Mlcf Annual Report 2015

7/24/2019 Mlcf Annual Report 2015

1/180


2/180

Financial Highlights 02Geographical Presence 03Company Information 07Vision Statement 08Mission Statement 09Corporate Strategy 10

Core Values 11History of Maple 12Code of Business Conduct andEthical Principles 14Company Pro le and Group Structure 15Statement of Overall StrategicObjectives 2015-2016 18Notice of Annual General Meeting 20Directors Report to the Shareholders 30Brief Pro le of Directors 54

The Board Structure and its Committees 57Policy and Procedures for StakeholdersEngagement 62Report of the Audit Committee 69Risk and Opportunity Report 71Calendar of Notable Events 76Organization Chart 77De nitions and Glossary of Terms 78Horizontal Analysis - Six Years 79Vertical Analysis - Six Years 80Summary of Cash Flow Statement - Six Years 82Comments on Six Years Analysis 83

Analysis of Financial Ratios 85Comments on Ratio Analysis 86DuPont Analysis 87Key Operating and Financial Data 88Statement of Cash FlowsDirect Method 89

Results Reported in Interim Financial Statements and Final Accounts 90Statement of Value Added and How Distributed 91Graphical Presentation -Stakeholders Information 92Pattern of Shareholding 94Statement of Compliance with the Code ofCorporate Governance 100Review Report to the Members on

Statement of Compliance with theCode of Corporate Governance 104

FINANCIAL STATEMENTSAuditors Report to the Members 109Balance Sheet 110Pro t and Loss Account 112Statement of Comprehensive Income 113Cash Flow Statement 114Statement of Changes in Equity 115Notes to Financial Statements 116Proxy Form

CONTENTS

1Annual Report 2015


3/180

F i n a n c

i a l H i g

h l i g h t s

2 0 1 5 V

S 2 0 1 4

16 1%49%32%22%22%9%9% 10%

M a r

k e t C a p i t a

l i z a t

i o n

I n t e r e s t C o v e r a g e

S h a r e

h o

l d e r s E q u

i t y

P r o

t A

f t e r T a x

E a r n

i n g s P e r S

h a r e

S a l e s R e v e n u

e

E B I T D A

O p e r a t i n g P r o

t

2 MAPLE LEAF CEMENT


4/180

Regional O ce25 West Wharf Road, Karachi

Head O ce42 - Lawrence Road, Lahore

PlantIskanderabad Distt: Mianwali

Geographical Presence

3Annual Report 2015


5/180

4 MAPLE LEAF CEMENT


6/180

5Annual Report 2015

E ective teamwork

Master Mistri Program


7/180

6 MAPLE LEAF CEMENT

Looking forward


8/180

7Annual Report 2015

Company InformationBoard of DirectorsMr. Tariq Sayeed Saigol ChairmanMr. Sayeed Tariq Saigol Chief ExecutiveMr. Tau que Sayeed SaigolMr. Waleed Tariq SaigolMr. Danial Tau que SaigolSyed Mohsin Raza NaqviMr. Zamiruddin Azar Mr. Karim Hatim

Audit Committee

Mr. Zamiruddin Azar ChairmanMr. Waleed Tariq Saigol MemberMr. Danial Tau que Saigol MemberMr. Karim Hatim Member

Human Resource &Remuneration CommitteeMr. Waleed Tariq Saigol ChairmanMr. Zamiruddin Azar Member Mr. Danial Tau que Saigol Member

Chief Financial O cerSyed Mohsin Raza Naqvi

Company SecretaryMr. Muhammad Ashraf

Chief Internal Auditor Mr. Bilal Hussain

Bankers of the CompanyAllied Bank LimitedAskari Bank LimitedBank Alfalah Limited

Bank Al-Habib LimitedBankIslami Pakistan LimitedBurj Bank LimitedBank of Khyber LimitedDubai Islamic Bank LimitedFaysal Bank LimitedFirst Dawood Islamic Bank LimitedFirst Women Bank LimitedHabib Bank LimitedHabib Metropolitan Bank LimitedIslamic Corporation for the Development

of the Private Sector, JeddahKASB Bank LimitedMCB Bank LimitedMeezan Bank LimitedNational Bank of PakistanNIB Bank LimitedPak Brunei Investment Company LimitedPak-Libya Holding Company (Pvt.) LimitedSilk Bank LimitedSoneri Bank LimitedStandard Chartered Bank (Pakistan) Limited

Summit Bank LimitedThe Bank of PunjabTrust Investment Bank LimitedUnited Bank Limited

AuditorsKPMG Taseer Hadi & Co. Chartered AccountantsLegal Adviser Mr. Shahid Ismail Advocate High Court Registered O ce42-Lawrence Road, Lahore.Phone: (042) 36278904-5

Fax: (042) 36368721E-mail: [email protected]

FactoryIskanderabad Distt. Mianwali.Phone: (0459) 392237-8

Call Centre (24 / 7)0800-41111

Share Registrar Vision Consulting Ltd.Head O ce: 3-C, LDA Flats,

Lawrence Road, LahorePhone: (042) 36283096-97Fax: (042) 36312550E-mail: [email protected]

Company Website:www.kmlg.com

Note: MLCFLs Financial Statements are also available at the above website.


9/180

8 MAPLE LEAF CEMENT

VisionStatement

The Maple Leaf Cement Factorystated vision is to achieveand then remain as the mostprogressive and pro tableCompany in Pakistan in termsof industry standards andstakeholders interest.


10/180

9Annual Report 2015

MissionStatementThe Company shall achieve itsvision through a continuousprocess of having sourced andimplemented the best leadingedge technology, industrybest practice, human resourceand by conducting its businessprofessionally and e cientlywith the responsibility to all itsstakeholders and community.


11/180

10 MAPLE LEAF CEMENT

Vision StatementCorporate StrategyWe at Maple Leaf Cement Factory manufacture and market di erenttypes of consistently high quality cement, according to the demandingrequirements of the construction industry. Our strategy is to becompetitive in the market through quality and e cient operations.As a responsible member of the community, we are committed toserve the interest of our stakeholders and contribute towards theprosperity of the country.


12/180

11Annual Report 2015

Core ValuesMaple Leaf Cement is committed to be an ethical and aresponsible member of the business communities in whichit operates. The Company always endeavours to ensurethat highest standards of honesty, integrity and ethics aremaintained.


13/180

History of Maple

1956, MLCFL was established by the WestPakistan Industrial Development Corporation(WPIDC) and incorporated as Maple LeafCement Factory Limited. The capacity of theplant was 300,000 tons clinker per annum.

1967, a company with the name of White CementIndustries Limited (WCIL) was established withthe clinker capacity of 15,000 tons per annum.

1974, under the WPIDC Transfer of Projects and

the Companies Act, 1913, the management oftwo companies namely, MLCFL and WCIL weretransferred to the newly established StateCement Corporation of Pakistan (SCCP).

1983, SCCP expanded WCILs white cement plantby adding another unit of the same capacityparallel to the existing one; it increased totalcapacity to 30,000 tons clinker per annum.

1986, SCCP set up another production unit of greycement under the name of Pak Cement CompanyLimited (PCCL) with a capacity of 180,000 tonsper annum.

1992, MLCFL, WCIL and PCCL were privatized andtransferred to the KMLG. All three companieswere merged into Maple Leaf Cement FactoryLimited on July 01, 1992.

1994, the Company was listed on all StockExchanges in Pakistan.

1998, a separate production line for grey portlandcement of 990,000 tons per annum clinkercapacity based on most modern dry processtechnology was installed.

2000, Maple Leaf Electric Company Limited(MLEC), a power generation unit, was mergedinto the Company.

2004, the coal conversion project at new dryprocess plant was completed.

2005, dry process plant capacity was increasedfrom 3,300 tpd to 4,000 tpd throughdebottlenecking and up-gradation of equipmentand necessary adjustments in operationalparameters.

2006, a project to convert the existing wetprocess line to a fuel e cient dry processwhite cement line commenced its commercialproduction. Pro t after tax was reported PKR1,059 million.

2007, the Company undertook another expansionproject of 6,700 tpd grey clinker capacity whichcommenced its commercial production onNovember 01, 2007.

2008, two existing lines of white cement 50tpd each clinker capacity converted into oilwell cement plant which started its commercialproduction.

2011, the Company successfully started WasteHeat Recovery Boiler Plant.

2012, the Company started earning pro t andrecorded PKR 496 million pro t after tax.

2013, the Company earned the highest everrecord pro t after tax of PKR 3,225 million.

2014, the Company and Pakistan Railway signedan agreement to transport coal and cement fromKarachi to Daudkhel and vice - versa.

2015, the Company recorded the highest ever

turnover of PKR 20,720 million as well as pro tafter tax of PKR 3,454 million. The Companyreduced its debt burden by 46% as comparedwith last year. The Company has proposed a nalcash dividend of 10% in addition to interim cashdividend of 10% which has already been paid.



14/180


Shared responsibility


15/180

Code of Business Conduct andEthical Principles

ETHICAL PRINCIPLES

1. Directors and employees are expected not toengage in any activity which can cause con ictbetween their personal interest and theinterest of the Company such as interest in anorganization supplying goods/services to theCompany or purchasing its products. In case arelationship with such an organization exists,the same must be disclosed to the Management.

2. Dealings with third parties which includeGovernment o cials, suppliers, buyers, agentsand consultants must always ensure that theintegrity and reputation of the Company are notin any way compromised.

3. Directors and employees are not allowed toaccept any favours or kickbacks from anyorganization dealing with the Company.

4. Directors and employees are not permitted todivulge any con dential information relatingto the Company to any unauthorized person,nor should they, while communicating publicly

on matters that involve Company business,presume to speak for the Company unless theyare certain that the views that they express arethose of the Company and it is the Companysdesire that such views be publicly disseminated.

5. All employees share a responsibility for theCompanys good public relations particularlyat the community level. Their readiness to helpwith religious, charitable, educational and civicactivities is accordingly encouraged providedit does not create an obligation that interfereswith their commitment to the Companys bestinterests.

6. The Company has strong commitment tothe health and safety of its employees andpreservation of the environment and theCompany will persevere towards achievingcontinuous improvement of its Health,Safety and Environment (HSE) performanceby reducing potential hazards, preventingpollution and improving awareness. Employeesare required to operate the Companys facilitiesand processes keeping this commitment inview.

7. Commitment and team work are key elementsto ensure that the Companys work is carried

out e ectively and e ciently. Also all employeeswill be equally respected and actions such assexual harassment and disparaging remarksbased on gender, religion, race or ethnicity willbe avoided.

The following principles constitute the code of conduct which all Directors and employees of Maple LeafCement Factory Limited are required to apply in their daily work and observe in the conduct of Companysbusiness. While the Company will ensure that all employees are fully aware of these principles, it is theresponsibility of each employee to implement the Companys policies. Contravention is viewed as misconduct.

The code emphasizes the need for a high standard of honesty and integrity which are vital for the successof any business.



16/180

Company Pro le and Group StructureMaple Leaf Cement is a part of Kohinoor Maple LeafGroup (KMLG). KMLG comprises of two listed publiclimited companies i.e. Kohinoor Textile Mills Limited(KTML) and Maple Leaf Cement Factory Limited(MLCF). MLCF is a subsidiary company of KTML.The Group companies are ranked amongst the topcompanies in the cement and textile sectors.

A wholly owned public limited subsidiary companyof Maple Leaf Cement namely, Maple LeafPower Limited (Proposed) is in the process ofincorporation. The main purpose of this entityshall be the generation and supply of power forMaple Leaf Cement and reduce dependency on thenational grid.

Maple Leaf Capital Limited (MLCL) has been setup as an unlisted public limited company havingauthorized share capital of Rs. 2,500 million withpaid up capital of Rs. 1,515 million. Its principal objectis to buy, sell, hold or otherwise acquire or invest itscapital in any sort of nancial instruments. This isthe subsidiary of Kohinoor Textile Mills Limited, theholding company of Maple Leaf Cement.

Nature of Business:

Maple Leaf Cement Factory Limited is part of theKohinoor Maple Leaf Group which is a reputablemanufacturer of textile and cement in Pakistan.Maple Leaf Cement is the largest single cementproduction site in Pakistan. It is one of the pioneersof cement industry in Pakistan and in 1956 it wasformed by the collaboration between the WestPakistan Industrial Development Corporation andthe Government of Canada. Currently, the Companyoperates via two production lines for the productionof grey cement and one line for white cementin which it owns more than 90% market share. Allthree lines are owned assets of the Company. Totalinstalled capacity for clinker production is 3,360,000tons annually.

Macro Factors A ecting the Business:

a) Pakistan Economy - The revival of growththat started in 2013-14 has accelerated in 2014-15 as per indicators released by the NationalAccounts Committee. The factors contributing

KMLG Head O ce



17/180

this momentum in growth include the reforminitiatives, commitment to a calibrated scaland monetary management and an overallimprovement in the macroeconomic situation.The impact of these factors was strengthenedby a steep decline in oil prices, rise in foreignexchange bu ers, growth in remittances andproceeds from privatization.

b) Cement Industry The cement sector has beenon the rise as being a major component ofdevelopment projects, a key focus of the currentgovernment. Also, reduction in cost owing toreduced HFO/coal prices has also bene tedthe sector as a whole. Major players have

continuously registered increased pro tabilityduring the year and surpassing expectations bybetter margins. Overall economic upgrade ofthe economy has also played a major role in thisrise in demand.

c) In ation From the start of the year, In ation ona year on year basis, decreased from 7% to 2.1%in April which is the lowest level since 2003-2004(SBP In ation Snapshot). However, towards theend of the nancial year, it increased slightly toclose at 3.2%.

d) Public Sector Development Budget (PSDB) One of the major focus of the presentgovernment is on public sector developmentincluding infrastructure which has led to anincrease in PSDB over the years. Majority ofthe PSDP projects are concentrated in Punjab,followed by Sindh and Khyber Pakhtunkhwa.Being majorly concentrated in Punjab, this givesthe Company an advantage as its local market isalso currently majorly clustered in Punjab.

e) Fiscal Development The scal de cit has

decreased from 8.8% in 2013 to 5.3% in 2015. Thishas been possible by the reforms of the presentgovernment on both revenue and expenditureside. The government further expects todecrease this to 4.3% for the year 2015-2016.

f) Construction Activity Based on low in ation,reduced scal de cit and increased economicperformance as mentioned above, theconstruction activity also got a boost with majorhousing projects initiated in all areas of Pakistan.

g) Money & Credit The discount rate has reducedfrom 10% in 2013 to 7.5% in 2015. Balance of

payments also improved at the backing ofreduced import bill and steady growth inworkers remittances. Foreign exchangereserves closed at $13.5 billion as on 30th June2015.

h) Main Market The main market of the Companyis the domestic market supported by exportswhich are mainly in Africa, Gulf and other Asiancountries.

i) Environment The operations of the Companyare subject to di erent environmental,corporate and labor laws and it is fully complyingwith these and other relevant laws.

Micro Factors A ecting the Business:

a) Business model for the Company The businessmodel of the Company is to increase retention,reduce the cost of production and increasein customer satisfaction. The approach to befollowed is to reduce variable cost throughvarious cost e cient measures.

b) Product portfolio To cater to varying needs ofthe market, Maple Leaf produces the followingcement:

i) Ordinary Portland Cement ii) Sulphate Resistant Cement iii) Low Alkali Cement iv) White Cement

The varying products allow Maple Leaf to caterdi erent types of customers from household tocontractors to government infrastructure needsas the composition of cement required by each isdi erent.

c) Competitors Maple Leaf is amongst the

top companies in the cement industry. It hasperformed handsomely and has yielded resultswhich have placed it in the top ranks. TheCompany is always striving to improve withfocus on improved sales and cost reductionmeasures.

d) Suppliers Coal is mainly imported from SouthAfrica, which is a famous source all over theworld for its high gross caloric value and lowmoisture content. Raw materials like limestone,clay and gypsum are mined by contractors onleased lands by Maple Leaf Cement.



18/180


Acutely dutiful


19/180

Statement of Overall Strategic Objectives

2015-2016Following are the main principles that constitute the strategic objectives of Maple Leaf Cement FactoryLimited:-

1. Improved capacity utilization of the Companys production facilities.

2. Modernization of production facilities in order to ensure the most e ective production.

3. E ective marketing and innovative concepts.

4. Implementation of e ective human resource solutions through personnel development, creatingproper environment for professional growth of highly skilled professionals, ensuring safe labourenvironment, competitive sta remuneration and social bene ts in accordance with scope and qualityof their work.

5. E ective use of available resources.

6. Explore alternative energy resources.

7. Further improvements in Code of Corporate Governance through restructuring of assets andoptimization of management processes.

8. Compliance with local and international environmental and quality management standards,implementation of technologies allowing to comply with the limitations imposed on pollutant emissions.

9. Implementation of projects in social and economic development of communities.



20/180


Thriving individuals


21/180

Notice of Annual General MeetingNotice is hereby given that the 55th Annual General Meeting of the members of Maple Leaf Cement FactoryLimited (the Company) will be held onSaturday, October 31, 2015 at 11:00 AMat 42-Lawrence Road, Lahore,the Registered O ce of the Company, to transact the following business:-

Ordinary Business:

1) To receive, consider and adopt the auditedaccounts of the Company for the year endedJune 30, 2015 together with the Directors andAuditors Reports thereon.

2) To approve the nal cash dividend of Re.1/- pershare (10%) for the year ended June 30, 2015, asrecommended by the Board of Directors. This isin addition to the interim dividend of Re.1/- pershare (10%) already paid making a total cashdividend of Rs.2/- per share (20%) during theyear.

3) To appoint Auditors for the year ending on June30, 2016 and x their remuneration. The Boardhas recommended, as suggested by the AuditCommittee, the appointment of M/s. KPMGTaseer Hadi & Co., Chartered Accountants,the retiring auditors and being eligible o erthemselves for re-appointment.

Special Business:

4) To consider and if deemed t, to pass the

following special resolution under Section 208of the Companies Ordinance, 1984, with or

without modi cation, addition(s) or deletion(s),as recommended by the Directors:-

Resolved by way of special resolution thatconsent and approval of Maple Leaf CementFactory Limited (the Company) be and ishereby accorded under Section 208 of theCompanies Ordinance, 1984 (the Ordinance)for investment in the form of loans / advancesfrom time to time to Kohinoor Textile MillsLimited, the holding company, upto anaggregate sum of Rs.500 million (Rupees

ve hundred million only) for a period of oneyear commencing from November 01, 2015 toOctober 31, 2016 (both days inclusive) at themark-up rate of one percent above the averageborrowing cost of the Company. Vide specialresolution passed in general meeting held

on October 30, 2014 by the shareholders, theCompany was authorized to extend a facilityof similar nature to the extent of Rs.300 millionwhich is valid till October 31, 2015.

Resolved further that the Chief Executive andthe Company Secretary of the Company be andare hereby authorized singly to take all stepsnecessary, ancillary and incidental, corporateand legal formalities for the completion oftransactions in relation to the loans / advancesto the holding company but not limited to lingof all the requisite statutory forms and all otherdocuments with SECP, executing documentsall such notices, reports, letters and any otherdocument or instrument to give e ect to theabove resolution.

BY ORDER OF THE BOARD

(Muhammad Ashraf)Lahore: October 10, 2015 Company Secretary



22/180

Notes:1. The Share Transfer Books of the Company will remain closed from October 20, 2015 to October 31, 2015

(both days inclusive). Physical transfers / CDS Transaction IDs received at the Companys Share Registrar,M/s. Vision Consulting Ltd, 3-C, LDA Flats, Lawrence Road, Lahore, at the close of business on October19, 2015 will be considered in time for the purpose of above entitlement and to determine voting rightsof the shareholders for attending the meeting.

2. A member eligible to attend, speak and vote at this meeting may appoint another member as his/herproxy and CDC shareholders shall attach an attested copy of his/her Computerized National IdentityCard (CNIC) / Passport. Proxies, in order to be e ective, must reach at the Companys Registered O cenot later than 48 hours before the time for holding the meeting and must be duly stamped, signed andwitnessed. Representatives of corporate members should bring the usual documents required for suchpurpose.

3. The Members, who desire for receiving the audited nancial statements and AGM Notice through e-mail,are requested to send their written consent on a Standard Request Form available on website www.kmlg.com in order to avail this facility.

4. Shareholders are requested to notify / submit the following information & documents, in case of bookentry securities in CDS to their respective CDS participants and in case of physical shares to our ShareRegistrar, if not earlier provided / noti ed:-

a. Change in their addresses;

b. Dividend mandate information i.e. Title of Bank Account, Bank Account No., Banks Name, BranchAddress and Cell / Landline No(s). of the Transferee(s) towards direct dispatch of cash dividendcheque(s) to their bankers;

c. Valid and legible copies of CNIC for printing of CNIC number(s) on their Dividend Warrant(s) asrequired vide SRO 831 (I)/2012 dated July 05, 2012. In case of non-submission of valid & legiblecopy of CNIC, the Company will be constrained to withhold the Dividend Warrant(s) under Section251(2) of the Companies Ordinance, 1984;

d. Valid and legible copies of National Tax Number (NTN) or NTN Certi cate(s) of corporate entitiesand must quote the company name and their respective folio numbers thereon while sending thecopies;

e. Pursuant to requirement of the Finance Act, 2015 e ective July 01, 2015, the Filer & Non-Filershareholders will pay tax on dividend income @12.5% and 17.5% respectively. Therefore, pleaseensure that their name(s) have been entered into Active Taxpayers List (ATL) provided on websitewww. r.gov.pk of the Federal Board of Revenue (FBR), despite the fact that the shareholder isa ler, before the payment date of cash dividend i.e. November 27, 2015, otherwise tax on cashdividend will be deducted @17.5% instead of 12.5%;



23/180

f. As per clari cation of FBR, each holder is to be treated individually as either a Filer or Non-Filerand tax will be deducted on the basis of shareholding of each joint holder as may be noti ed by theshareholder, in writing within 10 days from entitlement date i.e. October 19, 2015 as follows, to ourShare Registrar, or if no noti cation, each joint holder shall be assumed to have an equal numberof shares.

Folio / CDC Total Principal Shareholder Joint Shareholder Account No. Shares

Name & Shareholding Name & Shareholding CNIC No. Proportion CNIC No. Proportion (No. of Shares) (No. of Shares)

g. Related reference from law or valid tax exemption certi cate issued by the concernedCommissioner of Inland Revenue is to be furnished to the Company / Share Registrar in order to

avail tax exemption otherwise tax will be deducted under the provisions of the law.h. For any query / information, the shareholders may contact the Company Secretary at the above

Registered O ce and / or Mr. Abdul Gha ar Gha ari of Share Registrar, Vision Consulting Ltd, 3-C,LDA Flats, Lawrence Road, Lahore, Ph. Nos. (042) 36283096-97.

i. The audited nancial statements for the year ended June 30, 2015 are available on website of theCompany www.kmlg.com.



24/180


Pioneering trust


25/180

Statement Under Section 160(1) (b)of the Ordinance:

This statement sets out the material factspertaining to the special business proposed to betransacted under Section 208 of the Ordinance atthe forthcoming Annual General Meeting of theCompany to be held on October 31, 2015.

Kohinoor Textile Mills Limited (KTML), theholding company, having its Registered O ce at42-Lawrence Road, Lahore, is a manufacturer of yarnand cloth, processing and stitching the cloth andtrade of textile products. Its production comprises156,528 ring spindles capable of spinning a widerange of counts using cotton and Man-made bers.The weaving facilities at Raiwind comprise 252 loomscapable of weaving wide range of greige fabrics.The processing facilities at the Rawalpindi unit arecapable of dyeing and printing fabrics for the home

textile market. The stitching facilities produce adiversi ed range of home textiles for the exportmarket. Both the dyeing and stitching facilities arebeing augmented to take advantage of greatermarket access.

The Board of Directors of the Company in theirmeeting held on September 09, 2015 has approved

Rs.500 million as loans / advances, being a reciprocalfacility, to KTML on the basis of escalating pro ttrend of KTML subject to approval of the members.The Company shall extend the facility of loans /advances from time to time for working capitalrequirements to KTML in accordance with anagreement in writing including all relevant terms andconditions as prescribed in the Regulations.

Directors of the Company have also provided theirduly signed undertaking / due diligence reportwith recommendations that they have carried outnecessary due diligence for the proposed investmentin KTML and it has been kept at Registered O ce ofthe Company for inspection of the members alongwith audited accounts of KTML as required underthe Regulations.

INVESTMENT IN HOLDING COMPANY



26/180


Visualizing the future


27/180

The information under clauses 3(1)(b) & 4(1) of the Companies (Investment in AssociatedCompanies or Associated Undertakings) Regulations, 2012.

Ref.No.

(i)

(ii)

(iii)

(iv)

(v)

Requirement

Name of the associated company orassociated undertaking along withcriteria based on which the associatedrelationship is established;

Amount of loans or advances;

Purpose of loans or advances and bene tslikely to accrue to the investing companyand its members from such loans oradvances;

In case any loan has already been granted

to the said associated company orassociated undertaking, the completedetails thereof;

Financial position, including main items ofbalance sheet and pro t and loss accountof the associated company or associatedundertaking on the basis of its latest

nancial statements;

Information

Kohinoor Textile Mills Limited(the KTML)

KTML is a holding company of Maple Leaf CementFactory Limited (the Company).

Rs.500 million (Rupees ve hundred million only).

Purpose: To earn income on the loan and/oradvances to be provided to KTML from time totime for working capital requirements of KTML.

Benefts: The Company will receive mark upat the rate of one percent above its averageborrowing cost. This shall bene t the Companyscash ow by earning pro t on idle funds.

Period: For a period of one year from November01, 2015 to October 31, 2016 (both days inclusive).

A similar nature of loan/advance facility of

Rs.300 million from time to time for workingcapital requirements has been granted by thevalued shareholders of the Company vide specialresolution passed in the Annual General Meetingheld on October 30, 2014 which is valid tillOctober 31, 2015.

Based on the audited nancial statements for thenancial year ended 30 June 2015, the nancial

position of KTML is as under:-

Particulars Amount

Rupees (000)Paid up capital 2,455,262Reserves 5,554,966Surplus on revaluationof land and investmentproperties 3,673,825Current liabilities 5,185,753Current assets 5,338,022Breakup value pershare (Rs.) withoutrevaluation 32.62Sales 15,862,743Gross Pro t 2,729,989

Operating Pro t 2,897,223Net Pro t 2,086,833Earnings per share (Rs.) 8.50



28/180

Ref.No.

Requirement

Average borrowing cost of the investingcompany or in case of absence ofborrowing the Karachi Inter Bank O eredRate for the relevant period;

Rate of interest, mark up, pro t, fees orcommission etc. to be charged;

Sources of funds from where loans oradvances will be given;

Where loans or advances are beinggranted using borrowed funds,-(I) justi cation for granting the loan or

advance out of borrowed funds;(II) detail of guarantees / assets pledged

for obtaining such funds, if any; and(III) repayment schedules of borrowing of

the investing company;

Particulars of collateral security to beobtained against loan to the borrowingcompany or undertaking, if any;

If the loans or advances carry conversionfeature i.e. it is convertible intosecurities, this fact along with completedetail including conversion formula,circumstances in which the conversionmay take place and the time when theconversion may be exercisable;

Repayment schedule and terms of loansor advances to be given to the investeecompany;

Information

Average borrowing cost of the Company is 10.02%for the year ended June 30, 2015.

Mark-up will be charged to KTML at one percentabove the average borrowing cost of theCompany.

Loan and / or advance will be given out of ownfunds of the Company.

N/A

No collateral is considered necessary since KTMLis a holding company of the Company.

N/A

The loan / advance would be for a period of oneyear from November 01, 2015 to October 31, 2016(both days inclusive). KTML will pay interest /mark-up on quarterly basis whereas repaymentof principal amount shall be on or before October31, 2016.

(vi)

(vii)

(viii)

(ix)

(x)

(xi)

(xii)



29/180


Broader vision


30/180

Salient features of agreements entered orto be entered with its associated companyor associated undertaking with regards toproposed investment;

Direct or indirect interest of directors,sponsors, majority shareholders andtheir relatives, if any, in the associatedcompany or associated undertakings orthe transaction under consideration; and

Any other important details necessaryfor the members to understand thetransaction.

Nature : Loan / advance

Purpose : To earn mark- up / pro ton loan / advance beingprovided to KTMLwhich will augment theCompanys cash ow

Period : One Year

Rate of Mark-up : Above one percent of theaverage borrowing costof the Company

Repayment : Principal plus mark up/pro t upto October 31,2016

Penalty charges : @ 3-months KIBOR plusone percent in additionto the outstandingamount(s).

Investing Company i.e. the Company is asubsidiary company of KTML and six Directorsbeing common in both the companies may bedeemed to be interested to the extent of theirshareholding.

None of the Directors or their relatives orassociates are interested in any of the aboveresolution in any way except as members of theCompany.

N/A

Ref.No.

Requirement Information

Six Directors including sponsor Directors of the Company are also the members of investee company i.e. KTMLand are interested to the extent of their shareholding as under:-

(xiii)

(xiv)

(xv)

Name %age of shareholding %age of shareholding in KTML in the Company

Mr. Tariq Sayeed Saigol & his spouse 4.2727 0.3540Mr. Tau que Sayeed Saigol 4.4098 0.0010Mr. Sayeed Tariq Saigol 0.1286 0.0010Mr. Waleed Tariq Saigol 0.0289 0.0010Mr. Danial Tau que Saigol 0.0010 0.0005Mr. Zamiruddin Azar 0.0024 0.0020



31/180


Directors Reportto the Shareholders

The Directors are pleased to present the 55thannual report along with audited nancial

statements and Auditors Report thereon forthe year ended June 30, 2015.


32/180

The Company registered record net sales ofRs.20,720 million against Rs.18,969 million in thecorresponding year, showing growth of 9.2% alongwith stable cement price on account of volumetricimprovement in local dispatches due to enhancedpace of economic activity. Higher disposableincome on account of reduced in ation impacteddemand favourably. This development acceleratedprivate sector construction activities and partialmaterialization of budgeted Public SectorDevelopment Programme (PSDP) also gave a llipto construction activity. Housing projects wereinitiated in all major cities of the country; and onesalready in process are moving speedily towardscompletion. In the north zone markets, Maple LeafCement is still the premium brand and is sellingits products at better prices compared to otherbrands, resulting in improved retention prices perton. The Company is the largest manufacturer ofwhite cement in Pakistan with the highest retention.During the year, white cement production and local

dispatches improved over the previous year due toincrease in demand.

Export volumes have also shown a rising trend withgrowth of 9.1%. Gains were recorded in dispatchesto India and the rest of the world. This increase isdespite a dip in sales to Afghanistan by 30% due toreduced activity after withdrawal of NATO forcesand competition from Iranian cement. The marginson export business remained minimal during theyear. Iranian cement is also proving to be a threatto the local industry which is imported into Pakistanillegally and requires immediate attention of ourgovernment. Recent imposition of anti-dumpingduties in South Africa has had no e ect on us asthe Company is not exporting cement to SouthAfrica since more than a year. Our marketingstrategy was redirected to focus on other Africanmarkets. However, this action by the South Africanauthorities has a ected overall export volumes byother manufacturers.

(Rupees in thousand) Year Ended

2015 2014 Net Sales Revenue 20,720,054 18,968,547Gross Pro t 7,495,623 6,522,985Operating Pro t 5,583,550 5,055,173Finance Cost 1,082,639 1,464,772Pro t Before Taxation 4,500,911 3,590,401Taxation 1,046,616 760,227Pro t After Taxation 3,454,295 2,830,174Earnings Per Share (Rs.) 6.55 5.36

The nancial highlights are as follows:-



33/180

Capacity utilization and dispatches also improved as evident from data shown below:-

July to June VarianceParticulars 2015 2014 Qty % age

------------------M. Tons-----------------Production Clinker Production 2,824,854 2,694,848 130,006 4.82%Cement Production 3,005,456 2,753,142 252,314 9.16%

SalesDomestic 2,350,732 2,181,786 168,945 7.74%Exports 609,769 559,115 50,654 9.06%

2,960,501 2,740,901 219,599 8.01%

Total sales volume of 2,960,501 tons achieved represents an increase of 8.01% over the corresponding periodlast year. Domestic sales volume increased to 2,350,732 tons registering an increase of 7.74% and exportssales volume increased to 609,769 tons, an increase of 9.06%.

Decline in commodity prices, particularly coalprices, during the period resulted in lower fuel cost.Power cost also reduced due to fall in electricitycharges on the back of fuel price adjustmentsfollowing declining oil prices. Moreover, during the3rd quarter of the current period, the Companyhas fully operated its Furnace Oil based enginesdue to improved viability owing to low furnace oilprices. However, during the year under review,increase in packing material costs and pet cokerates have slightly depleted margins. The Companyhas prudently accounted for Gas InfrastructureDevelopment Cess (GIDC) costs after promulgationof GIDC Ordinance, 2014, which has increased thecost of doing business. However, the Company ise ciently utilizing its Waste Heat Recovery Plantalongwith the use of alternative fuels to counter thiswhich resulted in lowering the weighted average

cost of power. The Company is also continuouslybene ting from lower inland transportation coststhrough haulage via the railway network resultingin reasonable savings.

Keeping in view the above factors, gross pro trose by Rs. 973 million to Rs. 7,496 million in thecurrent period, compared to Rs. 6,523 millionin the corresponding year which depicts betteroperational performance than last year.

Due to e cient monitoring and development ofoperating procedures, administration and otheroperating expenses have been kept in check.Operating pro ts rose by Rs.529 million to Rs. 5,584million during the period, compared to Rs. 5,055million in the corresponding period last year.

Finance costs continue to reduce as the Companydeleverages due to robust cash ow generationalong with declining interest rates and debt equityratio also improved as shown below:-



34/180

The Company is paying o Sukuk / Syndicateand other debt obligations at an acceleratedpace and is dedicated to keep current on all debt

commitments backed by better cash ows ande cient cash management. Improved pro t levelsand healthy cash ows have enabled the Companyto go for aggressive deleveraging. During theyear, the Company has reduced its debt burdenby Rs.4,098 million i.e. 46% reduction. As a result,there is a notable decline of 26% in nance cost ofthe Company along with substantial improvementin the debt equity ratio.

The Company recorded post-tax pro t of Rs.3,454million during the year against Rs.2,830 million in

the corresponding period last year showing growthof 22%.

DIVIDEND

Keeping in view the results, the Board of Directorshas announced nal cash dividend at Re.1/- pershare i.e. 10%. This is in addition to the already paidinterim cash dividend @10% i.e. Re.1/- per share,thus making a total cash dividend @20% i.e. Rs.2/-per share for the year ended June 30, 2015.

ANALYSIS OF PRIOR PERIODS FORWARD LOOKINGDISCLOSURES

The Companys actual performance in the year2014-15 exceeds the disclosures made in the prior

periods annual reports mainly due to favorable

sales growth, coal prices, reduced HFO prices andreduction in nance cost. However, power costand load shedding increased during the year which

a ected the cost of production. E ective utilizationof resources and power generation equipmentbased on WHRP and backup HFO engines reducedproduction cost which resulted in an increase inoperating pro ts as compared to projections.

NON FINANCIAL PERFORMANCE

Quality, customers satisfaction, employeesdevelopment and professional standards areCompanys key areas where management hastaken necessary measures to improve them. TheCompany is currently producing and supplyingthe high quality products which ensure maximumsatisfaction to the customers. During the year, theCompany has conducted various training coursesfor the development of existing human capital.The Company is maintaining a highly satisfactoryrelationship with all stake holders. The Company hasformed various committees which are responsiblefor the e ective monitoring of key areas.

SEGMENTAL REVIEW OF BUSINESS PERFORMANCE

The nancial statements of the Company have beenprepared on the basis of single reporting segment.Revenue from sale of cement represents 100% of

gross sales of the Company. Sale comprises 92.27%of grey cement and 7.73% of white cement. TheCompany operates in two principal geographicalareas, Asia and Africa. Moreover, all assets of theCompany as at June 30, 2015 are located in Pakistan.

MANAGEMENTS OBJECTIVES AND STRATEGIES

Prime objective of management is to change theculture from a State Cement traditional hierarchyand status quo enterprise to a customer driven,empowered and cross functionality focusedcompany. Our objectives are determined toincrease our retention value along with reduction



35/180


High standards


36/180

in cost. We strive to achieve our objectives withcollective wisdom and empathy. We are committedto enhance stakeholders value. To achieve our

corporate objectives, we have given priorities tore ne and implement our human resource policies andStandard Operating Procedures (SOPs). Total QualityManagement (TQM) function has been implementedthat seeks to lower nonconformance costs throughan active focus on health, safety, environment,housekeeping and operations.

Apart from the above, we have implemented scienti cperformance evaluation techniques that are linkedto KPIs (Key Performance Indicators). We have alsodeveloped Reliability Center Maintenance Systemfor achieving run factor of 330 days considering itas an opportunity to improve our bottom line. Webelieve that training is the source of all process driventhinking. Local and international trainings for topmanagement were arranged during the year 2014-15 including 6 Sigma trainings. We have framed wellde ned di erent teams to address the key areas likeTeam energy, Team Reliability Centered Maintenance,Team Improvement and Team Culture Development.Priority is being assigned to control production cost.

We have reduced variable cost due to e cient energymanagement and other cost reduction measures.The todate results, nancial and nonnancial, are there ection of achievement of managements objective

which are strategically placed to increase the wealth ofstakeholders. The said results are properly evaluatedagainst the respective strategic objectives to con rmthe achievement.

There is no material change in Companys objectiveand strategies from the previous year.

ENTITYS SIGNIFICANT RESOURCES

Our resources mainly consist of human resource,nancial resource, and technological resource. The

Company assorted and hired team of professionalswith enormous expertise in latest technologieswho pro ciently design the ways for improving andupgrading our production process, networking andcontrol systems. We have developed a dedicated teamto analyze the human resource right from selection tillretirement. We believe in adding value to our humanresource by extensive trainings and developmentprogram.

LIQUIDITY AND CAPITAL STRUCTURE

Our liquidity condition has signi cantly improvedover the period with reduced payment cycle.The management of the Company has breadth

of experience and knowledge of best practicesin liquidity management pertaining to policies,processes, regulatory constraints, tax considerations



37/180

and liquidity management system. Capital structuremainly consists of ordinary share capital and longterm / short term debts. Management believes thatthere is no inadequacy in capital structure in statusquo.

The Company is highly e cient to manage liquidityrisk and in order to cope with it, we invest only inhighly liquid resources to mitigate the risk. E cientutilization of available resources, better control overproduction overheads and better retention resultedin increased cash generation from operations andrecovery of losses. The Company continues with itsplan to utilize that cash generated from operationsfor repayment of its debt on a timely basis, whichwill result in the reduction of nancial cost and

resultantly, net pro t of the Company will beincreased.

SIGNIFICANT CHANGES IN FINANCIAL POSITION

During the year, Company has paid o its long termdebt and redeemable capital totaling to Rs. 4,098Million, managed to improve debt equity ratiofrom 48:52 to 27:73 and net cash generated fromoperations increased by Rs. 732 million as comparedwith previous period due to increase in sales andreduction in nance cost. Moreover, the Companyhas adopted the strategy to utilize maximum cashpro ts for the payment of debts.

PROSPECTS OF THE ENTITY INCLUDING TARGETSFOR FINANCIAL AND NON-FINANCIAL MEASURES

Prospects of the Entity The nancial projections ofthe Company are very encouraging with continuedgrowth expected locally and internationally as newpotential markets are being explored and variousmeasures adopted by the Company to reduce thecost. Di erent marketing strategies are beingcarried out to increase sales and pro tability.

Financial Measures Various nancial considerationsare used to make the projections of Maple LeafCement. Following are the nancial measures todetermine the healthy prospects of the Company:

1. Increase in sales volume for all types of productswith special emphasis on white cement.

2. Reduced cost of production through:a. reduction in raw material cost per ton,b. savings in fuel cost per ton including more

e cient yield,c. lower power cost including decline in per

ton KWH power consumption; andd. lower weighted average cost of capital

percentage.

3. Reduction in debt burden based on healthy cashows to be generated from increased sales and

reduced costs as mentioned above to reinforcethe reduction in nance cost.

Non-Financial Measures Non nancial measuresare the many intangible variables that impactperformance. These are di cult to quantify ascompared to nancial measures but they are equallyimportant. Following are the non nancial measuresof the Company:

1. Stakeholders engagement Through di erentcommittees and forums, management expectsto further increase stakeholders engagementand increase the awareness in di erentqualitative aspects of the business throughcross functionality.

2. Customer satisfaction The Company placesgreat focus on customer satisfaction, and goingforward, this remains a prime objective of themanagement.

3. Brand recognition Marketing e orts will bein place to increase sales volume based on thephilosophy of being a brand where our productis demanded by consumers to create a pull

e ect.

4. Integrity of managers Being one of the corevalues of the Company, trainings have beenplanned to further drill this value into the middleand lower sta .

Change in Performance Measures Based onactual results for the year 2014-2015, the Companyhas made the following revisions to its nancialmeasures:

1. Increase in sales target Since the sales forthe current year have exceeded budgets, anupward revision has been made in the targetsfor the next year.

2. Change in the power mix Due to reductionin HFO cost, the Company has changed itsplanning of the power mix and has planned touse more HFO based power sources.

3. Fuel cost The price of coal has shown a constantdecline throughout the year and further fallis also expected. Therefore, a corresponding

downward adjustment has been made to thebudgeted purchases of the Company.



38/180

4. Finance cost The government has reducedthe rate of borrowing which is now lower thanwhat was expected last year. Consequentlythe Company has also made a reduction of itsbudgeted nance cost.

KEY SOURCES OF ESTIMATION UNCERTAINTY

The preparation of nancial statements requiresmanagement and the Board of Directors to makeestimates and judgments that a ect reportedamounts of assets, liabilities, revenues, expensesand related disclosure of contingencies. Theseestimates are based on historical experience andvarious other assumptions that management

and the Board believe are reasonable under thecircumstances, the results of which form the basisfor making judgments about the carrying values ofassets and liabilities that are not readily apparentfrom other sources. Actual results may di er fromthese estimates under di erent assumptions orconditions.

Key estimates and assumptions concerning thefuture include:

Estimating useful life of assets

The useful lives are estimated having regard tothe factors as asset usage, maintenance, rate oftechnical and commercial obsolescence. The usefullives of assets are reviewed annually.

Taxation

Determining income tax provisions involvesjudgment on the tax treatment of certaintransactions. Deferred tax is recognized on tax lossesnot yet used and on temporary di erences whereit is probable that there will be a taxable revenue

against which these can be o set. Managementhas made judgments as to the probability of futuretaxable revenues being generated against whichtax losses will be available for o set.

Employee bene t scheme

The de ned bene t obligations are based onactuarial assumptions such as discount rate,expected rate of return on plant assets, expectedrate of growth in salaries and expected averageremaining working life of employees which areextensively detailed in note 14 to the nancialstatements.

ENTITYS SIGNIFICANT RELATIONSHIPS

The Company has very prominent and good

relationships with all stakeholders. We maintaincollaborative relations with our stakeholders agood harmony, e ective communication andcustomer focused approach because without doingthis we may a ect our Companys performanceand values of our entity. We follow the best policyto maintain the relationship with our stakeholderswhich includes satisfaction of customers byproviding quality products and timely paymentsto all creditors. The call centre established lastyear is in full swing in achieving the main purposeof being a bridge between the Company and its

stakeholders including customers and supply chainsta . Moreover, the Company maintains goodrelationship with its Bankers and also arrangesInvestors Conferences periodically to discussbusiness prospects and nancial managementplans with the lenders which also enhances theircon dence on the Company.

INVESTORS GRIEVANCES POLICY

The Company believes that Investor service is avital element for sustained business growth andwe want to ensure that our Investors receiveexemplary service across di erent touch pointsof the Company. Prompt and e cient service isessential to retaining existing relationships andtherefore Investor satisfaction becomes criticalto the Company. Investor queries and complaintsconstitute an important voice of Investor, andthis policy details grievance handling through astructured grievance framework. Grievance policy issupported by a review mechanism to minimize therecurrence of similar issues in future. Investors hasthe facility to call toll free call centre 24/7 to registertheir grievances. The Companys Grievance policy

follows the following principles:

Investors are treated fairly at all times. Complaints raised by Investors are dealt with

courtesy and in a timely manner. Investors are informed of avenues to raise their

queries and complaints within the organization,and their rights if they are not satis ed with theresolution of their complaints.

Queries and Complaints are treated e cientlyand fairly.

The Companys employees work in good faithand without prejudice towards the interests ofthe Investors.



39/180

CRITICAL PERFORMANCE MEASURES

Following are some of the critical performance measures and indicators against stated objectives of theCompany.

Objectives

Improved capacity utilization of theCompanys production facilities

Modernization of production facilities inorder to ensure the most e ective production

E ective marketing and innovative concepts

Implementation of e ective human resourcesolutions through personnel development,creating proper environment for professionalgrowth of highly skilled professionals,ensuring safe labour environment,competitive sta remuneration and socialbene ts in accordance with scope and qualityof their work

E ective use of available resources

Explore alternative energy resources

Further improvements in Code of CorporateGovernance through restructuring of assetsand optimization of management processes

Compliance with local and internationalenvironmental and quality managementstandards, implementation of technologiesallowing to comply with the limitationsimposed on pollutant emissions

Implementation of projects in social andeconomic development of communities.

Measures

Number of days run factor

Reduction in unplanned stoppages

Increase in retention and sales volume

Higher return on human capital

Decrease in variable cost

Reduced dependence on national grid

Higher legal compliance level and reductionin contingencies

Compliance with SOPs

Allocation of funds for CSR and theirmonitoring

Sr. No.

1

2

3

4

5

6

7

8

9



40/180

Management believes that current criticalperformance measures continue to be relevant infuture as well.

HUMAN RESOURCE MANAGEMENT

The Company is committed to build a strongorganizational culture that is shaped byempowered employees who demonstrate a deepbelief in Companys vision and values. ThereforeHuman Resource Management (HRM) is an integralpart of our business strategy. The Companyfosters leadership, individual accountability andteamwork. The main objectives of the CompanysHRM policy are:

Selecting the right person, with the rightexperience, at the right time, o ering the rightcompensation.

Developing Management philosophies andpractices to promote and encourage motivationand retention of the best employees.

Recognizing and rewarding employeescontribution to the business.

Fostering the concept of team work andsynergetic e orts.

Encouraging and supporting team conceptsand team building techniques.

Nurturing a climate of open communicationsbetween management and employees.

Making all reasonable e orts to achieve a highquality of work-life balance.

SUCCESSION PLANNING

The Company believes in proactive approachtowards succession planning. We recruitemployees, develop their knowledge, skills,abilities, and prepare them for advancementor promotion into ever more challenging roles.Rigorous succession planning is also in placethroughout the organization. Succession planningensures that employees are constantly developedto ll each needed role. We look for people whoexemplify continuous improvement when we arespotting future successors. In this relation, the

Company also expends a lot in terms of nancesand time for the training of its resource as evidentfrom the below trainings held during the year:

1. Emotional Intelligence2. E ective Communication Skills3. House Keeping4. Project Management5. Kiln Alignment6. Supply Chain Management7. Siemens PLC8. OHSAS 18001 Lead Auditor 9. HSE SOPs10. Shell Lubes11. Simatic Program Logic Controllers

MARKET SHARE

Presently the Company due to its unique marketinge orts and superior quality has 7.4% market sharefor grey cement (on capacity based) as evidentfrom the All Pakistan Cement ManufacturingAssociation (APCMA) website. Therefore, theCompany is a leading brand in Pakistan with adiverse customer base and presence in almost allcities of Pakistan. Carrying on with the legacy ofLeaf, Maple Leaf brand is widely acknowledgedas best quality cement brand in all the markets,where it is exported. It is also the largest producerof White Cement in the country with more than

90% of local market share and the biggest whitecement exporter of Pakistan.

SOCIAL AND ENVIRONMENTAL RESPONSIBILITYPOLICY

The Companys Social and EnvironmentalResponsibility Policy re ects the Companysrecognition that there is a strong, positivecorrelation between nancial performance andcorporate, social and environmental responsibility.The Company believes that the observance of soundenvironmental and social strategies is essential forbuilding strong brand and safeguarding reputation,which in turn is vital for long-term success.

Social Responsibility Policy:

Implementation of Employee Code of Conductthat ts with local customs and regulations.

Culture of ethics and behavior which improvevalues like integrity and transparency.

Focusing on social involvement by developingmulticultural teams with many di erentcompetencies.

Promoting the culture of work facilitation andknowledge transfer. Carrying out corporate philanthropy actions



41/180


that focus in particular on preserving lifeand the environment.

Maintaining collaborative relations withthe society through a good harmony ande ective communication.

Environmental Responsibility Policy:

Ensure our products, operations andservices comply with relevant environmentallegislation and regulations.

Maintain and continually improve ourenvironmental management systems to

conform to the ISO Standards or morestringent requirements as dictated byspeci c markets or local regulations.

Operate in a manner that is committed tocontinuous improvement in environmentalsustainability through recycling,conservation of resources, preventionof pollution, product development, andpromotion of environmental responsibilityamongst our employees.

Responsibly managing the use of hazardousmaterials in our operations, products andservices, and promote recycling or reuse ofour products.

Inform suppliers, including contractors, ofour environmental expectations and requirethem to adopt environmental managementpractices aligned with these expectations.

CORPORATE SUSTAINABILITY

a) Corporate Social Responsibility

For community investment and welfare, theCompany acknowledges its responsibilitytowards society and performs its duty byproviding nancial assistance to projects forsociety development by various charitableinstitutions on consistent basis. The Companyhas been recognized by Pakistan Centre forPhilanthropy as a leader in social and charitablecontributions and strikes to be a constructivemember of the communities in which it hasa presence. Kohinoor Maple Leaf Group has

received 7th Corporate Social Responsibility


42/180


Making livesbeautiful


43/180

Award 2015 on account of its performance invarious projects. The Company has taken an arrayof initiatives for the welfare of its workforce, localcommunity as well as stakeholders. The Companyhas contributed in medical social sciences projectand in this regard, has donated a state of the artCardiac facility to the Gulab Devi Chest Hospital(GDCH) in Lahore by constructing Sayeed SaigolCardiac Complex (SSCC) at GDCH. Other initiativesare as follows:

Maple Leaf recognizes its responsibility tocontribute to the community including theminority. In this regard, it provided support torebuild the Church at Iskendarabad.

Maple Leaf helped in the building of a policeline memorial at Iskendarabad in memory of35 policemen who lost their lives serving theircountry from 1986 till 2012.

To cater for the religious needs of theemployees, a new mosque was constructedat plant site. Iftar party was arranged for allmanagement, CBA and workers to mark theoccasion.

Maple Leaf is continually committed to itsMaster Mistri Program which aims to enhanceskills and standard of living of masons. Tofacilitate the program, Maple Leaf built a stateof the art lodge at its plant site for boardingand lodging of masons.

Civil defense week was held from 24thNovember 2014 to 3rd December 2014 for

training of sta in defense matters.



44/180

b) Industrial Relations

The Company has set procedures, rules andregulations which regulate employment guidance.The Company has allocated Gratuity, ProvidentFund and Workers Pro t Participation Fund forits employees. The Company also pays bonuses toemployees on the basis of Companys pro tabilityand also awards performance bonuses to starperformers. Appropriate opportunity is providedto employees to participate in Collective BargainingAgreement (CBA) activities and to elect arepresentative of their choice. The Company iscommitted to provide equal opportunity to allexisting and prospective employees without any

discrimination on the basis of religion, gender,race, age etc. The Company also organizedseveral rewards and recognition programs foracknowledgment of work done by its employees.

c) Energy Saving Measures

Energy crisis is getting severe day by day inPakistan. We have developed a team energy that isstriving to get the best possible alternative sourceslike e cient usage of Waste Heat Recovery Boiler,LED lights, coal based boiler and other alternativesincluding waste, rice husk and carbon black. Work isbeing done actively on Coal Fired power plant andit is expected to be commissioned and running inthe rst half of 2017. We have also maintained suchmethods to avoid maximum WAPDA peak hoursutilization. Also, planning is under way to automatethe switching of lights based on light conditions.This will save energy as currently some lights areinadvertently left on during day time.

d) Consumer Protection MeasuresWe ensure that our products are shipped in a safemanner complying with safety standards and legalrequirements. The Company takes care and appliesappropriate procedures to manufacture cementproducts so as to ensure that no harmful substancesare present in its products. The Company has strictpolicy to control any activity which is against theconsumer rights.

e) Employment of Special Persons

The Company has employed disabled persons incompliance with the rules set out by the Governmentof Pakistan which is 2% quota of the total workforcenecessitated to be allocated to disabled persons.

f) Community Investment and Welfare Schemes

The Company has a strong tradition of goodcommunity relations and its employees are activelyinvolved in welfare schemes. We believe thatinvesting in our communities is an integral part ofour social commitment to ensure the sustained

success of the Company. We aim to ensure thatour business and factory have the resources andsupport to identify those projects, initiatives andpartnerships that can make a real di erence in theircommunities.

Management of the Company, for maintaininghealthy and green environment, celebrated theWorld Environment Day in coordination withDistrict O cer Environment Mianwali along withother community stakeholders on June 5th, 2015.The aim of celebrating World Environment Daywas to demonstrate the continual e orts and thecommitment of the Companys Management forthe healthy Working environment and awareness of



45/180

people through the Environment walk and Seminarin pursuance of the community investment andwelfare schemes.

In pursuance of the green vision and commitment ofTop Management of the Company for maintaininghealthy and green environment, Maple PlantationDay was carried out at Maple Leaf Cement FactoryLimited Iskandarabad, Mianwali on 28th March,2015. The main aim of the ceremony was todemonstrate the continual e orts and commitmentof the Companys Management for the healthyworking environment for its workers as well as forthe people in neighborhood of the Company.

The Company celebrated The World Water Day onthe 20th of March at site with the collaboration ofcommunity and DO Environment. The main purposeof the seminar was to raise the awareness of theinter-linkages between water and energy.

g) Rural Development Program

Being setup in a rural area, The Company realizesits responsibility to create awareness amongstthe local masses relating to dengue and otherserious diseases through awareness campaignsand various other techniques. The area of the plantsite is deprived with updated facilities and medicalaid. In such a case, prevention becomes moreimportant than cure but unfortunately due to lackof knowledge, new cases keep coming up of such

serious diseases. The management realizes theimportance of its activities and continues to play anactive role in this regard.

h) Health Care

Maple Health Care Center is a health facilityconcept with state of the art equipment for thehealth bene t of the employees of Maple Leafand their dependants. Negotiations with ShifaInternational Hospitals Limited were started in2013 for the construction and operation of the saidfacility. These negotiations have been nalized in thecurrent nancial year. Architect design was nalizedin November 2014. Presently it is in the construction

phase. Shifa International is a known name inPakistan with hospitals in Islamabad and Faisalabad.Once this facility is operational, the health standardsof the employees will go up.

Meanwhile, the free medical and hospital centeris treating patients with the help of qualityhuman capital working there. Keeping in view theoccupational health of employees, regular rst aidand Cardiopulmonary Resuscitation (CPR) trainingprograms are conducted to ensure safe health ofworkers.

i) Education and Training for CorporateSustainability

The Company is fully aware of its responsibilitytowards imparting education to future generation.For this purpose the Company has established veschools in Iskandarabad city, which provide qualityeducation not only to children of employees ofthe Company but also to the local residents. TheCompany has provided building and completeinfrastructure to these schools. In addition, theCompany gives monthly subsidy to partly coverthe running expenses. About 3,637 students arecurrently enrolled in these schools.



46/180

MITIGATING EFFORTS TO CONTROL INDUSTRYEFFLUENTS

Traditionally, cement plants are not consideredto be environment friendly but the Companyhas installed most modern and state of the artequipments to control industry e uents. In orderto mitigate the e ects of industrial e uents on thesurrounding environment, the Company is puttingforth all e orts for providing a healthy environmentto employees and natives. In this regard followingmajor environment friendly e orts are carried outby the Company:

1) Regular Monthly basis environmental

monitoring for stack emissions and e uentscomplying with Natural Environmental QualityStandards.

2) The Company has state of the art FLS cementmanufacturing technology, equipped withthe world class dust collection electrostaticprecipitators and bag lters for environmentprotection.

3) Massive Tree Plantation Program was carriedout for maintaining healthy and greenenvironment as a part of Corporate SocialResponsibility in coordination with DistrictO cer (Environment) Mianwali.

4) The Company has its own hospital and traumacenter at plant site. Keeping in view theoccupational health of employees, regular rstaid and CPR training programs are conductedto ensure the safe health of workers.

QUALITY MANAGEMENT SYSTEMS

The Company manufactures cement through the

plant based on the state of the art technology ofworld renowned FL Smidth Automation Denmark.Quality is assured through systematic ande ective adoption, implementation, monitoringand continuous enhancement of quality controlsystems using latest methods of analysis. To ensurethat each bag being used by our valued customers/ consumers is of the highest quality, all stages ofthe production process right from the selection ofraw materials, drying, grinding, homogenization,clinkerization and the nished product are testedrigorously. The quality check parameters duringeach level of the process are monitored andcontrolled by the latest version of technology &equipment connected on-line with Central Control

Room through PLC system. The frequency ofsampling and testing along with control parametersis de ned.

Procedures Adopted for Quality Assurance:

The main purpose is to ensure that the cementproduced:

meets all the standards requirements to whichthe Company is certi ed; and.

not only meets customers requirements butexceed their requirements and expectations.

To achieve these goals, the Quality ControlDepartment has adopted various procedures andis fully equipped with state-of-the art technologiessuch as:

X-ray Fluorescent Analyzers and X-rayDi raction analyzer to analyze chemical andmineralogical composition.

On line QCX system software. Sample preparation tools such as a jaw crusher,

sample dividers, disk grinding mill, mixer milland press mills.

Automatic Moisture Analyzers. Precision Electronic Balances. Drying Ovens & Furnaces. Lab glassware.

Automatic Free Lime Apparatus. PC Based Automatic Calorimeter and SulfurDeterminator to analyze fuels.

Latest Automatic Compressive Strengthmachines for determination of cementcompressive strength.

Latest whiteness tester.

OCCUPATIONAL HEALTH, SAFETY ANDENVIRONMENTAL (HSE) PROTECTION MEASURES

The Company is committed to achieve excellencein Occupational Safety, Health and Environmentalprotection. The Company encourages awarenessin these areas amongst our employees, customers,suppliers and all those who are associated withus in our activities. Our goal in respect of safety,health and environment is to minimize all adverseenvironmental and health impacts arising out of ouroperations and to conserve all kinds of resourcesand adhere to all legal regulations.

Maintenance of health and safety standards at ourplants and o ces is our top priority. The Company iscommitted to actively managing health and safety

risks associated with our business and is activelyworking towards improving our procedures toreduce, remove or control the risk of re, accidents



47/180


or injuries to employees and visitors. The Company strives to provide a safe and healthy workplace forits employees and to act responsibly towards the communities and environment, in which it operates.

the highest professional standards of work. Management takes all possible measures to prevent unsafe

and operational policies. The environmental friendly projects completed at our plants include:

Waste Heat Recovery Plant: Through this project the Company has been able to replace 16 MW of gridelectricity by utilizing exhaust gases emitted to the atmosphere through the stacks of clinker cooler and

Trees Plantation: To enhance environmental standards and continuously promoting a better and GreenEnvironment within the factory as well in the nearby areas, the Company is arranging regular Tree Plantation

factory premises and nearby areas to provide a healthy environment to employees and other community

living in surroundings. This activity will continue in the future and further trees will be planted to ensurehealthy and green environment.

BUSINESS ETHICS & ANTI-CORRUPTION MEASURES

The Company, through its training, management standards and procedures, aims to develop a disciplinedand constructive control environment in which all employees understand their roles and obligations.Employees are encouraged to report any deal that may be supported by kickbacks. No employee is allowed


48/180


to run a parallel business. The Company is maintaining sophisticated Oracle based online software usingwhich any employee can report the non-conformance (NC) to the top management. All the NCs reportedare being addressed by the top management on a timely basis and a regular follow up activity is beingcarried out in order to ensure that all issues highlighted are being resolved permanently. Moreover, theCompany has also formulated whistle blowing policy.

NATIONAL CAUSE DONATIONS

During the year, Company has donated to Abdul Razzaq Fazaia College Mianwali and National TennisAcademy. The Company has also donated in the form of cement for construction of schools, mosquesand other social projects.

CONTRIBUTION TO NATIONAL EXCHEQUER

During the year, Company has contributed an amount of Rs. 5,060 million towards national exchequer

in the shape of taxes, duties, cess, levies etc. The Company has also contributed through earnings ofvaluable foreign exchange amounting to US$ 35 million.


49/180

FORWARD LOOKING STATEMENT

Going forward, we expect local dispatches tofurther improve in coming period due to increasein demand of cement for public sector projectslike small dams, roads and bridges together withincreased construction activities in the privatesector as a result of expected better performanceof the economy. Mortgage nancing is alsoexpected to grow due to fall in interest rates andpositive economic outlook. Cement dispatches mayalso increase on account of reconstruction ofinfrastructure damaged dueto the recent oods.However, cement prices are

expected to remain stable. Thecement industry is also eyeingthe developments on China PakistanEconomic Corridor (CPEC) and thisopportunity is expected to prove tobe a great prospect for speeding upthe countrys economic development,as many agreements worth billions ofdollars for investment in projects ofinfrastructural development have beensigned which should increase demandfor cement in the mid-term.

The Afghanistan market is contractingon account of availability of inexpensiveIranian cement which is a worrying factor.Owing to this development, the Company isdetermined to explore new export marketsto improve capacity utilization.

As oil prices are expected to remainbearish, the Company will continue toenjoy savings resulting from the usageof its HFO based standby enginesto generate lower cost power

with less reliance on the nationalgrid. Fuel price adjustment reliefis also expected to continue in thenear term. We expect pro tabilityof the sector to enhance further owing to recordlow coal price of USD57.25/ton (Richards Bay 6000benchmark) depicting 13% drop from start of 2015.These factors should result in overall reduction ofpower cost and should keep margins robust. Othercost reduction e orts continue to be the mainfocus in all operational areas and the Company hasadopted various strategies to reduce cost including

use of alternative fuels and optimized operationsof the plant. The Company is actively working onsetting up a 40MW coal based captive power plantwhich is expected to further reduce power cost and

reliance on the national grid and act as an antidoteto gas curtailment. The letter of credit is expectedto be established in October 2015.

BEST CORPORATE REPORT AWARD

The Company again bagged award for BestCorporate Report 2014 in the award ceremonyjointly hosted by the Institute of CharteredAccountants of Pakistan (ICAP) and Institute of Costand Management Accountants of Pakistan (ICMAP)

on 4th September 2015. This awardfor Best Corporate Report securedby the Company is a re ection of

following best ethical values and

management practices in corporatereporting. The Company has promotedaccountability and transparency through

provision of accurate, informative, factualand reader friendly Annual Reports on timelybasis for the valuable stake holders.

BUSINESS CONTINUITY and DISASTERRECOVERY PLAN

The Board of Directors periodically reviewsthe Companys business continuity & disasterrecovery (BC/DR) plan to ensure that criticalbusiness functions will be available tocustomers, suppliers, regulators, and other

entities that have access to those functionseven under extraordinary circumstances. BC/DRplan mainly include daily tasks such as customer/

suppliers correspondence, production data,trading activities, project management,system backups and help desk operations.

The primary activities of the Board for theexecution of the plan include:

1)To develop and maintain a formal planthat is responsive to the Companyscurrent business needs and operating

environment.2) To ensure that a business continuity recovery

team includes representatives from all businessunits.

3) To provide ongoing business continuitytraining to all employees, including executivemanagement and the board.

4) Ensure that thorough current business impactanalysis and risk assessments are maintained.

5) Ensure a centralized executive view of thebusiness continuity plan and programs.



50/180


Daring endeavors


51/180


Rewardingexperience


52/180

CEO PERFORMANCE REVIEW

The performance of the CEO is regularly evaluated by the Board

of Directors and this evaluation is based on the criteria de ned bythe Board of Directors which includes various nancial and nonnancial key performance indicators. At the start of the year, CEO

presents his key performance indicators (KPIs) for the upcomingyear to the Board of Directors. The Board periodically evaluatesthe actual performance against those KPIs during the year anddiscusses the future course of action to attain the Companysstated goals. The CEO also appraises to the Board regarding anassessment of senior management and their potential to achievethe objectives of the Company.

COMPLIANCE OF THE CODE OF CORPORATE GOVERNANCE

The Board reviews the Companys strategic direction and businessplans on a regular basis. The Audit Committee is empoweredfor e ective compliance of the Code of Corporate Governance.The Board is committed to maintaining a high standard of goodcorporate governance.

Your Directors are pleased to report that:

a) The nancial statements, prepared by the managementpresent fairly its state of a airs, the result of its operations,cash ows and changes in equity.

b) Proper books of account have been maintained by theCompany.

c) Appropriate accounting policies have been consistentlyapplied in the preparation of nancial statements andaccounting estimates are based on reasonable and prudentjudgment.

d) International Financial Reporting Standards, as applicable inPakistan, have been followed in the preparation of nancialstatements and any departures there from have beenadequately disclosed and explained.

e) The existing internal control system and procedures arecontinuously reviewed by the internal auditor. The process ofreview will continue by the Audit Committee to monitor thee ective implementation.

f) There are no signi cant doubts upon the Companys ability tocontinue as a going concern.

g) Key operating and nancial data of last six years is annexed.

h) The value of investment of provident fund and gratuity trust,based on their respective unaudited accounts of June 30, 2015is as under:



53/180

Rupees in thousand Provident Fund 461,135 Gratuity Fund 69,447

There has been no material changes since June 30,2015 except as disclosed in this annual report andthe Company has not entered into any commitment,which would a ect its nancial position at the dateexcept for those mentioned in the audited nancialstatements of the Company for the year ended June30, 2015.

During the year, the Company has complied with all

applicable provisions, led all returns / forms andfurnished all the relevant particulars as requiredunder the Companies Ordinance, 1984 and alliedrules, the Securities and Exchange Commissionof Pakistan (SECP) Regulations and the listingrequirements.

DIRECTORS AND BOARD MEETINGS

During the year under review, four meetings of theBoard of Directors were held in Pakistan and nomeeting was held outside Pakistan. Attendance byeach Director was as follows:-

Sr. # Name of Directors Designation Meetings attended

1) Mr. Tariq Sayeed Saigol Chairman / Non Executive Director 42) Mr. Sayeed Tariq Saigol CEO / Executive Director 43) Mr. Tau que Sayeed Saigol Non Executive Director 34) Mr. Waleed Tariq Saigol Non Executive Director 35) Mr. Danial Tau que Saigol Non Executive Director 36) Syed Mohsin Raza Naqvi GDF / CFO / Executive Director 47) Mr. Zamiruddin Azar Non Executive Director 48) Mr. Karim Hatim Independent Non Executive Director 3

Leave of absence was granted to the Directors who could not attend the Board meetings.

ANNUAL EVALUATION OF BOARD PERFORMANCE

The Board has set a criterion based on emerging and leading practices to assist in the self-assessment of anindividual director and the full Boards performance. It is not intended to be all-inclusive. When completing theperformance evaluation, Board considers the following main performance evaluation process or behavior:

i) Adequate Board composition.ii) Satisfactory Processes and Procedures for Board meetings.iii) The Board sets objectives and formulates an overall corporate strategy.iv) The Board has set up adequate number of its Committees.v) Each Director has adequate knowledge of economic and business environment in which the Company

operates.vi) Each Board member contributes towards e ective and robust oversight.vii) The Board has established a sound internal control system and regularly reviews it.viii) The Board reviews the Companys signi cant accounting policies according to the nancial reporting

adequate regulatory framework.ix) The Board considers the quality and appropriateness of nancial accounting and reporting and the

transparency of disclosures.

EVALUATION CRITERIA OF BOARD PERFORMANCE

Following are the main criteria:

1. Financial policies reviewed and updated;2. Capital and operating budgets approved annually;3. Board receives regular nancial reports;4. Procedure for annual audit;



54/180

5. Board approves annual business plan;6. Board focuses on goals and results;

7. Availability of Boards guideline to management;8. Regular follow up to measure the impact ofBoards decisions;

9. Assessment to ensure compliance with thecode of ethics and corporate governance.

QUALIFICATION OF CFO AND HEAD OF INTERNALAUDIT

The Chief Financial O cer and the Head of InternalAudit possess the requisite quali cations andexperience as prescribed in the Code of CorporateGovernance.

FORMAL ORIENTATION TRAINING PROGRAM FORDIRECTORS

The Board had arranged Orientation Courses for itsDirectors namely, Mr. Danial Tau que Saigol andSyed Mohsin Raza Naqvi, during the preceding yearsfrom recognized institutions of Pakistan approvedby the SECP whereas some Directors having therequisite experience on the Board(s) of ListedCompanies are exempt from the Directors TrainingProgram. Further, the Directors have also provided

declarations that they are aware of their duties,powers and responsibilities under the CompaniesOrdinance, 1984 and the Listing Regulations of theStock Exchanges.

TRANSACTION / TRADE OF COMPANYS SHARES

The Board has reviewed the threshold for disclosureof interest by executives holding of Companysshares which include CEO, CFO, Head of InternalAudit and Company Secretary. However, duringthe nancial year, none of the Directors, CEO, CFO,

Head of Internal Audit and Company Secretary(including their spouses and minor children) tradedin the shares of the Company.

PATTERN OF SHAREHOLDING

Pattern of shareholding of the Company inaccordance with the Companies Ordinance, 1984and Code of Corporate Governance as at June 30,2015 is annexed.

AUDITORS

The present auditors of the Company M/s. KPMGTaseer Hadi & Co., Chartered Accountants auditedthe nancial statements of the Company and haveissued a report to the members.

The auditors will retire at the conclusion of theAnnual General Meeting. Being eligible, theyhave o ered themselves for re-appointment. TheBoard has recommended the appointment of M/s.KPMG Taseer Hadi & Co., Chartered Accountantsas auditors for the ensuing year, as suggested bythe Audit

Mlcf Annual Report 2015

Documents

Transcript of Mlcf Annual Report 2015