—————-—————-
28,182(28,021)
—————-—————-
1,212,348943,705
==================
21. ADMINISTRATIVE EXPENSES
Salaries and benefits11,31714,091
Communication2,8833,092
Amortization of deferred cost9,2099,209
Traveling and conveyance1,0953,336
Depreciation3,15 97,127
Insurance1,22994
Vehicle running and maintenance952795
Advertisement3 5 71,150
Printing and stationery7641,830
Security services25 3620
Entertainment3 7 7201
Legal and professional2,0992,106
Transportation and freight3 8 3504
Rent, rates and taxes720752
Utilities793804
Repair and maintenance5 9 8198
Auditors’ remuneration21. l17 3100
Charity and donation6197
Fees and subscription678405
Others667268
—————-—————-
37,76746,779
==================
21.1 Auditors’ Remuneration
Statutory audit fee100100
Cost audit fee60
Out of pocket expenses13
—————-—————-
173100
==================
22. SELLING AND DISTRIBUTION EXPENSES
Salaries and benefits6,9724,274
Communication2,1902,522
Travelling and conveyance45 5389
Printing and stationery2 4 0301
Utilities630625
Vehicle running and maintenance465351
Repairs and maintenance153107
Depreciation15 4183
Fees and subscription2021
Rent, rates and taxes864622
Advertisement5 41369
Entertainment2 2 0156
Insurance27633
Others1,152598
—————-—————-
14,33210,551
==================
23. OTHER INCOME
Gain / (loss) on sale of assets(24)232
Miscellaneous650397
—————-—————-
626629
==================
24. FINANCIAL CHARGES
Mark-up on
Long term loans87,5993,199
Lease finances27,20815,927
Short term borrowings33,90422,161
Bank charges and commission4,0842,494
—————-—————-
152,795123,781
==================
25. TAXATION
Current
Taxable income is worked out to be a tax loss. The company has not made provision for
turnover tax of Rs. 7 Million u/s 80D of the Income Tax Ordinance 1979, as it has filed an
appeal for allowing an exemption on account of clause 118C of the Second Schedule to the
Income Tax Ordinance, 1979.
Deferred
In view of tax losses available to be carried forward there is no deferred tax liability.
26. REMUNERATION OF EXECUTIVES
Remuneration13,46014,116
House rent allowance6,0846,353
Utilities allowance1,3461,412
Conveyance allowance1,2821,412
—————-—————-
22,17223,293
==================
Number of Persons7780
==================
No remuneration were paid to Chief Executive and/or Directors of the Company. The Chief
Executive has voluntarily decided not to accept any remuneration for the year ended June 30,
1999.
27. AGGREGATE TRANSACTIONS WITH
SUBSIDIARY COMPANY
Purchase of power312,479229,427
Rent278278
28. PRODUCTION CAPACITY                    Metric tons
Installed capacity (330 days)1,320,0001,320,000
Actual production682,032526,184
Reasons for short fall: Lack of demand.
29. EARNING PER SHARE
There is no dilutive effect on the basic earning per share of the company which is based on:-
Profit after tax (Rs. in million)55,431
Weighted average number of Ordinary shares245,000,000
Earning per share (Rupees)0.22
30.  FINANCIAL INSTRUMENTS
AND RELATED DISCLOSURES
Concentration of credit risk
Credit risk represents the accounting loss that would be recognized at the reporting date if counter
parties failed completely to perform as contracted. The Company applies credit limits to its
customers and does not have significant exposure to any individual customer.
Interest rate risk
Interest rate risk arise from the possibility that changes in interest rates will effect the value of
financial instruments. The Company is not exposed to interest rate risk.
Fair values of financial instruments
The carrying value of all the financial instruments reported in the financial statements approximate
their fair value.
31. OWNERS’ EQUITY
Movements in owner’s equity during the year are identified and adequately disclosed in the
financial statements.
32. STATEMENT AND REPORT UNDER SECTION 237
OF THE COMPANIES ORDINANCE, 1984 FOR
LUCKY POWERTECH LIMITED,
WHOLLY OWNED SUBSIDIARY
Statement under section (1) (e) of
a) Extent of the interest of Lucky Cement Limited (the
holding company) in the equity of its subsidiary as at100 %
the end of the last date of the financial year of the
subsidiary.
b) The net aggregate amount of revenue/profits less losses
  of the subsidiary, company, so far as these concern
  members of the holding Company and has not been
  dealt with in the accounts of the holding Company’ for
  the year ended June 30, 1999 are:
i) For the last financial year of’ the subsidiary30.523 million
ii) For the previous years upto June 30, 1998(74.163 million)
subsequent to the acquisition of the controlling
interest by the holding company.
c) The net aggregate amount of profits less losses of the
  subsidiary company so far as these have been dealt
  with or provision made for losses in the account of the
  holding company for the year ended June 30, 1999
i) For the last of the financial year of the subsidiaryNil
ii) For the previous years upto June 30, 1998 butNil
subsequent to the acquisition of the controlling
interest by the holding company
33. GENERAL
 Figures have been rounded off to the nearest thousand of Rupees.
Corresponding figures have been rearranged and/or regrouped, whenever necessary for the
purpose of comparison.
Total number of permanent employees at the year end are 528.
Muhammad Yunus TabbaAbdul Razzak Tabba
DirectorChief Executive
STATEMENT AND REPORT UNDER
SECTION 237 OF
THE COMPANIES ORDINANCE, 1984
SUBSIDIARY
LUCKY POWERTECH
LIMITED
Statement under section (1) (e) of
a) Extent of the interest of Lucky Cement Limited (the holding
company) in the equity of its subsidiary as at the end of the last100 %
date of the financial year of the subsidiary.
b) The net aggregate amount of revenue/profits less losses of
  the subsidiary company, so far as these concern members of
  the holding Company and has not been dealt with in the accounts
  of the holding Company for the year ended June 30, 1999 are:
i)    For the last financial year of the subsidiary30.523 million
ii) For the previous years upto June 30, 1998 subsequent to
the acquisition of the controlling interest by the holding(74.163 million)
company.
c) The net aggregate amount of profits, less losses of the subsidiary
  company so far as these have been dealt with or provision
  made for losses in the account of the holding company for the
  year ended June 30, 1999
i)    for the last financial year of the subsidiaryNil
ii) for the previous years upto June 30, 1998 subsequent to
the acquisition of the controlling interest by the holdingNil
company
LUCKY POWERTECH LIMITED
WHOLLY OWNED SUBSIDIARY
OF
LUCKY CEMENT LIMITED
DIRECTORS REPORT
We are pleased to present the 5th Annual Report of the company together with the Audited Accounts
for the year ended on June 30, 1999 and Auditors’ Report thereon.
During the year under review, the company operated as a captive power plant and supplied electricity
solely to Lucky Cement Limited which is its holding company. The total generation capacity of the
company was drastically under-utilised due to the under capacity utilisation of cement plant owing to
over supply position of cement in Pakistan. However, the gross sales of our company increased by
36% as compared to the last year.
Despite of the under-capacity utilisation, your company managed to earn a gross profit of Rs.91.05
million for the current year which is 29% of the net sales as against the gross profit of Rs.41.7
million in the preceding year which was 18.4% of the net sales. The year closed with the net profit
of Rs. 30.523 million against the net loss of Rs. 29.378 million in the preceding year. In view of net
profit for the current year, the accumulated loss of Rs. 74.163 has been reduced to Rs. 43.640
million. The earning per shares for the current year was Rs. 1.53.
Millennium Bug in Computer System
We have taken adequate measures to protect the company against Y2K problems.
Auditors
The auditors, M. Yousuf Adil Saleem & Co. Chartered Accountants retire and being eligible offer
themselves for reappointment.
Acknowledgment
Your directors acknowledge with appreciation, the efforts of the company’s managers, technicians
and workers and the support extended by the company’s bankers and leasing companies.
By order of the Board
ABDUL RAZZAK TABBA
Karachi: December 7, 1999Chairman & Chief Executive
AUDITORS’ REPORT TO THE MEMBERS
We have audited the annexed balance sheet of Lucky Powertech Limited as at June 30, 1999 and
related profit and loss account and the statement of changes in financial position (cash flow statement)
together with the notes forming part thereof, for the year then ended and we state that we have
obtained all the information and explanations which to the best of our knowledge and belief were
necessary for the purposes of our audit and, after due verification thereof, we report that:
a. in our opinion, proper books of account have been kept by the Company as required by the
  Companies Ordinance, 1984;
b. in our opinion:
i. the balance sheet and profit and loss account together with the notes thereon have been
drawn up in conformity with the Companies Ordinance, 1984 and are in agreement with
the books of account and are further in accordance with accounting policies consistently
applied;
ii. the expenditure incurred during the year was for the purpose of the Company’s business;
  and
iii. the business conducted, investments made and the expenditure incurred during the year
were in accordance with the objects of the Company;
c. in our opinion and to the best of our information and according to the explanations given to us,
  the balance sheet and profit and loss account and the statement of changes in financial position
  (cash flow statement) together with the notes forming part thereof, give the information required
  by the Companies Ordinance, 1984 in the manner so required and respectively give a true and
  fair view of the state of the company’s affairs as at June 30, 1999 and of the profit and the
  changes in financial position for the period then ended; and
d. in our opinion, no zakat was deductible at source under the Zakat and Ushr Ordinance, 1980.
M.YOUSUF ADIL SALEEM & CO.,
Karachi: December 7, 1999Chartered Accountants
BALANCE SHEET AS AT JUNE 30, 1999
Note19 9 91998
Amount in “000”
SHARE CAPITAL
Authorised
20,000,000 Ordinary shares of Rs. 10/- each200,000200,000
======================
Issued, subscribed and paid-up
20,000,000 Ordinary of Rs. 10/- each fully paid in cash200,000200,000
Accumulated loss(43,640)(74,163)
——————–——————–
156,360125,837
LONG TERM LOANS3196,400224,700
LIABILITIES AGAINST ASSETS SUBJECT
TO FINANCE LEASE421,77186,139
DEFERRED LIABILITIES540,535105,607
CURRENT LIABILITIES
Current portion of long terms liabilities687,22261,974
Creditors, accrued and other liabilities7205,239143,735
——————–——————–
292,461205,709
——————–——————–
707,527747,992
======================
FIXED ASSETS – TANGIBLE
Operating assets8666,123704,375
LONG TERM LEASE DEPOSITS AND
DEFERRED COST922,22022,283
CURRENT ASSETS
Stores and spares12,44215,975
Advances, deposits and other receivables105,4914,697
Bank balances111,251662
——————–——————–
19,18421,334
——————–——————–
707,527747,992
======================
The annexed notes from 1 to 22 form an integral part of these accounts.
Muhammad Yunus TabbaAbdul Razzak Tabba
DirectorChief Executive
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED JUNE 30, 1999
Note19991998
Amount in “000”
Sales – net12309,499226,774
Cost of generation13218,451185,062
——————–——————–
Gross profit91,04841,712
Administrative expenses141,4281,672
——————–——————–
Operating profit89,62040,040
Financial charges155 7,49169,418
Workers’ profit participants fund1,606
——————–——————–
59,09769,418
——————–——————–
Profit / (loss) for the year30,523(29,378)
Accumulated loss brought forward(74,163)(44,785)
——————–——————–
Accumulated loss carried forward(43,640)(74,163)
======================
Earning per share19Rs. 1.53
The annexed notes from 1 to 22 form an integral part of these accounts
Muhammad Yunus TabbaAbdul Razzak Tabba
DirectorChief Executive
STATEMENT OF CHANGES IN FINANCIAL POSITION
(CASH FLOW STATEMENT) FOR THE YEAR ENDED JUNE 30, 1999
19991998
Amount in “‘000”
A. CASH FROM OPERATING ACTIVITIES
Profit / (loss) for the year30,523(29,378)
adjustments for:
Depreciation38,25238,251
Provision for gratuity318231
Financial charges57,49169,418
Deferred cost6362
——————–——————–
Operating profit before working capital changes126,64778,584
Changes in working capital
Increase / (Decrease) in current assets
Stores and spares3,533(8,831)
Advances, deposits and other receivables(794)(2,304)
Increase / Decrease in current liabilities
Creditors, accrued and other liabilities9,20668,512
——————–——————–
Cash generated from operation13 8,646135,961
Financial charges paid(41,675)(66,999)
——————–——————–
Net cash from operating activities96,97168,962
——————–——————–
B. CASH FROM INVESTING ACTIVITIES:
——————–——————–
C. CASH FROM FINANCING ACTIVITIES
Long term loans paid(15,500)(23,070)
Lease finances paid(51,920)(37,699)
Deferred liabilities(28,962)(7,809)
——————–——————–
(96,382)(68,578)
——————–——————–
Net increase / (decrease) in cash and
cash equivalents (A+B+C)589384
Bank balances at the beginning of the year662278
——————–——————–
Bank balances at the end of the year1,251662
======================
Muhammad Yunus TabbaAbdul Razzak Tabba
DirectorChief Executive
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED JUNE 30, 1999
1. THE COMPANY AND ITS OPERATION
Lucky Powertech Limited was incorporated on June 26, 1994 under the Companies Ordinance
1984. The principal activity of the Company is to generate and provide electricity. The project is
located at District Lakki Marwat in North West Frontier Province. The Company is a wholly
owned subsidiary of Lucky Cement Limited..
2. SIGNIFICANT ACCOUNTING POLICIES
2.1 Accounting convention
    These accounts have been prepared under the ‘historical cost convention’.
2.2 Staff retirement benefit
The Company operates an unfunded gratuity scheme for all its employees. Annual provisions
are made in the accounts to cover the liability,
2.3 Fixed assets and depreciation
Operating assets
These are stated at cost less accumulated depreciation.
Depreciation is charged to income applying the straight line method at the rates mentioned
in the relevant note except plant and machinery on which depreciation is charged on unit
of production method based on higher of estimated life and production. Full year’s
depreciation is charged on additions while no depreciation is charged on assets deleted,
However, capitalization of project cost is depreciated proportionately for the period of
use.
Maintenance and normal repairs are charged to income as and when incurred. Major
renewals and improvements are capitalized.
Gains and losses on disposal of assets, if any, are included in income currently.
2.4 Assets subject to finance lease
Assets subject to finance lease are stated at the lower of present value of minimum lease
payments under the lease agreements and fair value of the assets. The related obligations
of the lease are accounted for as liabilities. Assets acquired under the finance leases are
depreciated at the rates specified in relevant note.
2.5 Deferred cost
Deferred cost is amortized over a maximum period of five years beginning from the year
of deferment.
2.6 Stores and spares
These are valued at moving average cost. Item in transit are stated at cost accumulated
upto the balance sheet date.
2.7 Taxation
Profits and gains of the Company are exempt from levy of income tax under clause 176
of Part-I and Clause 20 of Part-IV of the Second Schedule to the Income Tax
Ordinance, 1979.
2.8 Foreign Currency transactions
Assets and liabilities in foreign currencies are translated into Pak Rupees at the rates of
exchange ruling at the balance sheet date, except where forward exchange contracts
have been entered into for payment of liabilities in which case the rate contracted for is
used. Exchange gains and losses on translation are allocated to preproduction expenses
till commercial production commences and thereafter to profit and loss account.
2.9 Revenue Recognition
Revenue is recognized on the basis of electricity supplied to the consumer.
19991998
Amount in “000”
3. LONG TERM LOANS
Secured
Banking company
Demand Finance – I3.1134,500150,000
Demand Finance – II3.160,40060,400
Unsecured
Sponsors3.214,30014,300
——————–——————–
209,200224,700
Payable within one year shown under
current liabilities12,800
——————–——————–
196,400224,700
======================
3.1 The demand finance I and II are secured against mortgage on the fixed assets and
  hypothecation of plant and machinery and floating charge on book debts. These demand
  finances are subject to mark up @ 45 paisas per Rs. 1000/- per day. The sanctioned
  amount of loan is Rs. 232 million. The repayment of principal and mark up on these
  finances are on deferred payment basis and clubbed with the repayment of holding
  company. The substantial repayment for next financial year is likely to be made from the
  holding company.
3.2 This represents loan from sponsors and is interest free.
4. LIABILITIES AGAINST ASSETS
    SUBJECT TO FINANCE LEASE
Opening balance148,113185,812
Paid during the year(51,920)(37,699)
——————–——————–
96,193148,113
Payable within one year shown under
current liabilities(74,422)(61,974)
——————–——————–
21,77186,139
======================
4.1 Liabilities against assets subject to finance lease represent liabilities for finance obtained
  under sale and lease back arrangement for diesel power generating sets from a commercial
  bank and leasing companies. Effective from June 1999 the discounting rate of bank is
  reduced to 15% from previous rate of 18.5%. Approximate discounting rate of leasing
  companies is 21% p.a.
4.2 The amount of future lease payments to which the Company is committed at June 30,
1999 are as under:
Year ending June 30,Amount in “000”
200074,933
200136,006
——————–
110,939
Less: Finance charges allocated to
future periods(14,746)
——————–
96,193
===========
Note19991998
Amount in “000”
5. DEFERRED LIABILITIES
Staff gratuity869551
Retention money5.164,925
Accrued mark up5.239,66640,131
——————–——————–
40,535105,607
======================
5.1 This represented retention money of supplier of power plant machinery and balance amount
  is transferred to current liabilities.
5.2 This represents accrued mark up on demand finance I & II. (Refer Note 3.1).
6. CURRENT PORTION OF LONG
TERM LIABILITIES
Long term loans12,800
Liabilities against assets subject to finance lease74,42261,974
——————–——————–
87,22261,974
======================
7. CREDITORS, ACCRUED AND
OTHER LIABILITIES
Advance against power supply
from holding company123,021129,889
Advance from associated undertaking13,524
Creditors3,4671,808
Accrued expenses2,6972,587
Retention money35,988457
Accrued markup21,5945,313
Workers’ profit participation fund1,60 6
Others3,3423,681
——————–——————–
205,239143,735
======================
8. OPERATING ASSETS
Cost atAddition /Cost atAccumulatedDepreciationRateAccumulatedBook value
July 01(disposal)June 30depreciationfor the year%depreciationat June 30
Particulars19981999at July 01p.a.at June 301999
19981999
Owned
Building30,53230,5322,2841,52753,81026,721
Plant and machinery508,065508,06538,10725,403UPM63,510444,555
Furniture and fixtures4794791444810192287
Office equipments1,3881,38841513910554834
Other assets1,0261,02625710310360666
——————–——————–——————–——————–——————–——————–——————–——————–
541,490541,49041,20727,22068,426473,064
Leased
Plant and machinery220,639220,63916,54811,032UPM27,580193,059
——————–——————–——————–——————–——————–——————–——————–——————–
220,639220,63916,54811,03227,580193,059
——————–——————–——————–——————–——————–——————–——————–——————–
1999 (Rupees in “000”)762,129762,12957,75438,25296,005666,123
========================================================================================
998 (Rupees in “000”)761,877762,12919,50338,25157,754704,375
========================================================================================
UPM = Unit of Production Method
8.1 The land on which the project is setup, has been obtained on lease of twenty years from Lucky Cement Limited, the holding company.
8.2 The Company has surplus power generation capacity after meeting the requirements of
its holding company. The company is in process of finalizing arrangement with an associated
company for selling power and has shifted one engine of 6.12 MW to the premises of
Gadoon Textile Mills Limited.
19991998
Amount in “000”
8.3 Depreciation charge for the year
has been allocated as follows ·
Cost of generation37,96237,962
Administrative expenses290289
——————–——————–
38,25238,251
======================
9. LONG TERM LEASE DEPOSITS AND
DEFERRED COST
Long term lease deposits22,06422,064
Deferred cost
Preliminary expenses312312
Amortization
Opening balance9 331
During the year6362
——————–——————–
156(93)
——————–——————–
156219
——————–——————–
22,22022,283
======================
10. ADVANCES, DEPOSITS
AND OTHER RECEIVABLES
Advance to suppliers3,0692,815
Advance tax656130
Security deposits1,0361,036
Octroi refundable714714
Others162
——————–——————–
5,4914,697
======================
11. BANK BALANCES
In current accounts901312
In PLS accounts350350
——————–——————–
1,251662
======================
12. SALES – net
Sales – net312,479229,427
Less: Electricity duty(2,980)(2,653)
——————–——————–
309,499226,774
======================
13. COST OF GENERATION
Oil and lubricants159,798129,594
Chemicals8682,574
Store and spares4,4525,074
Repair and maintenance5,777664
Salaries and wages7,9117,277
Depreciation37,9 6237,962
Insurance1,4051,639
Ground rent2 7 8278
——————–——————–
218,451185,062
======================
14. ADMINISTRATIVE EXPENSES
Communication4 41457
Boarding and lodging417436
Depreciation2 9 0290
Fees and subscription2 522
Legal and professional14127
Audit fee5 050
Amortization of deferred cost6 362
Vehicle running and maintenance7 481
Repair and maintenance30
Travelling and conveyance4 560
Others1057
——————–——————–
1,4281,672
======================
15. FINANCIAL CHARGES
Markup on
Long term loans34,68840,015
Lease finances21,74529,346
Excise duty on lease finance-prior years1,052
Bank commission and charges657
——————–——————–
57,49169,418
======================
16. REMUNERATION OF EXECUTIVES
Remuneration2,2572,497
House rent allowance1,0161,123
Utilities allowance22 6250
Conveyance allowance226250
——————–——————–
3,7254,120
======================
Number of persons1314
======================
No remuneration were paid to Chief Executive and/or Directors of the Company. The Chief Executive
has voluntarily decided not to accept any remuneration for the year ended June 30, 1999.
17. AGGREGATE TRANSACTIONS WITH
HOLDING COMPANY
Sale of power312,479229,427
Rent278278
18. PRODUCTION CAPACITY
MWHS
Installed Capacity (330 days)
Main generators247,199247,199
Stand by generator41,19941,199
Actual generation99,44985,297
Reason for short fall: Lack of demand.
19. EARNING PER SHARE
There is no dilutive effect on the basic earning per share of the company which is based on:
Profit after tax (Rs. in million)30,523
Weighted average number of Ordinary shares20,000,000
Earning per share (Rupees)1.53
20. FINANCIAL INSTRUMENTS AND
RELATED DISCLOSURES
Concentration of credit risk
Credit risk represents the accounting loss that would be recognized at the reporting date if
counter parties failed completely to perform as contracted. The Company applies credit limits to
its customers and does not have significant exposure to any individual customer.
Interest rate risk
Interest rate risk arise from the possibility that change in interest rates will effect the value of
financial instruments. The Company is not exposed to interest rate risk.
Fair values of financial instruments
The carrying value of all the financial instruments reported in the financial statements approximate
their value.
21. OWNERS’ EQUITY
Movements in owner’s equity during the year are identified and adequately disclosed in the
financial statements.
22. GENERAL
    Figures have been rounded off to the nearest thousand of rupees.
Corresponding figures have been rearranged and/or regrouped, wherever necessary for the
purpose of comparison.
Total number of employees at the year end are 36.
Muhammad Yunus TabbaAbdul Razzak Tabba
DirectorChief Executive
Consolidated Accounts
AUDITORS’ REPORT TO THE MEMBERS
We have examined the annexed consolidated financial statements comprising consolidated Balance
Sheet of LUCKY CEMENT LIMITED and its subsidiary company LUCKY POWERTECH
LIMITED as at June 30, 1999 and the related consolidated Profit and Loss Account and Consolidated
Cash Flow Statement together with the notes forming part thereof, for the year ended June 30,
1999. We have also expressed separate opinions on the financial statements of Lucky Cement
Limited and its subsidiary company. These financial statements are the responsibility of the Holding
Company’s management. Our responsibility is to express an opinion on these financial statements
based on our examination.
Our examination was made in accordance with International Standards on Auditing and accordingly
included such tests of accounting records and such other auditing procedures as we considered
necessary in the circumstances.
In our opinion the consolidated financial statements examined by us present fairly the financial
position of Lucky Cement Limited and its subsidiary company as at June 30, 1999 and the results of
their operations for the year then ended.
M.YOUSUF ADIL SALEEM & CO.,
Karachi: December 7, 1999Chartered Accountants
CONSOLIDATED BALANCE SHEET AS AT JUNE 30, 1999
Note19991998
Amount in “000”
SHARE CAPITAL AND RESERVE
Authorized capital
300,000,000 Ordinary shares
of Rs. 10/: each3,000,0003,000,000
======================
Issued, subscribed and paid-up capital
245,000,000 Ordinary shares of Rs. 10/: each
fully paid in cash2,450,0002,450,000
Capital reserve
Share premium990,000990,000
Accumulated loss(133,970)(219,924)
——————–——————–
3,306,0303,220,076
LONG TERM LOANS3605,118742,601
LIABILITIES AGAINST ASSETS SUBJECT
TO FINANCE LEASE497,793192,848
DEFERRED LIABILITIES5116,529230,196
LONG TERM DEPOSITS616,13919,234
CURRENT LIABILITIES
Short term finance7175,143221,156
Short term loan – unsecured and interest free
Associated Undertaking45,000
Current portion of long term liabilities8221,327176,503
Creditors, accrued and other liabilities9320,255192,449
Provision for taxation7,0007,000
——————–——————–
768,725597,108
CONTINGENCIES AND COMMITMENTS10
——————–——————–
4,910,3345,002,063
======================
FIXED ASSETS – TANGIBLE
Operating assets114,445,4084,590,869
Capital work-in-progress125,59117,805
——————–——————–
4,450,9994,608,674
LONG TERM DEPOSITS AND
DEFERRED COSTS1365,05575,946
CURRENT ASSETS
Stores and spares14183,663130,426
Stock-in-trade1565,73563,125
Trade debtors5,681
Advances, deposits, prepayments and
other receivables16113,500108,091
Cash and bank, balances1725,70115,801
——————–——————–
394,280317,443
——————–——————–
4,910,3345,002,063
======================
The annexed notes from I to 30 form an integral part of these accounts.
Muhammad Yunus TabbaAbdul Razzak Tabba
DirectorChief Executive
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED JUNE 30, 1999
Note19991998
   Amount in “000”
Sales – net181,474,9641,010,006
Cost of sales / generation191,121,022901,715
——————–——————–
Gross profit353,942108,291
Operating expenses
Administrative2039,19548,451
Selling and distribution2114,33210,551
——————–——————–
53,52759,002
——————–——————–
300,41549,289
Operating profit
Other income223 4 8351
——————–——————–
300,76349,640
Financial charges23210,28 6193,199
Workers’ profit participation fund4,523
——————–——————–
214,809193,199
——————–——————–
Profit / (loss) before taxation85,954(143,559)
Provision for taxation(5,000)
——————–——————–
Net Profit/(loss) after taxation85,954(148,559)
Accumulated loss brought forward(219,924)(71,365)
——————–——————–
Accumulated loss carried forward(133,970)(219,924)
======================
Earning per share270.35
The annexed note from 1 to 30 from an integral part of these accounts.
Muhammad Yunus TabbaAbdul Razzak Tabba
DirectorChief Executive
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
(CASH FLOW STATEMENT) FOR THE YEAR ENDED JUNE 30, 1999
19991998
Amount in “000”
A. CASH FROM OPERATING ACTIVITIES
Profit / (loss) before taxation85,954(143,559)
Adjustments for:
Depreciation195,705173,774
Amortization of deferred cost11,90111,698
(Gain) / loss on disposal of fixed assets24(232)
Provision for gratuity2,2832,535
Payment for gratuity(345)
Financial charges210,286193,199
——————–——————–
Operating profit before working capital changes505,808237,415
Changes in working capital:
(Increase) / decrease in current assets
Stores and spares(53,237)8,533
Stock in trade(2,610)(28,847)
Trade debtors(5,681)37
Advances, deposits, prepayments
and other receivables(5,409)(80,867)
Increase / (Decrease) in current liabilities
Creditors, accrued and other liabilities24,781113,623
——————–——————–
Cash generated from operation463,652249,894
Financial charges paid(164,659)(227,534)
——————–——————–
Net cash from operating activities298,99322,360
——————–——————–
B. CASH FROM INVESTING ACTIVITIES
Fixed capital expenditure(38,093)(173,387)
Sales proceed of fixed assets3835,885
Long term deposits(1,750)
Deferred costs(1,010)(122)
——————–——————–
Net cash used in investing activities(39,065)(139,374)
——————–——————–
C. CASH FROM FINANCING ACTIVITIES
Long term loan paid(79,560)(35,570)
Lease finances obtained35,000
Lease finances paid(67,664)(38,145)
Deferred liabilities(53,699)45,769
Long term deposits(3,095)(5,533)
——————–——————–
Net cash used in investing activities(204,018)1,521
——————–——————–
Net decrease in cash and cash equivalents (A+B+C)55,910(115,493)
Cash and cash equivalent at the beginning of the year(205,352)(89,859)
——————–——————–
Cash and cash equivalent at the end of the year(149,442)(205,352)
======================
Cash and cash equivalent
Cash and bank balances25,70115,801
Short term finance(175,143)(221,156)
——————–——————–
149,442205,355
======================
Muhammad Yunus TabbaAbdul Razzak Tabba
DirectorChief Executive
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 1999
1. THE GROUP AND ITS OPERATIONS
Lucky Cement Limited, the parent company and its wholly owned subsidiary company, Lucky
Powertech Limited are incorporated in Pakistan as public limited companies under the Companies
Ordinance, 1984. The shares of the parent company are quoted on the stock exchanges of Pakistan
and its principal business is manufacture and sale of cement. The subsidiary company is unquoted
and its principal business is generation and sale of electricity. Both parent and subsidiary companies
are located at District Lakki Marwar N.W.F.P.
2. SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of consolidation
The consolidated financial statements include the accounts of Lucky Cement Limited, the
parent company and its subsidiary company, Lucky Powertech Limited. The subsidiary
company is wholly owned by parent company in lieu of its 100% equity ownership. Material
inter-company transactions are eliminated in the consolidated financial statements.
2.2 Accounting convention
These consolidated financial statements have been prepared under the ‘historical cost
convention.
2.3 Staff retirement benefits
The parent and subsidiary company operate an unfunded gratuity scheme for all their
employees. Annual provisions are made in the accounts to cover this liability.
2.4 Taxation
Current
Provision for current taxation of the parent company is based on taxable income at the
current rates of tax after taking into account tax rebates and credits available, if any.
Deferred
The parent company accounts for deferred tax on all material timing differences using the
liability method. However, deferred tax is not provided if it can be established with reasonable
certainty that these timing differences will not reverse in the foreseeable future.
2.5 Fixed assets and depreciation
Operating assets
These are stated at cost less accumulated depreciation except free hold land which is
stated at cost.
Depreciation is charged to income applying the straight line method on building and quarry
equipment and on written down value on all other assets at the rates mentioned in the
relevant note. On plant and machinery depreciation is charged on units of production method
based on higher of estimated life and production.
Full year’s depreciation is charged on additions while no depreciation is charge on assets
deleted during the year. However, capatilization of project cost is depreciated proportionately
for the period of use. Upto the year 1997-98 depreciation on Vehicle, Furniture and Fixture,
Office equipment and other assets was recorded on straight line method. Due to this change,
depreciation for the year has been reduced by Rs. 3.5 million.
Maintenance and normal repairs are charged to income as and when incurred. Major
renewals and improvements are capitalized.
Gains and losses on disposal of assets, if any, are included in income currently.
Assets subject to finance lease
Assets subject to finance lease are stated at the lower of present value of minimum lease
payments under the lease agreements or fair value of the assets. The related obligations of
the lease are accounted for as liabilities. Assets acquired under the finance lease are
depreciated at the rate specified in relevant note.
2.6 Capital work in progress
All cost/expenditure directly related to specific assets incurred during project implementation
period are carried under this head. These are transferred to specific assets as and when
assets are available for use.
2.7 Deferred Costs
Deferred cost is amortized over a maximum period of five years beginning from the year of
deferment.
2.8 Stores and spares
These are valued at moving average cost. Items in transit are stated at cost accumulated
upto the balance sheet date.
2.9 Stock in trade
These are valued at lower of cost or net realizable value. Cost signifies in relation to raw
and packing material at average cost. In case of work in process and finished goods at
average cost comprising prime cost and appropriate manufacturing overhead.
2.10 Foreign Currency Transactions
Assets and liabilities in foreign currencies are translated into Pak Rupees at the rates of
exchange prevailing at the balance sheet date, except those covered under the forward
exchange contracts which are translated at cover rate. Exchange gains and losses on translation
are included is income currently.
2.11 Revenue Recognition
Sales of the parent company are recorded on despatch of goods to customers. Energy sales
of the subsidiary company are recognized on the basis of electricity supplied to the consumer.
Note19991998
Amount in ‘000’
3. LONG TERM LOANS
Secured
Banking Company
Demand Finance – I3.1599,000670,500
Demand Finance – II3.160,40060,400
Investment Bank3.229,44037,500
Unsecured
Sponsors3.314,30059,300
——————-——————-
703,140827,700
Less: payable within one year shown
Under current liabilities(98,022)(85,099)
——————-——————-
605,118742,601
======================
3.1 This loan is secured against first charge by way of equitable mortgage on the fixed assets,
floating charge on book debts and hypothecation on plant / machinery and equipment
other than of Line ‘A’ and quarry equipments. The sanctioned amount of loan is
Rs. 756.236 million and is repayable is monthly installments. The mark up rate of these
finances is 45 paisas per Rs. 1,000/- per day.
3.2 This. loan is secured against second charge upto Rs. 68 million on the plant and equipment
  other than of Line ‘A’. This loan is repayable in monthly installments and will be paid in
  full by October 2000. The rate of mark up is 21% per annum.
3.3 The loan related to parent company has been transferred to short term loan.
4. LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE
Opening balance284,252287,397
Transferred / obtained during the year4,51035,000
——————-——————-
288,762322,397
Paid during the year(67,664)(38,145)
——————-——————-
221,098284,252
Payable within one year shown under
Current liabilities(123,305)(91,404)
——————-——————-
97,793192,848
======================
4.1 Liabilities against assets subject to finance lease represent liabilities for finances obtained
  under sale and lease back arrangements from a commercial bank and leasing companies.
  Effective from June 1999 the discounting rate of bank is reduced to 15% from previous
  rates of 21% and 18.5%. Approximate discounting rate of leasing companies is 21%.
4.2 The amount of future lease payments to which the Company is committed as at June 30,
  1999 are as under:
Amount in ‘000’
Year ending June 30
2000141,675
2001100,970
200213,055
200311,467
——————-
267,167
Less: Finance charges allocated to future period(46,069)
——————-
221,098
===========
19991998
Amount in “000”
5. DEFERRED LIABILITIES
Staff gratuity9,2077,269
Retention money
Contractors – local5.149,552
Plant and machinery – foreign supplier5.211,47777,065
Encashment of performance
guarantee (US$ 1,313,250)5.256,17956,179
Accrued markup39,66640,131
——————-——————-
116,529230,196
======================
5.1 This represented retention money of local contractors of parent company. The balance
  amount is transferred to current liabilities.
5.2 These represent net retention money and proceed of encashment of performance
guarantee. The encashment amount of performance guarantee is valued at conversion
rate prevailing at the date of encashment. These amounts are likely to be settled against
the claims made by the parent company (refer note # 10.2).
6. LONG TERM DEPOSITS – Unsecured
Cement Stockists6.14,1096,704
Transporters6.211,90012,400
Others130130
——————-——————-
16,13919,234
======================
6.1 These represent interest free security deposits received from Stockists and are repayable
  on cancellation or withdrawal of stockistship and adjustable with unpaid amount of sales.
6.2 These represent interest free security deposits received from transporters and are repayable
on cancellation or withdrawal of contracts.
7. SHORT TERM FINANCES – Secured175,143221,156
======================
7.1 These represents running finance facilities of the parent company from commercial banks.
The amount sanctioned is Rs. 230 million. These facilities are subject to average mark-up
@ 15% p.a. and are secured by way of charge on stores and spares and assets ranking
pari passu with the charge created to secure long term loans.
19991998
Amount in “000”
8. CURRENT PORTION OF LONG TERM LIABILITIES
Long term loans85,09998,022
Liabilities against assets subject to finance lease91,404123,305
——————-——————-
221,327176,503
======================
9. CREDITORS,  ACCRUED AND OTHER LIABILITIES
Creditors117,951101,098
Accrued expenses14,53016,929
Advance from associated undertaking13,524
Markup on secured long term loans
and short term finances92,82751,245
Advances from customers7,58812,943
Retention money65,3145,790
Workers’ profit participation fund4,523
Withholding taxes380674
Others3,6183,770
——————-——————-
320,255192,449
======================
10. CONTINGENCIES AND COMMITMENTS
Contingencies
10.1 Under SRO 484( 1 )/92 dated May 14, 1992 the plant and machinery not being manufactured
  locally was exempt from custom duty and sales tax, if imported before June 30, 1995. The
Company obtained certificates from the Ministry of Industries and Central Board of
Revenue (CBR) that the machinery being imported was not manufactured locally. In
April 1995 the Central Board of Revenue advised the Custom authorities that the local
industry was capable of manufacturing some of the equipment being imported by the
Company and that exemption from custom duty and sales tax on such equipments be
· denied. The Company has filed a writ petition against CBR’s instructions before the
  Peshawar High Court. The High Court was pleased to grant an ad interim injunction
  which was later on confirmed. The amount of levy is not ascertained at this stage. The
  case is pending with Peshawar High Court for final decision.
10.2 The company has field suits against the supplier of main plant and machinery in the Sindh
High Court, Karachi on account of uneconomical operation, short supply of equipment and
  parts and supply of sub-standard/defective parts etc. The suits are pending with the High
  Court and the total amount of these claims are not determinable in monetary terms at this
  stage.
10.3 In January, 1995, the Chinese Supplier of the plant sent a shipment of certain equipment
  by air which were found to be short supplied at the time of erection. Since the equipment
  were part and parcel of the main plant, the supply was made free of charge. The custom
  authorities however, assessed the equipment to duties and taxes of Rs. 20,830,226/- which
  was paid in full. The Company disputed this levy and filed an appeal before the Customs,
  Excise and Sales Tax Appellate Tribunal. The Tribunal has set aside the impugned
  assessment, waived the fine and penalty of Rs. 3,650,000/- and Rs. 1,000,000/- respectively
  and directed the custom authorities to re-determine the value of the goods and assess the
  same at concessional rate of duty @ 25% of tariff rate as per SRO No.978(1)/95 dated
  October 4, 1995.
10.4 The Income Tax department has filed an appeal before the Income Tax Appellate Tribunal
  against an order passed by the Commission (Appeals) in favour of the Company with
  respect to levy of tax amounting to Rs. 85 million on certain pre operational earnings for
  the assessment years 1994-95, 1995-96 and 1996-97. No liability has been accounted for
  in these accounts in lieu of the relief granted by the Commissioner (Appeals).
19991998
Amount in “000”
Commitments in respect of
Letters of credit21,27912,600
11. OPERATING ASSETS
Cost atCost atAccumulatedDepreciation/RateAccumulatedBook value
ParticularsJul-01Addition/Jun-30depreciationadjustment%depreciation atat June30
1998(disposal)1999at July 01 1998for the yearp.a.June30,19991999
Owned
Land-free hold5,309565,3655,365
Building on free hold Land880,01413,946893,96047,79644,699592,495801,465
Plant and machinery3,357,00332,7693,389,772139,718121,459UPM261,1773,128,595
Quary equipment183,4171,306184,72313,7559,606523,361161,362
Vehicles18,08839318,48111,5211,3922012,9135,568
Furniture and fixtures5,556145,5701,785393102,1783,392
Office equipment20,31571820,9086,3471,504107,78913,119
(125)(62)
Other assets10,4041,10411,508909103,5887,920
——————–——————–——————–——————–——————–——————–——————–——————–
4,480,10650,3064,530,287223,601179,962408,5014,126,786
(62)
Leased
Plant and machinery355,639355,63922,23615,532UPM37,858317,781
Vehicles1,7541,75470221020912842
——————–——————–——————–——————–——————–——————–——————–——————–
357,393357,39323,02815,74238,770318,623
——————–——————–——————–——————–——————–——————–——————–——————–
1999 (Rupees in “000”)4,837,49950,3064,887,680246,629195,704442,2714,445,408
(125)(62)
========================================================================================
1998 (Rupees in “000”)4,490,359383,0014,075,37073,444173,774246,6304,590,869
(36,113)(588)
========================================================================================
UPM= Unit of production method
19991998
Amount in “000”
11.1 A portion of land has been leased for twenty years to Lucky Powertech Limited, a wholly
  owned subsidiary company, for Power Plant.
11.2 Depreciation charge for the year has been allocated as follows:
Cost of sales192,103166,175
Administrative expenses3,4497,416
Selling expenses15 3183
——————–——————–
195,705173,774
======================
11.3 Disposal of assets
ParticularsCostBookSaleMode ofParticulars
ValueProceedsDisposalof Buyers
Office equipment1256338Trade inKhan Office Products, Karachi.
——————–——————–——————–
1999 (Rupees ‘000’)1256338
——————–——————–——————–
1998 (Rupees ‘000’)36,11235,88535,885
=================================
12 CAPITAL WORK-IN-PROGRESS – at cost
Building and civil works5,31014,659
Plant and Machinery – Local1,990
Quarry development1,018
Electrification281100
Mechanical erection and installation38
——————–——————–
5,59117,805
======================
13. LONG TERM DEPOSITS AND
DEFERRED COSTS
Long term lease deposits34,98834,988
Deferred costs
Preliminary expenses2,8192,819
Expenses on issue of shares41,04641,046
Quarry development costs13,14512,135
Other deferred costs2,4932,493
——————–——————–
59,50358,493
Less · Amortization of deferred costs(29,436)(17,535)
——————–——————–
30,06740,958
——————–——————–
65,05575,946
======================
14. STORES AND SPARES
Stores38,93939,775
Spares130,31987,417
Spares in transit14,4053,234
——————–——————–
183,663130,426
======================
15. STOCK-IN-TRADE
Raw’ and packing material8,3587,659
Work in process49,86719,774
Finished goods7,51035,692
——————–——————–
65,73563,125
======================
16. ADVANCES, DEPOSITS, PREPAYMENTS
AND OTHER RECEIVABLES
Loans and advances
Employees1,4471,650
Advance income tax49,39140,889
Excise duty2,694865
Advance to suppliers and others23,87332,252
——————–——————–
77,40575,656
Deposits and prepayments
Deposits4,8764,894
Prepayments492331
——————–——————–
5,3685,225
Other receivables – Considered good
Octroi refundable5,1844,808
Insurance claim330
Freight3,743102
Custom duty20,83020,830
Others9701,140
——————–——————–
30,72727,210
——————–——————–
113,500108,091
======================
17. CASH AND BANK BALANCES
Bank balances
Current accounts25,04614,637
PLS accounts6121,118
——————–——————–
25,65815,755
Cash in hand4346
——————–——————–
25,70115,801
======================
18. SALES – net
Sales2,542,9731,791,561
Less · Excise duty1,063,138776,123
Loading and other charges4,8715,432
——————–——————–
1,068,009781,555
——————–——————–
1,474,9641,010,006
======================
19. COST OF SALES / GENERATION
Raw material23,74520,211
Chemical8682,574
Packing material167,948122,853
Fuel, oil and lubricant551,039454,100
Stores and spares47,09836,174
Salaries and wages68,63164,854
Repairs and maintenance9,0558,585
Depreciation192,103166,175
Insurance41,09 629,593
Amortization of quarry development2,6292,427
Other manufacturing expenses18,72118,221
——————–——————–
1,122,933925,767
Work-in-process
Opening19,77422,903
Closing(49,867)(19,774)
——————–——————–
(30,093)3,969
——————–——————–
Cost of goods manufactured1,092,840929,736
Finished goods
Opening35,6927,671
Closing( 7,510 )(35,692)
——————–——————–
28,182(28,021)
——————–——————–
1,121,022901,715
======================
20. ADMINISTRATIVE EXPENSES
Salaries and benefits11,31714,091
Communication3,3243,549
Amortization of deferred cost9,2729,271
Travelling and conveyance1,1403,396
Depreciation3,4487,416
Insurance1,22994
Vehicles running and maintenance1,026876
Boarding and lodging .417436
Advertisement3571,150
Printing and stationery7641,830
Security services253620
Entertainment377201
Legal and professional2,1132,233
Transportation and freight383504
Rent, rates and taxes720752
Utilities793804
Repairs and maintenance598228
Auditors remuneration20.1223150
Charity and donation6197
Fees and subscription703427
Others677326
——————–——————–
39,19548,451
======================
20.1 Auditors’ Remuneration
Statutory audit fee150150
Cost audit fee60
Out of pocket expenses13
——————–——————–
223150
======================
21. SELLING AND DISTRIBUTION EXPENSES
Salaries and benefits6,9724,274
Communication2,1902,522
Travelling and conveyance455389
Printing and stationery240301
Utilities630625
Vehicles running and maintenance465351
Repairs and maintenance153107
Depreciation154183
Fees and subscription2021
Rent rates and taxes864622
Advertisement541369
Entertainment220156
Insurance27633
Others1,152598
——————–——————–
14,33210,551
======================
22. OTHER INCOME
Gain / (loss) on sale of assets(24)232
Miscellaneous372119
——————–——————–
348351
======================
23. FINANCIAL CHARGES
Mark-up on
Long term loans122,287123,214
Lease finances48,95345,273
Excise duty on borrowings – prior year1,052
Short term borrowings33,90422,161
Bank charges and commission4,0902,551
——————–——————–
210,286193,199
======================
24. TAXATION
Current
Taxable income is worked out to be a tax loss. The company has not made provision for turnover
tax of Rs. 7 Million u/s 80D of the Income Tax Ordinance 1979, as it has filed an appeal for
allowing an exemption on account of clause 118C of the Second Schedule to the Income Tax
Ordinance, 1979.
Profits and gains of the subsidiary company are exempt from the levy of income tax under
clause 176 of Part-I and clause 20 of Part-IV of the Second Schedule to the Income Tax
Ordinance 1979.
Deferred
In view of tax losses available to be carried forwards there is no deferred tax liability
25. REMUNERATION OF EXECUTIVES
Remuneration15,71716,613
House rent allowance7,1007,476
Utilities allowance1,5721,662
Conveyance allowance1,5081,662
——————–——————–
25,89727,413
======================
Number of Persons9094
======================
No remuneration were paid to Chief Executive and/or Directors of the Company. The Chief
Executive has voluntarily decided not to accept any remuneration for the year ended June 30,
1998.
19991998
                 Metric tons
26. PRODUCTION CAPACITY
Holding Company
Installed capacity (330 days)1,320,0001,320,000
Actual production682,032526,184
Subsidiary Company                         MWHS
Installed capacity (330 days)
Main generators247,199247,199
Standby generator41,19941,199
Actual generation99,44985,297
Reason for short fall: Lack of demand
27. EARNING PER SHARE
There is no dilutive effect on the basic earning per share of the company which is based on:-
Profit after tax (Rupees in million)85,954
Weighted average number of Ordinary shares245,000,000
Earning per share (Rupees)0.35
28. FINANCIAL INSTRUMENTS
AND RELATED DISCLOSURES
Concentration of credit risk
Credit risk represents the accounting loss that would be recognized at the reporting date if
counter parties failed completely to perform as contracted. The Company applied credit limits to
its customers and does not have significant exposure to any individual customer.
Interest rate risk
Interest rate risk arise from the possibility that changes in interest rates will effect the value of
financial instruments. The Company is not exposed to interest rate risk.
Fair values of financial instruments
The carrying value of all the financial instruments reported in the financial statements approximate
their fair value.
29. OWNERS’ EQUITY
Movement in owners’ equity during the year are identified and adequately disclosed in the
financial statements.
30. GENERAL
Figures have been rounded off to the nearest thousand Rupees.
Corresponding figures have been rearranged and/or regrouped wherever necessary for the
purpose of comparison.
Total number of permanent employees at the year end are 564.
Muhammad Yunus TabbaAbdul Razzak Tabba
DirectorChief Executive
Annual Report’
1999
1
LUCKY CEMENT LIMITED
PATTERN OF SHAREHOLDING AS AT JUNE 30, 1999
NUMBER OF                                          SHARE HOLDING                                      TOTAL SHARES
SHAREHOLDERS                            FROM                                TO                                HELD
543110054,300
32,36710150015,954,600
4425011000385,700
560100150001,680.95
2405001100002,106,900
721000115000941,900
5515001200001,017,800
402000125000971,800
262500130000750,800
83000135000258,500
93500140000344,500
2400014500089,900
114500150000542,500
55000155000264,900
65500160000345,500
1600016500062,800
26500170000137,700
97000175000667,500
57500180000396,400
28000185000164,400
28500190000175,500
29000195000183,400
995001100000896,400
2105001110000214,600
3115001120000351,400
1120001125000125,000
2125001130000255
6135001180000953,000
3195001200000778,500
2205001210000413,500
1225001230000230,000
1240001245000242,000
3245001250000749,800
2265001270000537,000
2275001280000276,900
52900013650001,631,400
33950014000001,200,000
1400001405000404,000
1410001415000412,500
1425001430000425,800
1435001440000435,600
1440001445000442,000
14950015000001,500,000
353500113450008,020,900
9134500114150004,045,200
3142500114300001,430,000
1194500119500001,949,700
1206500120700002,070,000
1227000122750002,272,720
1249500125000005,000,000
2254500125500005,100,000
2257500125800002,575,100
1304500130500006,100,000
2399000143650003,993,800
1399500139950003,999,200
1436000143650004,360,300
1449500145000004,500,000
14995001500000010,000,000
1641000164150006,411,500
1669500167000006,700,000
1833000183350008,333,350
1142500011415000014,146,600
1191700011917500019,171,600
2212100012121500042,424,240
1424200014242500042,424,240
——————-——————-——————-——————-——————-
34,499245,000,000
——————-——————-——————-——————-——————-
CATEGORIES OFNUMBER OFTOTALPERCENTAGE
SHAREHOLDERSSHAREHOLDERSSHARES HELD
Individuals34,42886,898,92035.46
Investment Companies2398,647,48040.26
Insurance Companies51,471,9000.6
Joint Stock Companies2027,201,50011.1
Financial Institutions929,468,70012.02
Modaraba Company6673,2000.27
Charitable Trust220,0000.04
Others6618,3000.25
——————-——————-——————-
Total34,4992,451,100,000100
——————-——————-——————-
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