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 Block Aptma House,
New Garden Town, Lahore. Jamrud Road, Peshawar.
UAN (042) 111-786-555 UAN (091) 111-786-555
Gold Crest Plaza, 20 Azmat Saddar Bazar, Bannu Road,
Wasti Road, Near Chowk Near Main Flying Coach Adda,
Dera Adda, Multan D.I. Khan.
Tel · (061 ) 540021,510021 UAN (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, 1999 Company 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, 1999 Chairman & 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, 1999 Chartered Accountants
Annual Report 1999
BALANCE SHEET AS AT JUNE 30, 1999
Note 1999 1998
Amount in “000”
SHARE CAPITAL AND RESERVE
Authorized capital
300,000,000 Ordinary shares
of Rs. 10/= each 3,000,000 3,000,000
=========== ===========
Issued, subscribed and paid-up capital
245,000,000 Ordinary shares of Rs. 10/= each
fully paid in cash 2,450,000 2,450,000
Capital reserve
Share premium 990,000 990,000
Accumulated loss (90,330) (145,761)
——————– ——————–
3,349,670 3,294,239
LONG TERM LOANS 3 408,718 517,901
LIABILITIES AGAINST ASSETS SUBJECT
TO FINANCE LEASE 4 76,022 106,709
DEFERRED LIABILITIES 5 75,994 124,589
LONG TERM DEPOSITS 6 16,139 19,234
CURRENT LIABILITIES
Short term finance 7 175,143 221,156
Short term loan – unsecured and interest free
Associated Undertaking 45,000
Current portion of long term liabilities 8 13 4,105 114,529
Creditors, accrued and other liabilities 9 238,037 178,603
Provision for taxation 7,00 0 7,000
——————– ——————–
599,285 521,288
CONTINGENCIES AND COMMITMENTS 10
——————– ——————–
4,525,828 4,583,960
=========== ===========
FIXED ASSETS – TANGIBLE
Operating assets 11 3,779,285 3,886,494
Capital work-in-progress 12 5,5 91 17,805
——————– ——————–
3,784,876 3,904,299
LONG TERM INVESTMENT 13 200,000 200,000
LONG TERM DEPOSITS AND
DEFERRED COSTS 14 42,835 53,663
CURRENT ASSETS
Stores and spares 15 171,221 114,451
S toc k- in- trade 16 65,73 5 63,125
Trade debtors – secured 5,681
Advances, deposits, prepayments and
other receivables 17 231,030 233,283
Cash and bank balances 18 24,450 15,139
——————– ——————–
498,117 425,998
——————– ——————–
4,525,828 4,583,960
=========== ===========
The annexed notes from 1 to 33 form an integral part of these accounts.
Muhammad Yunus Tabba Abdul Razzak Tabba
Director Chief Executive
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED JUNE 30, 1999
Note 1999 1998
Amount in “000”
Sales – net 19 1,474,964 1,010,006
Cost of sales 20 1,212,348 943,705
——————– ——————–
Gross profit 262,616 66,301
Operating expenses
Administrative 21 37,767 46,779
Selling and distribution 22 14,332 10,551
——————– ——————–
52,099 57,330
——————– ——————–
Operating profit 210,517 8,971
Other income 23 626 629
——————– ——————–
211,143 9,600
——————– ——————–
Financial charges 24 152,795 123,781
Workers’ profit participation fund 2,917 0
——————– ——————–
155,712 123,781
——————– ——————–
Profit/(loss) before taxation 55,431 -114,181
Provision for taxation 0 (5,000)
——————– ——————–
Net profit / (loss) after taxation 55,431 -109,181
Accumulated loss brought forward -145,761 (26,580)
——————– ——————–
Accumulated loss carried forward -90,330 -135,761
=========== ===========
Earning per share 29 Rs.0.22 Rs..23
The annexed notes from 1 to 33 form an integral part of these accounts
Muhammad Yunus Tabba Abdul Razzak Tabba
Director Chief Executive
STATEMENT OF CHANGES IN FINANCIAL POSITION
(CASH FLOW STATEMENT) FOR THE YEAR ENDED JUNE 30, 1999
1999 1998
Amount in “000”
A. CASH FROM OPERATING ACTIVITIES
Profit / (loss) before taxation 55,431 (114,181)
Adjustments for:
Depreciation 157,453 135,523
Amortization of deferred cost 11,838 11,636
Gain / (loss) on disposal of fixed assets 24 (232)
Provision for gratuity 1,965 2,304
Payment for gratuity (345)
Financial charges 152,795 123,781
——————– ——————–
Profit before working capital changes 379,161 158,831
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 receivables 2,253 (78,563)
Increase / (Decrease) in current liabilities
Creditors, accrued and other liabilities 8,656 45,111
——————– ——————–
Cash generated from operation 325,009 113,933
Financial charges paid (122,9 84) (160,535)
——————– ——————–
Net cash from / (used in) operating activities 202,025 (46,605)
——————– ——————–
B. CASH FROM INVESTING ACTIVITIES
Fixed capital expenditure (38,093) (173,387)
Sales proceed of fixed assets 3 8 35,885
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 obtained 35,000
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 year 150,693 (206,017)
=========== ===========
Cash and cash equivalent
Cash and bank balances 24,450 15,139
Short term finance (175,143) (221,156)
——————– ——————–
150,693 206,017
=========== ===========
Muhammad Yunus Tabba Abdul Razzak Tabba
Director Chief 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.
Note 1999 1998
Amount in “000”
3. LONG TERM LOANS
Secured
Banking Company 3.1 464,500 520,500
Investment Bank 3.2 29,440 37,500
Unsecured
Sponsors 3.3 45,000
——————– ——————–
493,940 603,000
Less: Payable within one year shown
under current liabilities (85,222) (85,099)
——————– ——————–
408,718 517,901
=========== ===========
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 balance 13 6,13 9 101,585
Transferred / obtained during the year 4,510 35,000
——————– ——————–
140,649 136,585
Paid during the year (15,744) (446)
——————– ——————–
124,905 136,139
Payable within one year shown under
Current liabilities (48,883) (29,430)
——————– ——————–
76,022 106,709
=========== ===========
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 30 Amount in “000”
2000 66,742
2001 64,964
2002 13,055
2003 11,467
——————–
156,228
Less: Finance charges allocated
to future periods 31,323
——————–
124,905
===========
1999 1998
Amount in “000”
5. DEFERRED LIABILITIES
Staff gratuity 8,338 6,718
Retention money
Contractor – local 5.1 49,552
Plant and machinery – foreign suppliers 5.2 11,477 12,140
Encashment of performance
guarantee (US$ 1,313,250) 5.2 56,179 56,179
——————– ——————–
75,994 124,589
=========== ===========
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 Stockists 6.1 4,109 6,704
Transporters 6.2 11,900 12,400
Others 130 130
——————– ——————–
16,139 19,234
=========== ===========
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 – Secured 175,143 221,156
=========== ===========
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 loans 85,222 85,099
Liability against assets subject to finance lease 48,883 29,430
——————– ——————–
134,105 114,529
=========== ===========
9. CREDITORS, ACCRUED AND OTHER
LIABILITIES
Creditors 114,484 99,290
Accrued expenses 11,833 14,342
Markup on secured long term loans & short term finances 71,233 45,932
Advances from customers 7,588 12,943
Retention money 29,326 5,333
Workers’ profit participation fund 2,917
Withholding taxes 3 8 0 674
Others 276 89
——————– ——————–
238,037 178,603
=========== ===========
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).
1999 1998
Amount in “000”
Commitments in respect of
Letters of credit 21,279 12,600
11. OPERATING ASSETS
Cost at Addition / Cost at Accumulated Depreciation Rate Accumulated Book value
July 01 (disposal) June 30 depreciation /adjustment % depreciation at June 30
Particulars 1998 1999 at July 01 for the year p.a. at June 30 1999
1998 1999
Land- free hold 5,309 56 5,365 5,365
Building on free hold Land 849,482 13,946 863,428 45,512 43,172 5 88,684 774,744
Plant and machinery 2,848,938 32,769 2,881,707 101,612 96,057 UPM 197,669 2,684,038
Quarry equipment 183,417 1,306 184,723 13,755 9,606 5 23,361 161,362
Vehicles 18,088 393 18,481 11,521 1,392 20 12,913 5,568
Furniture and fixtures 5,077 14 5,091 1,641 345 10 1,986 3,105
Office equipment 18,927 718 19,520 5,932 1,365 10 7,235 12,285
(125) (62)
Other assets 9,378 l, 104 10,482 2,422 806 10 3,228 7,254
—————- —————- —————- —————- —————- —————- —————- —————-
3,938,616 50,306 3,988,797 182,395 152,743 335,076 3,653,721
(125) (62)
Leased
Plant and machinery 135,000 135,000 5,778 4,500 UPM 10,278 124,722
Vehicles 1,754 1,754 702 210 20 912 842
—————- —————- —————- —————- —————- —————- —————- —————-
136,754 136,754 6,480 4,710 11,190 125,564
—————- —————- —————- —————- —————- —————- —————- —————-
4,075,370 50,306 4,125,551 188,875 157,453 346,266 3,779,285
1999 (Rupees in “000”) (125) (62)
========= ========= ========= ========= ========= ========= ========= =========
3,728,482 383,001 4,075,370 53,941 135,523 188,876 3,886,494
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.
1999 1998
Amount in “000”
11.2 Depreciation charge for the year
has been allocated as follows:
Cost of sales 154,141 128,213
Administration expenses 3,159 7,127
Selling expenses 153 183
—————- —————-
157,453 135,523
========= =========
11.3 Disposal’ of assets
Particulars Cost Book Sale Mode of Particulars
Value Proceeds Disposal of Buyers
Office equipment 125 63 38 Trade in Khan Office Products, Karachi.
========= ========= =========
1999 (Rupees ‘000’) 125 63 38
========= ========= =========
1998 (Rupees ‘000’) 36,112 35,652 35,885
========= ========= =========
1999 1998
Amount in “000”
12. CAPITAL WORK-IN-PROGRESS – at cost
Building and civil works 5,310 14,659
Plant and machinery – Local 1,990
Quarry development 1,018
Electrification 2 81 100
Mechanical errection and installation 38
—————- —————-
5,591 17,805
========= =========
13. LONG TERM INVESTMENT
Wholly owned subsidiary
Lucky Powertech Limited – Unquoted
20,000,.000 fully paid Ordinary
shares of Rs. 10/- each 13.1 200,000 200,000
========= =========
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 deposits 12,924 12,924
Deferred Costs
Preliminary expenses 2,507 2,507
Expenses on issue of shares 41,046 41,046
Quarry development costs 13,145 12,135
Other deferred costs 2,493 2,493
—————- —————-
59,191 58,181
Less · Amortization of deferred costs (29,280) (17,442)
—————- —————-
29,911 40,739
—————- —————-
42,835 53,663
========= =========
15. STORES AND SPARES
Stores 28,059 23,800
Spares 128,757 87,417
Spares in transit 14,405 3,234
—————- —————-
171,221 114,451
========= =========
16. STOCK-IN-TRADE
Raw and. packing material 8,358 7,659
Work-in-process 49,867 19,774
Finished goods 7,510 35,692
—————- —————-
65,735 63,125
========= =========
17. ADVANCES, DEPOSITS, PREPAYMENTS
  AND OTHER RECEIVABLES
Loans and advances
Employees 1,447 1,650
Advance to wholly owned subsidiary
for power supply 123,021 129,889
Advance income tax 48,735 40,759
Excise duty 2,694 865
Advance to suppliers and others 20,804 29,437
—————- —————-
196,701 202,600
Deposits and prepayments
Deposits 3,840 3,858
Prepayments 492 331
—————- —————-
4,332 4,189
Other receivables – Considered goods
Octroi refundable 4,470 4,094
Insurance claim 330
Freight 3,743 102
Custom duty 20,83 0 20,830
Others 954 1,138
—————- —————-
29,997 26,494
—————- —————-
231,030 233,283
========= =========
18. CASH AND BANK BALANCES
Bank balances
Current accounts 24,145 14,325
PLS accounts 262 768
—————- —————-
24,407 15,093
Cash in hand 4 3 46
—————- —————-
24,450 15,139
========= =========
19. SALES – net
Sales 2,542,973 1,791,561
Less · Excise duty 1,063,138 776,123
Loading and other charges 4,871 5,432
—————- —————-
1,068,009 781,555
—————- —————-
1,474,9 64 1,010,006
========= =========
20. COST OF SALES
Raw material 23,745 20,211
Packing material 167,948 122,853
Fuel and power 703,720 553,933
Stores and spares 42,646 31,100
Salaries and wages 60,720 57,577
Repairs and maintenance 3,278 7,921
Depreciation 154,741 128,213
Insurance 39,691 27,954
Amortization of quarry development 2,629 2,427
Other manufacturing expenses 15,741 15,568
—————- —————-
1,214,259 967,757
—————- —————-
Work-in-process
Opening 19,77 4 22,903
Closing (49,867) (19,774)
—————- —————-
(30,093) 3,969
—————- —————-
Cost of goods manufactured 1,184,166 971,726
Finished goods
Opening 35,692 7,671
Closing (7,510) (35,692)
—————- —————-
28,182 (28,021)
—————- —————-
1,212,348 943,705
========= =========
21. ADMINISTRATIVE EXPENSES
Salaries and benefits 11,317 14,091
Communication 2,883 3,092
Amortization of deferred cost 9,209 9,209
Traveling and conveyance 1,095 3,336
Depreciation 3,15 9 7,127
Insurance 1,229 94
Vehicle running and maintenance 952 795
Advertisement 3 5 7 1,150
Printing and stationery 764 1,830
Security services 25 3 620
Entertainment 3 7 7 201
Legal and professional 2,099 2,106
Transportation and freight 3 8 3 504
Rent, rates and taxes 720 752
Utilities 793 804
Repair and maintenance 5 9 8 198
Auditors’ remuneration 21. l 17 3 100
Charity and donation 61 97
Fees and subscription 678 405
Others 667 268
—————- —————-
37,767 46,779
========= =========
21.1 Auditors’ Remuneration
Statutory audit fee 100 100
Cost audit fee 60
Out of pocket expenses 13
—————- —————-
173 100
========= =========
22. SELLING AND DISTRIBUTION EXPENSES
Salaries and benefits 6,972 4,274
Communication 2,190 2,522
Travelling and conveyance 45 5 389
Printing and stationery 2 4 0 301
Utilities 630 625
Vehicle running and maintenance 465 351
Repairs and maintenance 153 107
Depreciation 15 4 183
Fees and subscription 20 21
Rent, rates and taxes 864 622
Advertisement 5 41 369
Entertainment 2 2 0 156
Insurance 276 33
Others 1,152 598
—————- —————-
14,332 10,551
========= =========
23. OTHER INCOME
Gain / (loss) on sale of assets (24) 232
Miscellaneous 650 397
—————- —————-
626 629
========= =========
24. FINANCIAL CHARGES
Mark-up on
Long term loans 87,599 3,199
Lease finances 27,208 15,927
Short term borrowings 33,904 22,161
Bank charges and commission 4,084 2,494
—————- —————-
152,795 123,781
========= =========
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
Remuneration 13,460 14,116
House rent allowance 6,084 6,353
Utilities allowance 1,346 1,412
Conveyance allowance 1,282 1,412
—————- —————-
22,172 23,293
========= =========
Number of Persons 77 80
========= =========
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 power 312,479 229,427
Rent 278 278
28. PRODUCTION CAPACITY                     Metric tons
Installed capacity (330 days) 1,320,000 1,320,000
Actual production 682,032 526,184
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 shares 245,000,000
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 at 100 %
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 subsidiary 30.523 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 subsidiary Nil
ii) For the previous years upto June 30, 1998 but Nil
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 Tabba Abdul Razzak Tabba
Director Chief 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 last 100 %
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 subsidiary 30.523 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 subsidiary Nil
ii) for the previous years upto June 30, 1998 subsequent to
the acquisition of the controlling interest by the holding Nil
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, 1999 Chairman & 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, 1999 Chartered Accountants
BALANCE SHEET AS AT JUNE 30, 1999
Note 19 9 9 1998
Amount in “000”
SHARE CAPITAL
Authorised
20,000,000 Ordinary shares of Rs. 10/- each 200,000 200,000
=========== ===========
Issued, subscribed and paid-up
20,000,000 Ordinary of Rs. 10/- each fully paid in cash 200,000 200,000
Accumulated loss (43,640) (74,163)
——————– ——————–
156,360 125,837
LONG TERM LOANS 3 196,400 224,700
LIABILITIES AGAINST ASSETS SUBJECT
TO FINANCE LEASE 4 21,771 86,139
DEFERRED LIABILITIES 5 40,535 105,607
CURRENT LIABILITIES
Current portion of long terms liabilities 6 87,222 61,974
Creditors, accrued and other liabilities 7 205,239 143,735
——————– ——————–
292,461 205,709
——————– ——————–
707,527 747,992
=========== ===========
FIXED ASSETS – TANGIBLE
Operating assets 8 666,123 704,375
LONG TERM LEASE DEPOSITS AND
DEFERRED COST 9 22,220 22,283
CURRENT ASSETS
Stores and spares 12,442 15,975
Advances, deposits and other receivables 10 5,491 4,697
Bank balances 11 1,251 662
——————– ——————–
19,184 21,334
——————– ——————–
707,527 747,992
=========== ===========
The annexed notes from 1 to 22 form an integral part of these accounts.
Muhammad Yunus Tabba Abdul Razzak Tabba
Director Chief Executive
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED JUNE 30, 1999
Note 1999 1998
Amount in “000”
Sales – net 12 309,499 226,774
Cost of generation 13 218,451 185,062
——————– ——————–
Gross profit 91,048 41,712
Administrative expenses 14 1,428 1,672
——————– ——————–
Operating profit 89,620 40,040
Financial charges 15 5 7,491 69,418
Workers’ profit participants fund 1,606
——————– ——————–
59,097 69,418
——————– ——————–
Profit / (loss) for the year 30,523 (29,378)
Accumulated loss brought forward (74,163) (44,785)
——————– ——————–
Accumulated loss carried forward (43,640) (74,163)
=========== ===========
Earning per share 19 Rs. 1.53
The annexed notes from 1 to 22 form an integral part of these accounts
Muhammad Yunus Tabba Abdul Razzak Tabba
Director Chief Executive
STATEMENT OF CHANGES IN FINANCIAL POSITION
(CASH FLOW STATEMENT) FOR THE YEAR ENDED JUNE 30, 1999
1999 1998
Amount in “‘000”
A. CASH FROM OPERATING ACTIVITIES
Profit / (loss) for the year 30,523 (29,378)
adjustments for:
Depreciation 38,252 38,251
Provision for gratuity 318 231
Financial charges 57,491 69,418
Deferred cost 63 62
——————– ——————–
Operating profit before working capital changes 126,647 78,584
Changes in working capital
Increase / (Decrease) in current assets
Stores and spares 3,533 (8,831)
Advances, deposits and other receivables (794) (2,304)
Increase / Decrease in current liabilities
Creditors, accrued and other liabilities 9,206 68,512
——————– ——————–
Cash generated from operation 13 8,646 135,961
Financial charges paid (41,675) (66,999)
——————– ——————–
Net cash from operating activities 96,971 68,962
——————– ——————–
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) 589 384
Bank balances at the beginning of the year 662 278
——————– ——————–
Bank balances at the end of the year 1,251 662
=========== ===========
Muhammad Yunus Tabba Abdul Razzak Tabba
Director Chief 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.
1999 1998
Amount in “000”
3. LONG TERM LOANS
Secured
Banking company
Demand Finance – I 3.1 134,500 150,000
Demand Finance – II 3.1 60,400 60,400
Unsecured
Sponsors 3.2 14,300 14,300
——————– ——————–
209,200 224,700
Payable within one year shown under
current liabilities 12,800
——————– ——————–
196,400 224,700
=========== ===========
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 balance 148,113 185,812
Paid during the year (51,920) (37,699)
——————– ——————–
96,193 148,113
Payable within one year shown under
current liabilities (74,422) (61,974)
——————– ——————–
21,771 86,139
=========== ===========
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”
2000 74,933
2001 36,006
——————–
110,939
Less: Finance charges allocated to
future periods (14,746)
——————–
96,193
===========
Note 1999 1998
Amount in “000”
5. DEFERRED LIABILITIES
Staff gratuity 869 551
Retention money 5.1 64,925
Accrued mark up 5.2 39,666 40,131
——————– ——————–
40,535 105,607
=========== ===========
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 loans 12,800
Liabilities against assets subject to finance lease 74,422 61,974
——————– ——————–
87,222 61,974
=========== ===========
7. CREDITORS, ACCRUED AND
OTHER LIABILITIES
Advance against power supply
from holding company 123,021 129,889
Advance from associated undertaking 13,524
Creditors 3,467 1,808
Accrued expenses 2,697 2,587
Retention money 35,988 457
Accrued markup 21,594 5,313
Workers’ profit participation fund 1,60 6
Others 3,342 3,681
——————– ——————–
205,239 143,735
=========== ===========
8. OPERATING ASSETS
Cost at Addition / Cost at Accumulated Depreciation Rate Accumulated Book value
July 01 (disposal) June 30 depreciation for the year % depreciation at June 30
Particulars 1998 1999 at July 01 p.a. at June 30 1999
1998 1999
Owned
Building 30,532 30,532 2,284 1,527 5 3,810 26,721
Plant and machinery 508,065 508,065 38,107 25,403 UPM 63,510 444,555
Furniture and fixtures 479 479 144 48 10 192 287
Office equipments 1,388 1,388 415 139 10 554 834
Other assets 1,026 1,026 257 103 10 360 666
——————– ——————– ——————– ——————– ——————– ——————– ——————– ——————–
541,490 541,490 41,207 27,220 68,426 473,064
Leased
Plant and machinery 220,639 220,639 16,548 11,032 UPM 27,580 193,059
——————– ——————– ——————– ——————– ——————– ——————– ——————– ——————–
220,639 220,639 16,548 11,032 27,580 193,059
——————– ——————– ——————– ——————– ——————– ——————– ——————– ——————–
1999 (Rupees in “000”) 762,129 762,129 57,754 38,252 96,005 666,123
=========== =========== =========== =========== =========== =========== =========== ===========
998 (Rupees in “000”) 761,877 762,129 19,503 38,251 57,754 704,375
=========== =========== =========== =========== =========== =========== =========== ===========
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.
1999 1998
Amount in “000”
8.3 Depreciation charge for the year
has been allocated as follows ·
Cost of generation 37,962 37,962
Administrative expenses 290 289
——————– ——————–
38,252 38,251
=========== ===========
9. LONG TERM LEASE DEPOSITS AND
DEFERRED COST
Long term lease deposits 22,064 22,064
Deferred cost
Preliminary expenses 312 312
Amortization
Opening balance 9 3 31
During the year 63 62
——————– ——————–
156 (93)
——————– ——————–
156 219
——————– ——————–
22,220 22,283
=========== ===========
10. ADVANCES, DEPOSITS
AND OTHER RECEIVABLES
Advance to suppliers 3,069 2,815
Advance tax 656 130
Security deposits 1,036 1,036
Octroi refundable 714 714
Others 16 2
——————– ——————–
5,491 4,697
=========== ===========
11. BANK BALANCES
In current accounts 901 312
In PLS accounts 350 350
——————– ——————–
1,251 662
=========== ===========
12. SALES – net
Sales – net 312,479 229,427
Less: Electricity duty (2,980) (2,653)
——————– ——————–
309,499 226,774
=========== ===========
13. COST OF GENERATION
Oil and lubricants 159,798 129,594
Chemicals 868 2,574
Store and spares 4,452 5,074
Repair and maintenance 5,777 664
Salaries and wages 7,911 7,277
Depreciation 37,9 62 37,962
Insurance 1,405 1,639
Ground rent 2 7 8 278
——————– ——————–
218,451 185,062
=========== ===========
14. ADMINISTRATIVE EXPENSES
Communication 4 41 457
Boarding and lodging 417 436
Depreciation 2 9 0 290
Fees and subscription 2 5 22
Legal and professional 14 127
Audit fee 5 0 50
Amortization of deferred cost 6 3 62
Vehicle running and maintenance 7 4 81
Repair and maintenance 30
Travelling and conveyance 4 5 60
Others 10 57
——————– ——————–
1,428 1,672
=========== ===========
15. FINANCIAL CHARGES
Markup on
Long term loans 34,688 40,015
Lease finances 21,745 29,346
Excise duty on lease finance-prior years 1,052
Bank commission and charges 6 57
——————– ——————–
57,491 69,418
=========== ===========
16. REMUNERATION OF EXECUTIVES
Remuneration 2,257 2,497
House rent allowance 1,016 1,123
Utilities allowance 22 6 250
Conveyance allowance 226 250
——————– ——————–
3,725 4,120
=========== ===========
Number of persons 13 14
=========== ===========
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 power 312,479 229,427
Rent 278 278
18. PRODUCTION CAPACITY
MWHS
Installed Capacity (330 days)
Main generators 247,199 247,199
Stand by generator 41,199 41,199
Actual generation 99,449 85,297
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 shares 20,000,000
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 Tabba Abdul Razzak Tabba
Director Chief 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, 1999 Chartered Accountants
CONSOLIDATED BALANCE SHEET AS AT JUNE 30, 1999
Note 1999 1998
Amount in “000”
SHARE CAPITAL AND RESERVE
Authorized capital
300,000,000 Ordinary shares
of Rs. 10/: each 3,000,000 3,000,000
=========== ===========
Issued, subscribed and paid-up capital
245,000,000 Ordinary shares of Rs. 10/: each
fully paid in cash 2,450,000 2,450,000
Capital reserve
Share premium 990,000 990,000
Accumulated loss (133,970) (219,924)
——————– ——————–
3,306,030 3,220,076
LONG TERM LOANS 3 605,118 742,601
LIABILITIES AGAINST ASSETS SUBJECT
TO FINANCE LEASE 4 97,793 192,848
DEFERRED LIABILITIES 5 116,529 230,196
LONG TERM DEPOSITS 6 16,139 19,234
CURRENT LIABILITIES
Short term finance 7 175,143 221,156
Short term loan – unsecured and interest free
Associated Undertaking 45,000
Current portion of long term liabilities 8 221,327 176,503
Creditors, accrued and other liabilities 9 320,255 192,449
Provision for taxation 7,000 7,000
——————– ——————–
768,725 597,108
CONTINGENCIES AND COMMITMENTS 10
——————– ——————–
4,910,334 5,002,063
=========== ===========
FIXED ASSETS – TANGIBLE
Operating assets 11 4,445,408 4,590,869
Capital work-in-progress 12 5,591 17,805
——————– ——————–
4,450,999 4,608,674
LONG TERM DEPOSITS AND
DEFERRED COSTS 13 65,055 75,946
CURRENT ASSETS
Stores and spares 14 183,663 130,426
Stock-in-trade 15 65,735 63,125
Trade debtors 5,681
Advances, deposits, prepayments and
other receivables 16 113,500 108,091
Cash and bank, balances 17 25,701 15,801
——————– ——————–
394,280 317,443
——————– ——————–
4,910,334 5,002,063
=========== ===========
The annexed notes from I to 30 form an integral part of these accounts.
Muhammad Yunus Tabba Abdul Razzak Tabba
Director Chief Executive
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED JUNE 30, 1999
Note 1999 1998
   Amount in “000”
Sales – net 18 1,474,964 1,010,006
Cost of sales / generation 19 1,121,022 901,715
——————– ——————–
Gross profit 353,942 108,291
Operating expenses
Administrative 20 39,195 48,451
Selling and distribution 21 14,332 10,551
——————– ——————–
53,527 59,002
——————– ——————–
300,415 49,289
Operating profit
Other income 22 3 4 8 351
——————– ——————–
300,763 49,640
Financial charges 23 210,28 6 193,199
Workers’ profit participation fund 4,523
——————– ——————–
214,809 193,199
——————– ——————–
Profit / (loss) before taxation 85,954 (143,559)
Provision for taxation (5,000)
——————– ——————–
Net Profit/(loss) after taxation 85,954 (148,559)
Accumulated loss brought forward (219,924) (71,365)
——————– ——————–
Accumulated loss carried forward (133,970) (219,924)
=========== ===========
Earning per share 27 0.35
The annexed note from 1 to 30 from an integral part of these accounts.
Muhammad Yunus Tabba Abdul Razzak Tabba
Director Chief Executive
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
(CASH FLOW STATEMENT) FOR THE YEAR ENDED JUNE 30, 1999
1999 1998
Amount in “000”
A. CASH FROM OPERATING ACTIVITIES
Profit / (loss) before taxation 85,954 (143,559)
Adjustments for:
Depreciation 195,705 173,774
Amortization of deferred cost 11,901 11,698
(Gain) / loss on disposal of fixed assets 24 (232)
Provision for gratuity 2,283 2,535
Payment for gratuity (345)
Financial charges 210,286 193,199
——————– ——————–
Operating profit before working capital changes 505,808 237,415
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 liabilities 24,781 113,623
——————– ——————–
Cash generated from operation 463,652 249,894
Financial charges paid (164,659) (227,534)
——————– ——————–
Net cash from operating activities 298,993 22,360
——————– ——————–
B. CASH FROM INVESTING ACTIVITIES
Fixed capital expenditure (38,093) (173,387)
Sales proceed of fixed assets 38 35,885
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 obtained 35,000
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 balances 25,701 15,801
Short term finance (175,143) (221,156)
——————– ——————–
149,442 205,355
=========== ===========
Muhammad Yunus Tabba Abdul Razzak Tabba
Director Chief 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.
Note 1999 1998
Amount in ‘000’
3. LONG TERM LOANS
Secured
Banking Company
Demand Finance – I 3.1 599,000 670,500
Demand Finance – II 3.1 60,400 60,400
Investment Bank 3.2 29,440 37,500
Unsecured
Sponsors 3.3 14,300 59,300
——————- ——————-
703,140 827,700
Less: payable within one year shown
Under current liabilities (98,022) (85,099)
——————- ——————-
605,118 742,601
=========== ===========
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 balance 284,252 287,397
Transferred / obtained during the year 4,510 35,000
——————- ——————-
288,762 322,397
Paid during the year (67,664) (38,145)
——————- ——————-
221,098 284,252
Payable within one year shown under
Current liabilities (123,305) (91,404)
——————- ——————-
97,793 192,848
=========== ===========
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
2000 141,675
2001 100,970
2002 13,055
2003 11,467
——————-
267,167
Less: Finance charges allocated to future period (46,069)
——————-
221,098
===========
1999 1998
Amount in “000”
5. DEFERRED LIABILITIES
Staff gratuity 9,207 7,269
Retention money
Contractors – local 5.1 49,552
Plant and machinery – foreign supplier 5.2 11,477 77,065
Encashment of performance
guarantee (US$ 1,313,250) 5.2 56,179 56,179
Accrued markup 39,666 40,131
——————- ——————-
116,529 230,196
=========== ===========
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 Stockists 6.1 4,109 6,704
Transporters 6.2 11,900 12,400
Others 130 130
——————- ——————-
16,139 19,234
=========== ===========
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 – Secured 175,143 221,156
=========== ===========
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.
1999 1998
Amount in “000”
8. CURRENT PORTION OF LONG TERM LIABILITIES
Long term loans 85,099 98,022
Liabilities against assets subject to finance lease 91,404 123,305
——————- ——————-
221,327 176,503
=========== ===========
9. CREDITORS,  ACCRUED AND OTHER LIABILITIES
Creditors 117,951 101,098
Accrued expenses 14,530 16,929
Advance from associated undertaking 13,524
Markup on secured long term loans
and short term finances 92,827 51,245
Advances from customers 7,588 12,943
Retention money 65,314 5,790
Workers’ profit participation fund 4,523
Withholding taxes 380 674
Others 3,618 3,770
——————- ——————-
320,255 192,449
=========== ===========
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).
1999 1998
Amount in “000”
Commitments in respect of
Letters of credit 21,279 12,600
11. OPERATING ASSETS
Cost at Cost at Accumulated Depreciation/ Rate Accumulated Book value
Particulars Jul-01 Addition/ Jun-30 depreciation adjustment % depreciation at at June30
1998 (disposal) 1999 at July 01 1998 for the year p.a. June30,1999 1999
Owned
Land-free hold 5,309 56 5,365 5,365
Building on free hold Land 880,014 13,946 893,960 47,796 44,699 5 92,495 801,465
Plant and machinery 3,357,003 32,769 3,389,772 139,718 121,459 UPM 261,177 3,128,595
Quary equipment 183,417 1,306 184,723 13,755 9,606 5 23,361 161,362
Vehicles 18,088 393 18,481 11,521 1,392 20 12,913 5,568
Furniture and fixtures 5,556 14 5,570 1,785 393 10 2,178 3,392
Office equipment 20,315 718 20,908 6,347 1,504 10 7,789 13,119
(125) (62)
Other assets 10,404 1,104 11,508 909 10 3,588 7,920
——————– ——————– ——————– ——————– ——————– ——————– ——————– ——————–
4,480,106 50,306 4,530,287 223,601 179,962 408,501 4,126,786
(62)
Leased
Plant and machinery 355,639 355,639 22,236 15,532 UPM 37,858 317,781
Vehicles 1,754 1,754 702 210 20 912 842
——————– ——————– ——————– ——————– ——————– ——————– ——————– ——————–
357,393 357,393 23,028 15,742 38,770 318,623
——————– ——————– ——————– ——————– ——————– ——————– ——————– ——————–
1999 (Rupees in “000”) 4,837,499 50,306 4,887,680 246,629 195,704 442,271 4,445,408
(125) (62)
=========== =========== =========== =========== =========== =========== =========== ===========
1998 (Rupees in “000”) 4,490,359 383,001 4,075,370 73,444 173,774 246,630 4,590,869
(36,113) (588)
=========== =========== =========== =========== =========== =========== =========== ===========
UPM= Unit of production method
1999 1998
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 sales 192,103 166,175
Administrative expenses 3,449 7,416
Selling expenses 15 3 183
——————– ——————–
195,705 173,774
=========== ===========
11.3 Disposal of assets
Particulars Cost Book Sale Mode of Particulars
Value Proceeds Disposal of Buyers
Office equipment 125 63 38 Trade in Khan Office Products, Karachi.
——————– ——————– ——————–
1999 (Rupees ‘000’) 125 63 38
——————– ——————– ——————–
1998 (Rupees ‘000’) 36,112 35,885 35,885
=========== =========== ===========
12 CAPITAL WORK-IN-PROGRESS – at cost
Building and civil works 5,310 14,659
Plant and Machinery – Local 1,990
Quarry development 1,018
Electrification 281 100
Mechanical erection and installation 38
——————– ——————–
5,591 17,805
=========== ===========
13. LONG TERM DEPOSITS AND
DEFERRED COSTS
Long term lease deposits 34,988 34,988
Deferred costs
Preliminary expenses 2,819 2,819
Expenses on issue of shares 41,046 41,046
Quarry development costs 13,145 12,135
Other deferred costs 2,493 2,493
——————– ——————–
59,503 58,493
Less · Amortization of deferred costs (29,436) (17,535)
——————– ——————–
30,067 40,958
——————– ——————–
65,055 75,946
=========== ===========
14. STORES AND SPARES
Stores 38,939 39,775
Spares 130,319 87,417
Spares in transit 14,405 3,234
——————– ——————–
183,663 130,426
=========== ===========
15. STOCK-IN-TRADE
Raw’ and packing material 8,358 7,659
Work in process 49,867 19,774
Finished goods 7,510 35,692
——————– ——————–
65,735 63,125
=========== ===========
16. ADVANCES, DEPOSITS, PREPAYMENTS
AND OTHER RECEIVABLES
Loans and advances
Employees 1,447 1,650
Advance income tax 49,391 40,889
Excise duty 2,694 865
Advance to suppliers and others 23,873 32,252
——————– ——————–
77,405 75,656
Deposits and prepayments
Deposits 4,876 4,894
Prepayments 492 331
——————– ——————–
5,368 5,225
Other receivables – Considered good
Octroi refundable 5,184 4,808
Insurance claim 330
Freight 3,743 102
Custom duty 20,830 20,830
Others 970 1,140
——————– ——————–
30,727 27,210
——————– ——————–
113,500 108,091
=========== ===========
17. CASH AND BANK BALANCES
Bank balances
Current accounts 25,046 14,637
PLS accounts 612 1,118
——————– ——————–
25,658 15,755
Cash in hand 43 46
——————– ——————–
25,701 15,801
=========== ===========
18. SALES – net
Sales 2,542,973 1,791,561
Less · Excise duty 1,063,138 776,123
Loading and other charges 4,871 5,432
——————– ——————–
1,068,009 781,555
——————– ——————–
1,474,964 1,010,006
=========== ===========
19. COST OF SALES / GENERATION
Raw material 23,745 20,211
Chemical 868 2,574
Packing material 167,948 122,853
Fuel, oil and lubricant 551,039 454,100
Stores and spares 47,098 36,174
Salaries and wages 68,631 64,854
Repairs and maintenance 9,055 8,585
Depreciation 192,103 166,175
Insurance 41,09 6 29,593
Amortization of quarry development 2,629 2,427
Other manufacturing expenses 18,721 18,221
——————– ——————–
1,122,933 925,767
Work-in-process
Opening 19,774 22,903
Closing (49,867) (19,774)
——————– ——————–
(30,093) 3,969
——————– ——————–
Cost of goods manufactured 1,092,840 929,736
Finished goods
Opening 35,692 7,671
Closing ( 7,510 ) (35,692)
——————– ——————–
28,182 (28,021)
——————– ——————–
1,121,022 901,715
=========== ===========
20. ADMINISTRATIVE EXPENSES
Salaries and benefits 11,317 14,091
Communication 3,324 3,549
Amortization of deferred cost 9,272 9,271
Travelling and conveyance 1,140 3,396
Depreciation 3,448 7,416
Insurance 1,229 94
Vehicles running and maintenance 1,026 876
Boarding and lodging . 417 436
Advertisement 357 1,150
Printing and stationery 764 1,830
Security services 253 620
Entertainment 377 201
Legal and professional 2,113 2,233
Transportation and freight 383 504
Rent, rates and taxes 720 752
Utilities 793 804
Repairs and maintenance 598 228
Auditors remuneration 20.1 223 150
Charity and donation 61 97
Fees and subscription 703 427
Others 677 326
——————– ——————–
39,195 48,451
=========== ===========
20.1 Auditors’ Remuneration
Statutory audit fee 150 150
Cost audit fee 60
Out of pocket expenses 13
——————– ——————–
223 150
=========== ===========
21. SELLING AND DISTRIBUTION EXPENSES
Salaries and benefits 6,972 4,274
Communication 2,190 2,522
Travelling and conveyance 455 389
Printing and stationery 240 301
Utilities 630 625
Vehicles running and maintenance 465 351
Repairs and maintenance 153 107
Depreciation 154 183
Fees and subscription 20 21
Rent rates and taxes 864 622
Advertisement 541 369
Entertainment 220 156
Insurance 276 33
Others 1,152 598
——————– ——————–
14,332 10,551
=========== ===========
22. OTHER INCOME
Gain / (loss) on sale of assets (24) 232
Miscellaneous 372 119
——————– ——————–
348 351
=========== ===========
23. FINANCIAL CHARGES
Mark-up on
Long term loans 122,287 123,214
Lease finances 48,953 45,273
Excise duty on borrowings – prior year 1,052
Short term borrowings 33,904 22,161
Bank charges and commission 4,090 2,551
——————– ——————–
210,286 193,199
=========== ===========
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
Remuneration 15,717 16,613
House rent allowance 7,100 7,476
Utilities allowance 1,572 1,662
Conveyance allowance 1,508 1,662
——————– ——————–
25,897 27,413
=========== ===========
Number of Persons 90 94
=========== ===========
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.
1999 1998
                 Metric tons
26. PRODUCTION CAPACITY
Holding Company
Installed capacity (330 days) 1,320,000 1,320,000
Actual production 682,032 526,184
Subsidiary Company                          MWHS
Installed capacity (330 days)
Main generators 247,199 247,199
Standby generator 41,199 41,199
Actual generation 99,449 85,297
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 shares 245,000,000
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 Tabba Abdul Razzak Tabba
Director Chief 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
543 1 100 54,300
32,367 101 500 15,954,600
442 501 1000 385,700
560 1001 5000 1,680.95
240 5001 10000 2,106,900
72 10001 15000 941,900
55 15001 20000 1,017,800
40 20001 25000 971,800
26 25001 30000 750,800
8 30001 35000 258,500
9 35001 40000 344,500
2 40001 45000 89,900
11 45001 50000 542,500
5 50001 55000 264,900
6 55001 60000 345,500
1 60001 65000 62,800
2 65001 70000 137,700
9 70001 75000 667,500
5 75001 80000 396,400
2 80001 85000 164,400
2 85001 90000 175,500
2 90001 95000 183,400
9 95001 100000 896,400
2 105001 110000 214,600
3 115001 120000 351,400
1 120001 125000 125,000
2 125001 130000 255
6 135001 180000 953,000
3 195001 200000 778,500
2 205001 210000 413,500
1 225001 230000 230,000
1 240001 245000 242,000
3 245001 250000 749,800
2 265001 270000 537,000
2 275001 280000 276,900
5 290001 365000 1,631,400
3 395001 400000 1,200,000
1 400001 405000 404,000
1 410001 415000 412,500
1 425001 430000 425,800
1 435001 440000 435,600
1 440001 445000 442,000
1 495001 500000 1,500,000
3 535001 1345000 8,020,900
9 1345001 1415000 4,045,200
3 1425001 1430000 1,430,000
1 1945001 1950000 1,949,700
1 2065001 2070000 2,070,000
1 2270001 2275000 2,272,720
1 2495001 2500000 5,000,000
2 2545001 2550000 5,100,000
2 2575001 2580000 2,575,100
1 3045001 3050000 6,100,000
2 3990001 4365000 3,993,800
1 3995001 3995000 3,999,200
1 4360001 4365000 4,360,300
1 4495001 4500000 4,500,000
1 4995001 5000000 10,000,000
1 6410001 6415000 6,411,500
1 6695001 6700000 6,700,000
1 8330001 8335000 8,333,350
1 14250001 14150000 14,146,600
1 19170001 19175000 19,171,600
2 21210001 21215000 42,424,240
1 42420001 42425000 42,424,240
——————- ——————- ——————- ——————- ——————-
34,499 245,000,000
——————- ——————- ——————- ——————- ——————-
CATEGORIES OF NUMBER OF TOTAL PERCENTAGE
SHAREHOLDERS SHAREHOLDERS SHARES HELD
Individuals 34,428 86,898,920 35.46
Investment Companies 23 98,647,480 40.26
Insurance Companies 5 1,471,900 0.6
Joint Stock Companies 20 27,201,500 11.1
Financial Institutions 9 29,468,700 12.02
Modaraba Company 6 673,200 0.27
Charitable Trust 2 20,000 0.04
Others 6 618,300 0.25
——————- ——————- ——————-
Total 34,499 2,451,100,000 100
——————- ——————- ——————-

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